The Problem with Total Rewards—And How Recognition Can Help

Total Rewards began as a way to package the compensation and benefits employees receive from their organisation, in hopes that employees would want to work for and stay with a company that had an attractive Total Rewards bundle.

As the workplace evolved, organisations tried to attract great talent and improve employee retention with additional benefits they thought employees would want: work-life balance, career development, recognition, and, more recently, offerings like pet insurance, remote work, and wellness resources.

But new research from the 2025 Global Culture Report shows companies should reconsider their Total Rewards strategies. As employee expectations and needs continue to evolve, many companies have defaulted to offering as many benefits as possible, hoping to meet all their employees’ needs. But with a buffet of Total Rewards offerings, employees are often left overwhelmed and confused. It’s time to take a more targeted approach to Total Rewards that addresses employees’ needs.

Problem #1: The term “Total Rewards” can be confusing

When we asked employees in focus groups what Total Rewards meant, less than 40% of employees knew the meaning of the term and only 14% of those people could explain it. Many confused Total Rewards with customer reward programs like those offered by airlines.

Employees also don’t see Total Rewards as rewards. This is particularly true for things like base and variable pay and health benefits. For employees, these are table stakes—things their company should provide in exchange for their work.

Problem #2: Total Rewards don’t always reflect care

Employees often don’t find Total Rewards offerings meaningful because they don’t reflect a sense of care for employees. Many employees are skeptical of Total Rewards statements, seeing them as a way to mask low pay or a lack of profit sharing. Total Rewards should reflect the care and culture of an organisation, and a shiny Total Rewards package can’t make up for the lack of a caring culture.

Get more insights into the current state of Total Rewards in our 2025 Global Culture Report.

What employees need from Total Rewards

What employees really want from Total Rewards is to have their needs met, and those needs depend on whether they are surviving or thriving at work. The relevance and effectiveness of Total Rewards depend on the ability to meet these survive and thrive needs. But remember that employees must have their survival needs met before they can start thriving.

Employees who are merely surviving at work feel uncertain about their future—a lack of financial security, health security, and growth opportunities. They may feel anxious and burned out, and their struggles at work may impact their ability to survive outside of work.

When we asked employees to rate the elements of Total Rewards that help them survive at work, we found compensation and recognition were the most important elements for surviving.

Employees who are thriving at work feel secure, appreciated, work in companies with strong cultures, and have opportunities for growth and development. They are hopeful about their future. For these employees, recognition and development are most important in helping them thrive.

Top Offerings that Affect an Employee’s Ability to Survive and Thrive at Work

The modern workplace requires a Total Rewards strategy designed to help employees survive and thrive; one that shows the organisation truly cares about their people and is fully invested in them.

“The reality is that three shifts in the work environment have eroded the impact of the traditional employee value proposition: Employees are people, not just workers; work is a subset of life, not separate from it; and value comes through feelings, not just features.”
—Carolina Valencia, Vice President, Gartner

Employee recognition is a bridge from survive to thrive

Employees in both survive and thrive states need recognition. Not all organisations can increase compensation or add benefits each year. But every organisation can practice genuine recognition. Recognition acts as a bridge to help all employees feel seen and valued.

Odds of employees thriving at work increase 15x when organisations integrate recognition and make it part of the everyday employee experience.

Recognition provides immediate security to employees who are surviving

Having a culture of recognition shows employees that they are doing great work, are a valued part of their company, and their organisation appreciates them. This is crucial to employees in survival mode because when they are feeling overworked, unsupported, and burned out, they need to feel they are important and their work matters.

The weight of a surviving experience can be lightened by frequent, meaningful recognition. Surviving employees whose organisations have integrated recognition programs see:

• 86% increased probability of engagement
• 111% increased probability of a strong sense of opportunity
• 131% increased probability of a strong sense of success

See how Norton Healthcare improved burnout and wellbeing with recognition.

Recognition provides a sense of long-term security, inclusion, and belonging

For thriving employees, recognition demonstrates that employees belong, and the company sees they are contributing to the organisation’s long-term success.

When recognition is given to employees who are already thriving, it improves odds of:

• Staying with the organisation (11x)
• Promoting the organisation as a great place to work (16x)
• Doing great work (24x)
• Satisfaction with the employee experience (31x)

Learn how ICF uses recognition to help their employees belong and thrive at work.

