In early 2024, we predicted total rewards leaders would respond to economic disruption, technology transformation and labor market shifts by optimizing reward cost, addressing employee affordability, advancing transparency, prioritizing career and skills development and leveraging artificial intelligence (AI).
Our conversations with over 100 global total rewards leaders showed significant progress in many of these areas in 2024. The focus on optimizing reward cost and advancing pay transparency proved particularly prescient. Emphasis on careers and building skills taxonomies continues. AI adoption has lagged as leaders await proof of concept, but it will likely accelerate over the next two years.
In 2025, total rewards leaders will face familiar and new challenges, including rising salary and healthcare costs, organized labor activities and new global trade policies. Critical skill shortages and stagnant labor markets will lead to employee burnout and disengagement masked by low attrition. Geopolitical tensions and changing global regulations will challenge global rewards policies.
As many total rewards leaders will need to address these challenges without additional budgets or resources, they will need to focus their time, energy and resources on areas delivering the greatest impact. In rethinking their strategies across all elements of total rewards (pay, careers, benefits and wellbeing), we predict the following actions will take priority:
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