Compensation and benefits used to be a fairly straightforward conversation. You offered a salary, threw in some health insurance, maybe a few leave days, and that was mostly that. Those days are behind us.
Gallup’s Employee Retention and Attraction Indicator found that pay and benefits were the top reasons employees switched jobs in 2024. A ZipRecruiter survey of over 2,000 companies found that 39% saw higher turnover that year. The most common reason? Inadequate pay or benefits.
So if your package hasn’t been seriously revisited in a while, there’s a real chance it’s already costing you people.
Compensation and Benefits: Why the Bar Keeps Rising
SHRM’s 2024 Employee Benefits Survey counted 216 different benefits being offered by employers, up from 175 just two years before. That’s a 23% jump.
Part of this is demographic. Today’s workforce spans four generations, each carrying different financial pressures and life priorities. A 26-year-old with student loans has a completely different idea of “good benefits” than a 50-year-old thinking about retirement. A working parent values flexible scheduling in a way a fresh graduate simply hasn’t needed to yet.
Companies still offering a single standard package to everyone are, in practice, offering nothing particularly useful to anyone.
Run Workplace Surveys Before You Redesign Anything
Here’s a mistake a lot of HR teams make: redesigning benefits based on what leadership assumes employees want, rather than what employees actually say.
Aflac’s research put a number to this. 80% of organisations believed employees were satisfied with their benefits. Only 58% of employees agreed. That’s a 22-point gap, and it’s exactly where quiet resignation lives.
BambooHR found that 85% of employees want benefits their employer doesn’t currently offer. The only way to find out which ones is to ask.
Workplace surveys don’t need to be elaborate. A short pulse survey twice a year, a few stay interviews, and some honest one-on-one conversations. What matters is doing something visible with the answers. Employees stop participating in surveys the moment they sense the results go nowhere.
A few things worth including:
- Anonymous options so people answer honestly rather than safely
- Open-ended questions alongside the ratings
- Results segmented by team, age bracket, and tenure, since a 30-person average often hides the real gaps
Think Beyond the Salary Band
Most conversations about pay start and end with base salary. That framing is too narrow.
Total rewards covers everything an employee gets from working with you:
- Base salary, benchmarked against what the market is actually paying right now
- Variable pay such as bonuses, profit-sharing, or performance incentives
- Equity through stock options or RSUs, especially relevant in growth-stage companies
- Health coverage across medical, dental, and mental health
- Financial wellness support including retirement plans and counselling
- Leave policies covering parental leave, paid time off, and flexible or remote working
- Learning budgets, certification pathways, and course access
- Recognition, which costs less than most people think and lands harder than many expect
NFP’s 2025 data shows organisations are putting 6 to 7% of payroll toward broad-based variable pay. And 30% of employers are planning to tie more of their compensation to individual performance this year.
The strongest packages aren’t always the most expensive. They’re the most thoughtfully built.
Pay Transparency Has Moved From Preference to Expectation
Employees are already talking about money. BambooHR’s 2025 research found that 47% of employees have discussed salary with a coworker, and 21% of Gen Z workers had done so within the past month alone.
Keeping pay confidential doesn’t stop those conversations. It just means they happen without accurate information, which tends to fuel more suspicion, not less.
Gartner research published in HBR found that when employees perceive their pay as fair, retention improves by up to 27%. Lattice’s 2024 survey found that companies with genuine pay transparency had engagement rates of 72%, compared to 39% at companies that kept compensation closed off.
What this looks like day-to-day:
- Salary bands are published for every role, both in job postings and internally
- Clear explanations of how pay decisions get made, not just the figures themselves
- Annual audits to find and close pay gaps before they become a legal or cultural problem
- Managers are trained to have straight conversations about compensation rather than deflecting
Illinois, Minnesota, and Vermont added pay transparency laws in 2025, joining nine other US states. Several European markets and India are heading in the same direction. Companies that get ahead of this spend far less energy than those who react late.
Personalised Benefits Are Where Employer Branding Gets Made
LinkedIn’s 2025 Workplace Learning Report found that 88% of organisations now consider learning a top retention tool. That’s a big number. But what learning means varies a lot from person to person.
A 23-year-old might prioritise certification support in cloud platforms or data analytics. A parent returning after a career break needs something very different. A senior hire with 20 years of experience isn’t driven by the same things as someone two years in.
This is why Lifestyle Spending Accounts have been gaining ground. Benepass found that 66% of companies now offer them, with a median annual fund of $780 per employee. SHRM data shows another 38% are considering adding them in 2025. The idea is simple: give employees a budget and let them spend it on whatever fits their life – therapy, fitness, childcare, skills courses, savings.
The employer branding effect is worth mentioning. When someone can honestly say their company’s benefits match how they actually live, they say that to other people. That kind of word-of-mouth is harder to manufacture than most recruiting teams would like to admit.
A Package Only Works If the Culture Backs It Up
Gallup’s State of the Global Workplace 2025 found that 69% of the reasons employees leave trace back to engagement, culture, and work-life balance concerns, not pay alone.
Leadership in workplaces determines whether any of the above lands properly. A mental health benefit doesn’t help when managers make people feel guilty for using it. A flexible working policy doesn’t help when the unspoken rule is that physical presence equals commitment. The culture either reinforces the package or quietly undoes it.
This is where certification for people managers pays dividends. Training in inclusive leadership, mental health awareness, or coaching isn’t just a box-tick. It changes how benefits actually function in practice, rather than how they’re described in the handbook.
The organisations with the lowest turnover aren’t always the ones with the most generous packages. They’re the ones where employees can actually use what’s on offer without it feeling like a risk.
Benchmarking: Do It Annually, Do It Properly
Mercer’s 2025 data puts average salary budget increases at 3.7%, with merit increases around 3.3%. Useful as a reference point. Not useful as a strategy on its own.
Good benchmarking means comparing your pay by role, location, level, and function, not just looking at one company-wide number. A flat 3.7% increase that leaves your senior engineers 15% below market is still going to cost you those engineers.
Sources worth pulling from:
- Salary surveys from Mercer, WTW, Aon, and Payscale
- Government labour statistics for your sector
- Salary ranges published in competitor job postings
- Compensation data from LinkedIn and Indeed
Once you have that data, act on it rather than filing it. The market doesn’t wait for your next budget cycle.
A Quick Check Before You Sign Off
Before finalising the package, it’s worth asking a few honest questions:
- When did you last run a workplace survey on benefits specifically, and what changed as a result?
- Is your base salary benchmarked against current market data, or something from two years ago?
- Can your managers explain clearly how pay decisions are made?
- Do your benefits reflect how your workforce actually lives, or how HR imagined they might?
- Are learning and certification options genuinely funded, or just mentioned on the careers page?
- Do the people who most need flexibility actually feel safe taking it?
Worth Saying Plainly
The companies holding onto good people right now aren’t all paying the highest salaries. Some are. But that’s not the consistent thread.
What they mostly share: they know what their employees actually care about, they’ve built their packages around that rather than around convention, and their day-to-day culture doesn’t quietly contradict what’s written in the offer letter.
Compensation and benefits, designed well, show candidates and employees that someone thought carefully before putting the offer together. That kind of care is harder to replicate than a salary bump. Which is part of why it keeps working.
