Total Rewards Strategies That Drive Business Outcomes

Total Rewards Strategies That Drive Business Outcomes
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June 3, 2025 12 mins

Total Rewards Strategies That Drive Business Outcomes

Total Rewards Strategies That Drive Business Outcomes

As business demands grow more complex, employers must offer a total rewards package that balances the varied needs of the workforce with financial sustainability. Explore ways to ensure an effective total rewards program with data and timely communications.

Key Takeaways
  1. A data-driven approach to total rewards helps HR make informed decisions that drive attraction, retention, productivity and wellbeing.
  2. Alignment between what the company offers and what employees value — beyond benchmarking — can lead to a better return on investment.
  3. Clear and timely communication, delivered in multiple formats and platforms, will ensure employees understand and use the benefits being offered.

In recent years, employees have become bolder and more vocal about what they expect from their employer. Employers must match that boldness by offering the right mix of total rewards programs that are personalized, relevant and aligned with employees’ values and aspirations. 

Designing and implementing a total rewards program thoughtfully that covers compensation, benefits, career development, recognition and work environment, is a good place to start. This not only strengthens an organization’s ability to attract and retain top talent, but it also supports a more inclusive culture by recognizing and responding to the diverse needs of today’s workforce — building positive employee-company relationships in the process. With nearly 60 percent of employees considering leaving their current job according to Aon’s 2025 Employee Sentiment Study, employers face mounting pressure to deliver total rewards programs that genuinely resonate. 

"Total rewards are no longer just about programs and pay — they’re about shaping the employee experience, fueling performance and driving business outcomes."
- Stephanie DeLorm, Global Total Rewards Leader, Human Capital

In addition to evolving employee expectations, there are headwinds facing employers that make designing total rewards programs challenging: 

  • Healthcare costs consume more of the total rewards budget than ever, and cost increases are unlikely to slow down any time soon. 
  • Inflation eats away at employees’ financial wellbeing such that annual merit increases can’t keep up. 
  • Pay transparency regulations, especially in the European Union, are impacting employers’ budgets. 
  • Market volatility is having an impact on retirement plans and retirement readiness. 

“For most companies, total people spend is 30 percent or more of operating expenses, and companies need to constantly differentiate to stand out as an employer of choice,” says Piotr Bednarczuk, head of people advisory for Aon’s Talent Solutions practice in Europe, the Middle East and Africa. “It’s really important to get total rewards right.”

For most organizations, many challenges are systemic, and people budgets aren’t getting larger. However, taking a data-led approach that is informed by employee sentiment will help HR leaders determine where to get a better return on current spend.

"Employers need to make tough decisions with their budgets, and in some cases, completely rethink their approach to total rewards. Be bold about what differentiates your organization."
- Andrew Cunningham, Chief Commercial Officer, Human Capital, Europe, the Middle East and Africa

#1

The majority of employers surveyed say budget and financial constraints are the biggest obstacle to achieving their total rewards objectives.

Source: Aon’s 2025 Future of Total Rewards Survey

Balancing Trade-Offs

  • 01
    Competitive Value

    Determine if the pay and benefits offered are at, above or below the market for similarly situated organizations.

  • 03
    Financial Value

    Total rewards should be driving business outcomes and delivering return on investment.

  • 04
    Strategic Value

    Total rewards should have a positive impact on people strategy including performance, retention and productivity.

Know What Rewards Employees Value

Total rewards professionals should think like marketers when it comes to knowing what employees value — and they can start by segmenting employees. Many organizations already segment eligibility for certain benefits or incentive compensation based on job grade. But that doesn’t take into account employee preferences and their level of desire for benefit personalization. By segmenting into a reasonable number of groups that share enough common characteristics, patterns will likely emerge that the company can use to articulate a more personalized employee value proposition (EVP).

