Introduction

Foreword

The recent pace of change in workplace cultures has been dramatic, to say the least. Yet, in the eye of the storm, leaders may finally have a chance to pause, take a breath, and refine their relationship with employees. The question is how. And this report has an answer: Start by putting care at the center of strategies to create environments where everyone can thrive. In speaking with HR professionals, we found this starts with reorienting Total Rewards. While many feel trapped in a cycle of expanding benefits that fail to satisfy, our research suggests the failure, in most cases, isn’t because programs offer too little or too much. Instead, it’s because the offerings simply don’t fit people’s underlying needs.

This year, we propose a powerful framework to better understand and address the evolving essentials of Total Rewards. It hinges on the differences between—and within—two categories of functioning at work: surviving and thriving. Unfortunately, nearly a third of workers say they struggle to hold their lives together. But when the basic needs for adequate compensation, physical and mental healthcare, and a sense of belonging in the workplace are met, employees feel empowered and motivated to seek opportunities for growth and development. And when organizations provide avenues for skill building and career advancement, coupled with a culture that values flexibility and shows appreciation, the likelihood of a thriving workforce surges.

Our report also illuminates the profound impact of mental health and emotional intelligence (EQ) on employees’ ability to thrive. Employers that prioritize mental wellbeing can buffer against burnout and increase resilience, while those with high EQ reap the benefits of greater trust among their people. To be sure, the advantages of thriving employees extend far beyond individual satisfaction. They include improved retention and a deeper sense of purpose and belonging that drive organizational success.

One final theme focuses on the inevitable job transitions people navigate throughout their careers, and how positive onboarding experiences that foster connection, community, and development can be the difference between long-term success and a lot of empty seats.

For 2025, the O.C. Tanner Institute examined the experiences of tens of thousands of employees, leaders, HR practitioners, and business executives across the world. Our goal: to equip leaders in HR and across the organization with the necessary insights and strategies to meet today’s most immediate and consequential challenges head-on.

The foremost challenge now is closing the distance between organizational offerings and employee needs. There’s no better time to make Total Rewards more effective to ensure both the individual and the business can thrive.

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Caring for employees has always been a primary aim of human resources. And over the past 20 years, that goal has taken shape in the concept called Total Rewards. Born out of the best intentions, these regular statements and communications are supposed to help workers see the full investment organizations make in them—compensation, benefits, career development, recognition, and various perks—all in one compelling package. A transparent strategy made in good faith to help retain and recruit talent. Not surprisingly, employees have broad expectations, and faced with the increasing costs and complexities of living, they are looking for always-on benefits to help meet planned and unexpected challenges.

How have Total Rewards teams responded? Many have curated a deep catalog of niche offerings. There are now thousands of solutions designed to help organizations connect their people to resources for spouses, children, pets, homes, paid time off, mental wellness, financial challenges, social health, retirement, education expenses, etc.

Yet most employees don’t see these combined offerings in the light organizations have hoped—as the sum of ways their employer cares about them. In fact, one of the biggest hurdles with Total Rewards is that most employees don’t understand the name. According to our research, less than 40% of workers know the meaning of the term, “Total Rewards,” and only 14% of those people can explain it. Some confuse it with a customer loyalty program.

The research also shows it doesn’t matter how robust a benefits package is if employees don’t believe their organization has their best interest at heart. Our focus groups and surveys repeatedly indicate that a buffet of benefits will backfire if it doesn’t reflect an authentic concern for people’s wellbeing.

Here again, the term itself may help explain the problem because many employees wouldn’t call every element of Total Rewards a reward. As one focus group participant put it, “A lot of people don’t feel like it’s a reward to get your compensation and benefits.” In other words, much of Total Rewards is the minimum people expect for their employment. Likewise, Total Rewards statements shared in our focus groups were rarely assessed holistically. Instead, the recipients saw them with cynicism and a general sense that they’re designed to distract from low pay or a lack of company profit sharing.

So, what’s missing from most Total Rewards strategies? Additional novel and imaginative benefits? No. What’s missing is the communication of care.

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“We need a clear, consistent, and differentiated Total Rewards strategy and experience to keep talent engaged.”
—Harish Bubna, Head of Compensation, Intuit India

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Surviving vs. Thriving

The relevance and effectiveness of Total Rewards at the personal level depend on how employees answer one question: Am I surviving or am I thriving?

People who are merely surviving feel anxious, financially uncertain, doubtful of growth opportunities, and pessimistic about the future. Their struggles at work impact their ability to survive outside of work. As an employee in one focus group said, “Not surviving at work will affect everything to a point where it’s scary.”

Contrast that with people who are thriving. They feel their organization cares about their mental health, they work in a cooperative workplace, and they have opportunities for growth and mentorship along a clearly defined career advancement path. They have hope.

When employees do not feel they’re surviving, their unmet basic needs shape their perception of Total Rewards offerings—and they focus exclusively on the offerings that provide financial and physical stability. Only after employees believe they’re surviving will they think about thriving or be receptive to other Total Rewards offerings.

To better understand the effect of Total Rewards on people’s capacity to survive and/or thrive at work, we asked employees to rate the elements of Total Rewards that influence their perspective. We found compensation and recognition were essential to surviving, while recognition and development help employees thrive.

