5 Bold Predictions for the Future of Total Rewards

5 Bold Predictions for the Future of Total Rewards
September 18, 2025 6 mins

5 Bold Predictions for the Future of Total Rewards

5 Bold Predictions for the Future of Total Rewards

Total rewards professionals must adapt quickly to changes in the workforce. Whether it's personalization of benefits powered by AI or a whole new language around total rewards, the near future may look very different than the status quo.

Key Takeaways
  1. Personalization of benefits gives employees the flexibility they want — and could be key in boosting retention and workforce productivity.
  2. A host of new realities, from technology to increased life expectancy, will reshape total rewards.
  3. Total rewards is evolving from a support function to a strategic lever for business performance, workforce sustainability and value creation.

Total rewards is on the verge of a major reinvention, evolving from a support function to a strategic lever for business performance, workforce sustainability and value creation. What was once a domain of HR will become a vehicle for bringing together finance, leadership and HR to drive value creation, workforce sustainability and business performance.

Below are five trends that are poised to define the total rewards of the near future:

1. Longevity Will Reshape Workforce and Rewards Strategy

As people live — and work — longer, the concept of retirement is evolving. Fewer employees will exit the workforce at a fixed age, leading to higher healthcare costs, delayed retirement and multi-generational workforces with widely divergent needs. Gen Z, the oldest of which are nearly 30, will enter management just as Baby Boomers opt to stay longer in the workforce. A five-generation workforce creates complex challenges in benefits design, succession planning and career development. 

What it means: Total rewards teams must manage flexible retirement vehicles, rethink defined contribution and defined benefit plans to be sustainable and address workforce planning that supports lifelong learning and career pathing. Healthcare and leave policies will need to be sustainable.

Quote icon

Healthcare costs are rising at four times the rate of inflation and three times wages. We’ve been saying that’s not sustainable for years, but it’s still happening. It’s time to close the health-wealth gap.

Stephanie DeLorm
Global Total Rewards Leader, Human Capital

2. The Total Rewards Team of the Future Will Look Radically Different

Traditional skillsets are no longer enough. Finance and legal professionals are stepping into total rewards leadership roles, emphasizing business acumen, financial results and strategic decision making. This shift highlights a growing gap between current HR capabilities and what the future demands. Similarly, total rewards strategy and philosophy must be agile and responsive to the business. The future is with total rewards strategies that pivot quickly with market shifts, with less focus on cost savings and more focus on growth and productivity.   

What it means: Upskilling is critical for today’s total rewards professionals. Business, data analytics, AI fluency and financial literacy will be required— otherwise, traditional roles risk being replaced. As a result, total rewards will evolve to act more like a business function, with real-time responsiveness and a clearer tie to performance. To support this change, the language around total rewards will have to evolve. Concepts like “total rewards” and “employee value proposition” don’t capture all of what employees are looking for. In fact, what many think of when discussing an employee value proposition is a branding exercise. 

3. Personalization Will Accelerate — and Be Powered by AI

Personalization is no longer a trend; it’s an expectation. More than 7 in 10 employees said choice in benefits was important to them, according to Aon’s 2025 Employee Sentiment Study. However, the same study found only about 4 in 10 said they have that level of flexibility. Employees want benefit experiences tailored to their individual needs, and AI is enabling that at scale, fundamentally reshaping the employee experience. 

What it means: Employers will deploy AI to create curated benefit experiences. The emergence of flexible benefits “wallets” (typically, a set amount of money allotted for employees to choose their own benefits) could spark a new era of individualized total rewards. Unlike the cafeteria plans of the 1980s, today’s AI-enabled systems will offer smarter support, better data, and greater flexibility. For example, predictive analytics could be used to determine what benefits an employee is more likely to value, and offer easy opt-in options.  

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This is our opportunity to really execute on the ways AI can help personalize benefit offerings — whether it’s giving employees more choice to opt in or out of certain benefits or making information around benefits more personally relevant. It’s either we rise to this opportunity or AI is somewhat going to take over some of the functions of benefit advisors.

Jane Kwon
Total Rewards Strategy Leader, North America

Personalization and Choice are Important

As part of Aon’s Employee Sentiment Study we asked employees what was important to them. It should come as no surprise that having more control over their benefits ranked highly. Despite this, many workers said they did not have the needed flexibility and choice in the benefits.

Learn More

4. Performance Differentiation Will Regain Prominence

The era of “peanut butter” pay — across-the-board merit increases with little differentiation — is fading. Companies will focus more sharply on performance-based compensation. Despite some speculation that pay transparency regulations might cause a pullback in performance-based pay, the opposite is more likely. Cash-constrained budgets combined with more rigorous performance management systems are likely to create more effective and fairer pay for performance plans. 

What it means: Expect a resurgence in performance management — not necessarily with ratings, but with more objective, traceable development and reward decisions. For hourly workforces, we’ll see bifurcated models: some moving incentives into base pay, others increasing pay-for-performance.

 

5. Differentiated Employee Experiences Will Define Culture and Brand

Companies will increasingly use total rewards to live their brand and culture — not just support it. Recognition programs, incentive structures and flexible benefits will all reflect and reinforce the organization’s purpose and values. 

What it means: One-size-fits-all is obsolete. The future will be about curated experiences that resonate with different workforce segments. For example, companies may tailor leave policies for working parents as a way to support their family friendly culture. Total rewards will be a primary lever for cultural differentiation and brand authenticity. 

Final Thought: The Total Rewards Revolution Has Begun

Total rewards is already becoming a strategic driver of business performance and employee experience. It is no longer enough to deliver programs that are “competitive” or “compliant.” HR leaders must design for agility, personalization, performance and purpose. In doing so, they will move from being administrators to architects of the future workforce.

The time to transform is now.

Aon’s Thought Leaders
  • Lauren Borcherding
    Senior Vice President, Human Capital, North America
  • Andrew Cunningham
    Chief Commercial Officer, Human Capital, Europe, the Middle East and Africa
  • Stephanie DeLorm
    Global Total Rewards Leader, Human Capital
  • Jane Kwon
    Total Rewards Strategy Leader, 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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