Segmentation can take time and resources. Some employers are also concerned this endeavor can set unreasonable expectations around what the organization can deliver. However, the data and insights that come from knowing what employees value are worth it. “Employers can’t be afraid of asking and hearing, ‘We want more money,’” says Bednarczuk. “While that might be a big part of the answer, there will be other trade-offs.” For example, Aon’s Employee Sentiment Study found that one in five employees prioritize a fun place to work, while a similar number want an employer that is a strong fit with their values. 

“It’s all in how you ask the question,” notes Sandrine Decarnin, head of employee communications in Aon’s Health Solutions practice in Europe, the Middle East and Africa. “Instead of asking what employees want, find out what they value.”

Because total rewards by definition contain a series of trade-offs, understanding which trade-offs employees are willing to make based on what they value is important intel to gather. For example, asking employees whether they’d prefer additional paid leave or enhanced wellbeing benefits can shed light on what is important to them, guiding the construction of a plan. 

Employees Value Fair and Transparent Total Rewards

Employees Value Fair and Transparent Total Rewards

New pay transparency regulations present an opportunity — especially considering 80.6 percent of more than 9,200 employees surveyed globally by Aon said that companies demonstrating greater compensation transparency and fairness was important or very important to them. Having skills-based, gender-neutral criteria for determining total rewards will ease compliance and serve as a powerful sign of a company’s commitment to its employees. The goal is that the underlying equity of total rewards programs is above reproach, both in design and impact. While the regulatory environment varies widely across the world, calculating and analyzing unexplained gaps across all total rewards will make an employer’s EVP even more attractive to top talent.

Read More

Integrated Data Helps Close Gaps in Perception Between Employers and Employees

Having the right data to inform decisions isn’t as easy as it may seem. But Integrating that data helps provide a clear picture of what benefits employees are using and how they are interacting with them. Then comparing that data with what employees say they value can expose discrepancies to evaluate further such as: Is a program less popular than employee sentiment would otherwise indicate because it is poorly understood? Or does the program not actually meet employees’ needs? 

  • 72%

    of employees value benefit customization

    Source: Aon’s 2025 Employee Sentiment Study

  • 41%

    of employees report having access to personalized benefit options

One of the most glaring perception gaps between benefits provided and benefits needed is life and disability insurance benefits. Only 38 percent of the employees who consider these benefits important reported that they have access to them.1 But with life insurance being a well-established benefit globally, this perception gap is likely the result of a lack of employee awareness. This highlights an opportunity to improve communications and understanding around this benefit and how it will support employees’ long-term financial security.

Another disconnect is around wellbeing. Nearly half of employees think that their employer should support their wellbeing,2 yet fewer than one in five feel they are being supported. Employers are starting to recognize this disconnect, as well as the value of wellbeing to an organization. In another survey, HR leaders said they expect to increase their allocation of total rewards spend to wellbeing — from 2.8 percent of investment to 3.2 percent.3

How Retirement Benefits Impact Performance at a Healthcare Company

How Retirement Benefits Impact Performance at a Healthcare Company

Aon worked with a healthcare company that had below-market retirement benefits, but didn’t feel they could afford to offer more. The conversation with the client began to evolve once Aon's data and analysis revealed how the firm's retirement benefits impacted workforce management. For example, we found that lean retirement benefits led to a significant number of employees delaying retirement. This could have a downstream impact on higher salaries and health expenses, and lower productivity and engagement. With a holistic approach to total rewards, the client was able to navigate the trade-offs between enhancing retirement benefits while generating savings through better workforce management.

Good Communication is Just The Start

Look to utilization data when making difficult choices to reallocate resources. If programs aren’t being used, determine if they are worth keeping for other reasons — for example, if they have the potential to provide important long-term financial security. In these cases, the programs may just require better explanation of the benefits to employees. In other cases, determine if cutting underutilized programs to reallocate resources to something employees value more would be a net positive.