4 ways to use recognition to help employees survive and thrive

Ensure recognition is integrated into your organisational culture to help employees survive and thrive. Integrated recognition is frequent, specific, genuine, and a daily part of the employee experience.

1. Provide ample tools to recognise a variety of reasons, accomplishments, and milestones.

‍When employees feel appreciated for not just what they do but who they are, it instills a sense of belonging and helps them feel valued and secure. Have recognition tools easily available to celebrate all types of accomplishments and contributions, including:

• Extra effort
• Above and beyond work
• Team and company successes
• Corporate or personal milestones
• Department-specific goals
• Initiatives like safety or wellbeing
• Life events

Having a formal program for recognition, using a solution like the Culture Cloud® platform, makes it easier for employees to access and use the tools.

Integrating recognition into your employees’ flow of work—the existing tools, programs, and systems employees use every day—also makes recognition easier.

Southwest Airlines’ Swag Program enables them to recognise employees early and often throughout their employee journey, whether it’s for helping out a colleague, embodying the company values, an extraordinary act of service, or a career milestone. They have a 97% engagement rate with the platform, and recognition helps employees survive and thrive at work, whether they are on the ground or in the air.

2. Ensure all employees receive recognition from peers and leaders often.‍

To feel truly appreciated, employees should be recognized often, ideally every other week. Provide all employees access and enablement to give and receive recognition, no matter what level, role, or location they work.

For those employees who may not have access to computers or flexibility at work, provide on-the-spot tools they can use to recognise and be recognized with. Examples include:

• Swag boxes and corporate swag
• Physical reward cards with points
• Access to recognition platforms via a mobile app
• Shared recognition kiosks

Reporting tools, like the My Team dashboards in Culture Cloud®, can help you find areas where recognition could be increased or improved across your organisation.

Initiatives can bring employees together around common team or company goals, which allows more people to be included in recognition.

3M built an inclusive, unified recognition platform for their employees scattered around the globe. With a consolidated recognition platform, shared kiosks and a mobile app for their production employees, and Initiatives to enable various business units to recognise goals specific to their teams (like quality, safety, wellness, or innovation), 94% of employees have used their recognition tools. On their recent employee survey, employees mentioned recognition as a highlight of their experience.

3. Use storytelling to build belonging.

Sharing stories about what employees have uniquely contributed and how they further the organisation’s purpose builds a sense of appreciation, belonging, and immediate and future security. Public recognition and sharing recognition stories across the organisation help everyone see the great work an employee has done. A social feed makes recognition more visible and awards like Careerscapes^TM and custom trophies serve as a visual reminder of those stories and accomplishments.

To strengthen their culture of courage, care, and inclusion, Treasury Wine Estates leveraged celebrating employee careers to instill a sense of belonging and connection. At career milestones employees receive a physical Yearbook, which tells the story of an employee’s career with comments and photos from peers and leaders, as well as a beautiful TWE-branded numeral (featuring images from their wineries and cellars) tying their accomplishments to the company’s purpose and success. This has resulted in a 26% improvement in employee engagement scores.

4. Evolve recognition as you evolve your Total Rewards strategy.

Like with Total Rewards, your recognition solutions should evolve with employee needs and expectations. Be sure to continually monitor your recognition efforts and measure impact and ROI. Build in regular check-ins to see where you can grow and expand your recognition approach with new recognition tools and opportunities to be recognized.

Our Culture By Design® approach can help you discover potential opportunities for improvement, plan strategy and experiences, activate employees and recognition champions, and optimise your recognition efforts.

AAA – The Auto Club Group is always adapting to meet their members’ and employees’ needs. They continually adjust and rebrand their recognition platform based on evolving company goals and employee needs. Their Celebrate as One recognition platform improves accessibility, inclusivity, and alignment of recognition to their organisational strategy. This ensures all employees feel appreciated at ACG and has led them to being recognized as a top place to work.

“We have the opportunity, especially with everything that is happening in the world today, to step up our game and value the wonderful people we have here at ACG. What we are seeing right now is that companies who truly value their people are going to not just survive but thrive.”
‍—Senior Executive, The Auto Club Group  

The key to retaining employees is to help them feel seen. An effective recognition and rewards program enables all employees to feel seen, valued, and appreciated every day.

O.C. Tanner is the global leader in software and services that improve workplace culture through meaningful employee recognition experiences. Learn how Culture Cloud® can help your employees thrive at work.