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HR.com has released its latest research report, HR.com’s Future of Compensation and Total Rewards 2024-25, revealing key insights into how organizations are approaching compensation and total rewards strategies amid a rapidly changing workplace. The findings underscore that while organizations recognize the growing importance of effective compensation systems, many are still struggling to modernize and align their approaches to meet employee needs.
This critical gap is highlighted by the fact that while 67% of HR professionals responding believe compensation and total rewards will gain importance in the next two years, only 22% of organizations describe their compensation approaches as advanced or innovative.
Organizations are grappling with several challenges with their compensation strategies, including:
Lack of clarity: 40% say their compensation systems are not well understood by employees.
Lack of personalization: 30% report their systems fail to address individual employee needs.
Wage compression issues: 30% cite wage compression as a persistent challenge.
Further examination points to the lack of focus on achieving pay equity. Only 32% cite fair and equitable pay as a top-three driver of their compensation strategy, suggesting that many organizations are not prioritizing pay equity as a means to attract and retain talent.
Despite these hurdles, many organizations are taking steps to create better employee