"Right now, many employees receive disparate information about their rewards,” says Jane Kwon, total rewards leader for Aon’s Talent Solutions practice in North America. “Employers are quick to say they put the information out there, but it’s when active participation is required that an employee starts to engage with the information.”

Different employee groups have different communication preferences and methods of learning. Some may respond well to webinars or printed material while others may prefer a mobile app that offers on-demand content. In any case, it’s vital that employers communicate across platforms and in a variety of formats, especially during key milestones such as new-hire onboarding and annual healthcare and benefit enrollment.

Optimizing Total Rewards Budgets for Greater Impact

While the role of HR continues to evolve, the fundamental goal of attracting, retaining and developing high-performing talent remains a high priority and challenge. The most important aspect to consider is the value that an organization’s total rewards brings to individual employees. 

With total rewards budgets being consumed by inflation and rising medical costs, the mandate to do more with less is real. “The needle on total rewards is moving faster than we’ve seen in the past several years, mainly because employees are demanding more from their employers. A recent period of high turnover also accelerated that action,” adds Kwon.

5 Practical Steps to Maximize the Impact of Total Rewards

  1. Align total rewards to business outcomes. Bring together a variety of data (e.g., compensation, benefits, health, performance, productivity, risks, retirement readiness and what employees value) to inform decisions. This data can be the foundation of a program to improve business performance. However, don’t overrely on benchmarks. While industry benchmarks are an important comparison for decision making, it takes a more balanced approach — one that includes insights from leaders, financial targets and employee perceptions to create a more sustainable and aligned total rewards strategy. An overreliance on benchmarks can either create an unsustainable program to fund each year or cause a race to the bottom that fails to attract and retain talent.
  2. Manage employee health as a business asset. With rising health costs, employers, particularly in the U.S., should leverage tools and technology to reduce costs over a multi-year period. In order to be productive, employees need to be healthy. A targeted long-term approach to health and benefits will minimize inefficient spending, bringing investment back into the organization and its people.
  3. Go beyond pay transparency regulations. While pay transparency regulations may create compliance challenges, they force organizations to address gaps and prepare for pay equity conversations — a key component of building employee trust. 
  4. Build adaptable skills. Technology will always be part of the skills conversation. By identifying the skills needed for the future and creating opportunities for upskilling and investing in career paths, companies can create an alignment of incentives for themselves and workers. 
  5. Reinforce fiduciary governance. A strong governance structure is imperative to handle an influx of fiduciary responsibilities. Employers are increasingly at risk for fiduciary-related litigation in areas from prescription medication pricing to documentation issues. Having good governance practices in place, coupled with fiduciary liability insurance, can help protect employers. 

Now is not the time to make small tweaks to total rewards programs in the hope of engagement ticking up a few percentage points. Rather, it takes reimagining total rewards to successfully express a company’s EVP. Optimizing and building a sustainable, agile offering not only helps companies meet regulatory obligations, but also attracts and retains the talent needed to deliver strategic business value for years to come. 

 

1 2025 Employee Sentiment Study, Aon
2 2025 Employee Sentiment Study, Aon
3 2025 Future of Total Rewards Survey, Aon

47%

of employees ranked the provision of better-than-average pay and meaningful benefits as the number one factor influencing their employer choice.

Source: Aon’s 2025 Employee Sentiment Study

Aon’s Thought Leaders

Piotr Bednarczuk
Senior Partner, Strategic Advisory, Europe, the Middle East and Africa

Andrew Cunningham
Chief Commercial Officer, Human Capital, Europe, the Middle East and Africa

Sandrine Decarnin
Head of Employee Communications, Health, Europe, the Middle East and Africa

Stephanie DeLorm
Global Total Rewards Leader, Human Capital

Melissa Elbert
Partner, Retirement Solutions, North America

Adithi Jagannathan
Partner, Human Capital Advisory Solutions, Europe, the Middle East and Africa

Jane Kwon
Associate Partner, Total Rewards, North America

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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