The Evolving Compensation Landscape: What Employees Want and How Employers Can Respond

Guest PostsArtificial IntelligenceEmployee Engagement

By Gudrun Thorgeirsdottir On Mar 13, 2025

By Gudrun Thorgeirsdottir, Chief Business Development Officer for Pay Equity at beqom

As workplace dynamics continue to evolve, compensation remains a critical factor in attracting, retaining, and engaging top talent. But beyond salary figures, employees are looking for something more—clarity, transparency, and fairness in how their pay is determined.

beqom’s 2025 Compensation and Culture Report, based on a survey of over 1,800 employees in the US and UK, reveals a striking disconnect between employees’ perceptions of their compensation and employers’ efforts to communicate pay structures. Many workers don’t fully understand their total compensation package, feel uncertain about pay transparency, and believe performance evaluations lack objectivity. These factors can erode trust, lower engagement, and increase turnover risk.

For HR and compensation leaders, this presents both a challenge and an opportunity: those who proactively confront these concerns—which fortunately can be addressed by leveraging current compensation and HR technology—will be better positioned to retain talent, foster loyalty, and strengthen their employer brand in 2025 and beyond.

Employees Don’t Fully Understand Their Pay—And It’s Hurting Engagement

Despite organizations investing in total rewards strategies, many employees still don’t have a clear picture of their full compensation package. The survey found that:

62% of employees said they don’t know how their total compensation is calculated.
39% believe their company’s pay rates are below industry norms.
47% identified wage stagnation as a key concern.

This disconnect has serious implications. When employees don’t understand their earnings—including base pay, benefits, bonuses, and perks—they are more likely to perceive their compensation as insufficient, even when it may be competitive. This can lead to dissatisfaction, disengagement, and increased turnover.

Communication is key, and technology can bridge this gap by providing employees with compensation clarity, such as personalized, real-time visibility into their total compensation through digital total rewards statements, self-service dashboards, and AI-driven insights. Automating compensation communication not only increases understanding but also ensures that employees see the full value of their rewards beyond base salary.

Pay Transparency: An Employer Differentiator in 2025

Employees increasingly expect transparency in pay structures, and companies that provide it can build trust and differentiate themselves in a competitive job market. Yet, many organizations still fall short, as nearly half (46%) of employees cited a lack of pay transparency as a top concern. Additionally, in the US, 58% of employees say their employer does not share gender pay gap information.

With new pay transparency laws emerging across multiple regions, companies need to be proactive. Transparency isn’t just about compliance—it’s about showing employees that compensation decisions are fair and data-driven.

HR and compensation technology can play a vital role by enabling organizations to:

Clearly define and communicate salary ranges and pay policies through employee-facing portals.
Conduct pay equity audits using data analytics to proactively identify and address disparities.
Empower managers with data-driven insights to make better, more informed pay discussions for employees.

A culture of pay transparency not only helps employees feel confident in their compensation but also reduces the perception of bias and inequity, improving retention and engagement.

Subjective Performance Reviews Undermine Trust in Pay Decisions

Performance evaluations play a key role in determining promotions and salary adjustments, but many employees question their fairness. The survey found that 56% of respondents believe their performance reviews are subjective, based on managers’ opinions rather than objective data.

When employees feel their career growth is influenced by subjectivity rather than measurable performance, they are more likely to become disengaged or seek opportunities elsewhere.

To improve trust and objectivity in performance evaluations, HR leaders can take several steps. For example, they can implement performance management tools that align employee contributions with clear, quantifiable metrics. Additionally, using automated data tracking, feedback tools, and performance dashboards helps ensure consistent evaluation criteria. HR leaders can also rain managers with real-time coaching tools to provide objective, data-backed feedback that supports fair pay decisions.

By reducing subjectivity, employers can ensure that pay decisions feel fair, predictable, and performance-based, reinforcing trust and motivation.

Key Takeaways for HR Leaders

The 2025 workplace is shaped by employee expectations for transparency, clarity, and fairness in compensation. Organizations that act on these insights—leveraging HR and compensation technology—will be better positioned to enhance employee engagement, reduce turnover, and build a reputation as a fair and equitable employer.

To address these challenges, companies should:

Provide clarity to employees about their total compensation package through digital compensation dashboards, self-service tools, and real-time total rewards statements.
Strengthen pay transparency initiatives by using compensation analytics to identify gaps and proactively share insights with employees.
Improve performance review processes by making them data-driven and reducing subjectivity through performance evaluation tools.

By proactively adopting technology-driven solutions, employers can turn compensation into a strategic advantage—one that drives retention, trust, and long-term success.

[To share your insights with us, please write to psen@itechseries.com ]