Why a strong Total Reward strategy is key to driving business value

Many organisations have had to reassess how they attract, retain and motivate their workforce. This is due to the instability of the job market, as well as ongoing economic challenges and the changing expectations of employees.

Creating a strong total reward strategy has become a critical differentiator for businesses. This is not just the case in recruitment, but also for driving long-term employee engagement and organisational performance. The way to make this strategy work is by underpinning it with a fair and transparent job evaluation, impartial pay practices and tailored learning and development opportunities to make it successful in engaging and retaining employees.

Retention starts with feeling valued

Insights from Personnel Today have revealed that 65 per cent of UK employees are planning, considering or are likely to find new employment that meets their needs better. It’s common for many employees to consistently re-evaluate their options due to various reasons. Around one in four employees feel undervalued in their current roles, making them seek new opportunities where they are more valued. As well as this, whilst 54 per cent of employees feel like their compensation is competitive with industry peers, nearly a quarter are unconvinced that their employers provide equal pay.

With limited pay growth, economic uncertainty and high inflation, many employees are becoming more and more empowered to leave roles that don’t offer them clear progression, recognition or fair compensation. This clearly shows employers that they need to review their approach to pay and reward strategy. They should find out how to improve their approach, while strategically focusing on transparency, fairness and development.

The role of job evaluation: creating pay parity and internal equity

At the heart of any successful and robust total reward strategy is a reliable job evaluation system. This gives you the objective and a structured framework that’s designed to ensure that roles are assessed consistently based on their responsibilities, impact and complexity.

Without job evaluation:

• Pay decisions risk becoming arbitrary or manager-dependent.
• New hires could gain higher salaries than the existing employees.
• Any disparities in pay across departments, genders or roles can very easily be overlooked, which can lead to employees not trusting the company and becoming disengaged.

Using a reliable job evaluation system helps companies to establish fair and defensible pay grades, job families and career pathways. It ensures that employees who have similar levels of responsibilities and skills are rewarded rightfully, while also still recognising the nuances between roles. Our UK Reward Management Survey has revealed that nearly half of organisations are paying new hires around 10 per cent more than their existing staff. Effective job evaluation is crucial for addressing internal pay equity concerns.

The rise of personalised benefits and why it matters

The traditional one-size-fits-all approach to benefits no longer cuts it. According to Aon’s Employee Sentiment Study in 2025, 57 per cent of employees are willing to trade their existing benefits for a better and more personalised package that suits their needs. This is due to the numerous generations that are in the modern workforce, who all want different benefits that suit their needs and drive. As well as this, personalised benefits packages are more popular among the workforce because of mounting economic pressures, making it essential to tailor benefits to meet diverse needs.

For example, Generation X and Baby Boomers typically feel that retirement savings have a higher value. Generation Y prioritises career development and a work-life balance because many have side hustles that they’re also managing. Employees who are experiencing wellbeing difficulties are more likely to value targeted health benefits, like health support, mental health benefits, mobility perks and savings plans.

Private medical insurance is also becoming much more desirable, as NHS wait times continue to be under strain. While this does not top the list of Gen Y’s priorities, it remains a powerful lever for older or high-risk employee groups. Certain benefits providers are offering tools that help employers use data to identify needs and target spending more effectively, harnessing the use of data to inform the total reward strategy.

A total reward strategy should always be led by data and focused on the employees and what they want, tailoring packages to their needs. It’s best to provide options, flexibility and value for money to create a successful reward strategy.

Learning and Development: A critical lever for retention

Career development is still a powerful retention tool, even though the market is currently facing limited salary increases. Many employers typically underestimate how providing learning and development (L&D) opportunities can encourage employees to stay with the company. Most employees today expect the chance to learn, grow and move forward with their careers and will continue to look for that opportunity if their current employer doesn’t allow them to grow.

This is where managers play a vital role. They need to have regular career conversations, skills audits and development planning with employees, to uncover hidden ambitions and even frustrations with the company. However, the only way these strategies succeed is if they are backed by investment and strategy from the organisation.

Recent policy changes will hinder organisations from making progress in this area. This is due to the UK government’s decision to scrap level 7 apprenticeship funding for most employees in 2026. The policy change has faced a lot of criticism, and the NHS, which provides a third of all public sector apprenticeships, has warned that it will significantly impact development pipelines. In a world where seven million fewer jobs are predicted globally due to trade uncertainty, cutting back on high-level training could undermine efforts to future-proof the workforce.

To be able to meet the modern employee’s need to grow, organisations have to find different ways to invest in learning and development. This could be through mentorship, e-learning platforms, career pathways or internally funded training. It’s also worth linking these opportunities directly to role evaluations and promotion criteria because this helps to strengthen fairness and transparency for employees, while encouraging top talent to stay and grow within the business.

The cost of inequity and the value of getting it right

Our UK Reward Management Survey has confirmed that recruitment and retention challenges are continuing to rise. The biggest concerns with this are:

• Pay compression between levels.
• Voluntary turnover is already averaging at 11.6 per cent and is expected to grow.
• Internal equity challenges due to out-of-cycle pay decisions, which are becoming very hard to justify in a cost-conscious environment.

Nearly 70 per cent of employers still operate bonus schemes. However, the focus is changing to more long-term engagement benefits, such as development opportunities, clear reward structures and inclusive workplace cultures.

Due to this, having a strong total reward strategy in place helps to deliver value by driving employee engagement effectively. Employers must consider:

• Structured job evaluation
• Transparent pay grading
• Flexible benefits
• Career development

By considering these factors, organisations can create a complete, tailored offering that actually resonates with employees, while also having better control over costs. Every pound that’s invested in this type of reward strategy can turn into measurable returns. These returns are achieved through reduced turnover, higher engagement rates and a stronger employer brand, which also resonates with stakeholders and finance teams.

3 steps to future-proof your reward framework

1. Review your job evaluation and grading systems to check that it has a transparent,consistentand objective structure that backs up your reward decisions.

2. Audit your total reward package for:

• Internal equity and fairness.
• Personalisation and generational relevance.
• Alignment with L&D opportunities.

3 Use data to guide where your investment will have the greatest impact. This could be through tailored wellbeing support, providing more inclusive benefits or even offering manager-led career development opportunities.

The employers who manage to retain their top talent in a workforce where employees are constantly seeking new opportunities for growth will be the ones who recognise, reward and help their people grow in their job roles.

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Ready to rethink your reward strategy? Start with your job evaluation framework. The right foundation ensures that every decision, from pay to perks to promotion, is fair, strategic and built to last.