The modern workplace requires a Total Rewards strategy designed to help employees survive and thrive. Rather than provide an exhaustive list of offerings, organizations should prioritize meeting employees’ basic needs, and the goal of Total Rewards should be to demonstrate how the organization cares and wants everyone to thrive at work.

Categorically speaking, offerings like competitive compensation and health benefits are considered basic, help provide financial stability, and meet survival needs. Offerings such as career development and skill building move beyond the required to provide long-term growth and satisfy other criteria to thrive. Interestingly, recognition is a practice that provides a bridge to help employees feel seen and valued at any stage of surviving or thriving. Keeping these distinctions top of mind helps Total Rewards leaders prioritize care at the core of their compensation and benefits mix.

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“Traditional methods of rewards and recognition are incompetent to drive a holistic strategy aimed at enhancing personal lives and invigorating employees’ sense of purpose.”
—Manavi Pathak, Head of Learning and Organizational Development, Samsung Research

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Rewards That Meet Needs Help Employees Thrive

Employees who are thriving are:

• 84% less likely to burn out
• 30% less likely to leave the organization
• 12x more likely to feel high engagement
• 7x more likely to do great work
  

Total Rewards can play a crucial part in an employee’s ability to thrive. As the table below shows, employees who are satisfied with their organization’s offerings are less likely to suffer from mental health challenges. They’re also more likely to feel engaged and want to stay.

The approach to Total Rewards must evolve to meet employees’ needs and ensure that they can survive and thrive. Our report this year explores each of these two states more deeply and shares insights and best practices to help you assemble, communicate, and support the right mix of offerings so employees can progress—regardless of where they are now.

Of course, it also helps to see where the key metrics of workplace culture currently stand.

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Talent Magnet™ Areas

Each year we measure changes in the six core elements of workplace culture that together determine employee decisions to join, engage with, and remain at any place of work. We call them Talent Magnets because of their power to attract and connect people to their teams and organizations.

Notably, each of our Talent Magnet scores are the same as they were last year with consistent impacts on culture measures. Across all geographic regions, metrics such as employee engagement, job satisfaction, job fulfillment, and satisfaction with organizational culture all remain virtually unchanged.

This indicates that, collectively, organizations are neither improving nor declining in key areas important to creating healthy organizational cultures and positive employee experiences. The absence of movement signals that, on average, little has changed in how employees feel about their organizations and jobs.

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1. Purpose

An organization’s reason for being besides profits. It’s the difference it makes in the world, why the company exists. Employees need to feel connected to the purpose and understand how their jobs contribute to it. Once they do, their work takes on meaning. Organizations should clearly articulate the connection between work and purpose.

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2. Opportunity

The chance to develop new skills, contribute to meaningful work, feel challenged, have a voice, and grow. Opportunity is more than the lure of promotions and pay increases. It’s about preparing and empowering employees to make decisions, inviting them to the table, and offering them projects that will expand their skills and relationships.

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3. Success

The thrill of accomplishment, innovation, breaking barriers, playing on a winning team, and experiencing victories. Employees must find success at the individual, team, and organizational levels, and it should be nurtured and publicly celebrated.

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4. Appreciation

Feeling valued for one’s contributions and being recognized for one’s worth. Appreciation is essential to employees—people need to know their leaders and peers notice and are grateful for their efforts and contributions. Appreciation is most effective when it’s delivered in timely, personal, and meaningful ways.

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5. Wellbeing

Caring about the employee as a whole—their physical, emotional, social, and financial health. Wellbeing ensures employees can be their strongest, most capable, most authentic selves at work. A comprehensive approach to wellbeing requires leaders to create an environment of inclusivity, life balance, and connection.

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6. Leadership

The mentoring, coaching, inspiring, and facilitating that allow individuals, teams, and, ultimately, organizations to succeed. Great leaders co-create a shared purpose for their teams and empower their employees to do great work. As the most influential of the six Talent Magnets, leadership cultivates the other five.

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Opportunities for organizations in 2025

Based on our research, we see five significant ways organizations can improve their workplace cultures, both within and beyond their Total Rewards programs.

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1. Help employees survive

When people are merely surviving, it’s nearly impossible to be productive, innovate, or even think beyond the next paycheck. By meeting basic needs for financial stability, healthcare, and recognition, companies can ensure all employees get to a place where thriving is possible.

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2. Enable employees to thrive

Providing opportunities for growth, advancement, and recognition communicates the company is invested in long-term success and security for all employees. This builds connection, belonging, and appreciation, and ultimately leads employees to thrive and find fulfillment at work.

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3. Get smart—emotionally

Employees at every level can learn and apply emotional intelligence (EQ) to determine whether others are surviving or thriving and how to help them. Demonstrating EQ behaviors creates strong cultures and high trust where employees can start to thrive.

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4. Aid employees’ mental health

Caring for employees means more than providing physical health benefits—employees need mental health support, too. Destigmatizing mental health issues and removing cultural factors that contribute to them are two good ways to start.

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5. Meet needs in key moments of change

Job transitions are a chance for employers to create transformative experiences for their people and set them up to thrive. Connection, community, growth, and flexibility should be part of every new job.

We hope these opportunities and the specific findings behind them in this report help clarify what it means to care for employees. Just as importantly, we hope they expand our expectations of how generative that care can be.

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“As work constructs are changing, the way organizations structure their pay and rewards programs is also changing. This will play a massive role in deciding whether your organization delivers on its promises.”
—Dr. Scott Cawood, CEO, WorldatWork