A Critical Shift Is Needed to Align Compensation Strategies With the Modern Workforce - New Study by HR Research Institute

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 experiences:

• 65% ensure employees have easy access to pay and benefits information.

• 59% promote work-life balance through flexible work arrangements.

• 56% are actively educating employees about their benefits.

“Compensation and total rewards are critical drivers of employee engagement and retention, yet our research shows that many organizations still struggle to modernize their systems,” said Debbie McGrath, Chief Instigator and CEO of HR.com. “This report highlights not only the challenges but also the opportunities for HR leaders to create more equitable, transparent, and effective compensation practices.”

The full research report, HR.com's Future of Compensation and Total Rewards 2024-25, is available for free download and offers a detailed look at compensation strategy and total rewards programs to provide actionable insights to help HR practitioners and leaders to develop more sophisticated compensation approaches that meet future needs.

The recording of the research webcast presentation, Current Trends and Possible Futures of Compensation and Total Rewards, is available for viewing 24/7 on demand.

About HR.com and the HR Research Institute

The HR Research Institute (HRRI) helps you keep your finger on the pulse of HR! Powered by HR.com, the world’s largest HR community, the HRRI identifies key trends and best practices to help more than 2 million HR professionals and their organizations make strategic decisions with informed and insightful research findings. Among the most productive and respected HR research institutes globally, the HRRI publishes dozens of high-quality reports every year across a wide array of HR topics. HR.com’s free membership offers many benefits, including access to over 250 exclusive primary research, state-of-the-industry reports, and infographics. These resources are published based on surveys developed with the assistance of a panel of thought leaders and industry experts on the advisory boards. Visit hr.com/hrresearchinstitute to maximize your HR potential.

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