Executive Summary
Following a year of cautious hiring and retention-focused pay structures in 2024, organisations are entering 2025 with a renewed focus on pay transparency, personalised reward strategies, and technology-driven compensation frameworks. While economic uncertainty led to restrained salary increases and an emphasis on non-monetary rewards in 2024, businesses are now shifting towards more dynamic and data-led approaches to total rewards.
Across Commerce & Industry, Financial Services, and Professional Services, companies are adapting their strategies to enhance engagement, drive retention, and ensure compliance with evolving regulations. This paper explores how the Reward market is evolving in 2025, building on trends seen in 2024 and highlighting the key areas of transformation.
The Evolution of Reward in 2025
From Stability to Strategy: The Shift from 2024 to 2025
In 2024, businesses prioritised stability, focusing on retention strategies and cautious compensation adjustments. Pay freezes and fixed-term contracts were common, with many organisations delaying large-scale reward transformations. However, 2025 is expected to bring a more strategic and proactive approach to Reward, driven by regulatory changes, increased competition for talent, and advances in HR technology.
Key differences between 2024 and 2025 include:
- Greater investment in pay transparency – Organisations are moving beyond compliance-driven transparency to proactively communicate reward structures. Research shows that 73% of employees are more likely to trust employers who are open about pay policies.
- Customisation of total rewards – Businesses are tailoring benefits and incentives based on workforce demographics and preferences. A recent survey found that 62% of employees prioritise flexible benefits over higher base salaries.
- Integration of advanced analytics – The use of AI and real-time data for benchmarking, pay modelling, and workforce planning is expanding. HR technology adoption in compensation planning has increased by 28% year-on-year.
- Renewed focus on long-term incentive plans (LTIPs) – Particularly in Financial Services, performance-linked compensation structures are becoming more refined. 80% of financial firms now incorporate ESG (Environmental, Social, and Governance) metrics into executive LTIPs.
While these trends apply broadly, each sector faces distinct challenges and opportunities in 2025:
Commerce & Industry: Agile, Data-Driven Reward Strategies
Industries such as retail, FMCG, manufacturing, energy, and technology are embracing more agile and data-led reward strategies. With cost pressures persisting, companies are embedding cost-of-living considerations into pay structures while increasing the use of personalised benefits and flexible compensation models.
Key 2025 Trends:
- Customised total rewards frameworks – Businesses are leveraging data to tailor benefits and incentives.
- AI-powered compensation benchmarking – Real-time market insights are driving competitive pay structures.
- Automation in payroll and benefits – Investment in HR tech is increasing to improve compliance and efficiency.
- Non-monetary rewards on the rise – Career development, well-being initiatives, and hybrid work benefits are playing a bigger role.
Comparison to 2024: In 2024, reward strategies were largely reactive, focusing on retaining employees without significant structural changes. In 2025, organisations are taking a more forward-thinking approach, using technology and analytics to design reward models that are both competitive and cost-efficient. Market data shows that 68% of C&I firms are increasing investment in HR tech to streamline compensation processes.
Financial Services: Governance, Performance-Based Pay, and Compliance
In banking, asset management, and insurance, regulatory oversight and governance remain top priorities. However, while 2024 saw firms cautiously adjusting salaries and bonuses, 2025 is about refining structured compensation frameworks, compliance-led pay policies, and performance-driven incentives.
Key 2025 Trends:
- Stronger pay governance and transparency – Compliance with regulatory requirements is driving standardised pay frameworks.
- Refined long-term incentive plans (LTIPs) – Bonuses are being adjusted to encourage retention and performance.
- Location-based salary adjustments – Hybrid work is prompting firms to reassess geographical pay differentials.
- DEI-linked compensation strategies – Firms are integrating diversity and inclusion into pay structures.
Comparison to 2024: Last year, financial services firms focused on stability, with minimal changes to pay structures beyond compliance-driven updates. In 2025, businesses are proactively refining reward strategies to remain competitive, particularly in talent-scarce areas. Recent reports indicate that 41% of financial firms are restructuring their bonus schemes to reflect new performance metrics.
Professional Services: Competitive Benchmarking and Total Reward Innovation
In law, consulting, accountancy, and real estate, firms are investing heavily in structured compensation strategies to retain top talent. While 2024 was marked by retention-focused salary adjustments, 2025 sees firms using data-driven reward decisions and career-linked incentives to differentiate themselves in the market.
Key 2025 Trends:
- Greater focus on structured pay banding – Organisations are refining salary frameworks to enhance clarity and retention.
- Market benchmarking to attract top talent – Firms are leveraging external compensation data more aggressively.
- Total reward flexibility – Enhanced leave policies, professional development budgets, and well-being benefits are being prioritised.
- Tech-enabled reward planning – HR analytics tools are optimising pay structures and workforce planning.
Comparison to 2024: While 2024 saw cautious salary adjustments and a focus on retention, 2025 is about strategic differentiation. Firms are using market insights and technology to stay ahead in a competitive talent market. According to industry data, 55% of professional services firms have increased investment in flexible benefits programmes.
Conclusion
The Reward market in 2025 is moving from cautious, retention-driven strategies to proactive, technology-led transformation. Across Commerce & Industry, Financial Services, and Professional Services, businesses are embedding pay transparency, analytics-driven decision-making, and flexible compensation models to remain competitive.
For Reward professionals, success in 2025 will depend on:
- Expertise in compensation analytics and benchmarking.
- Strong understanding of regulatory compliance and pay transparency.
- The ability to design personalised, flexible total rewards packages.
- Proficiency in HR technology and automation tools.
As businesses adapt to new economic and workforce challenges, Reward professionals with data-driven insights, strategic thinking, and compliance expertise will play a crucial role in shaping the future of total rewards. Industry surveys indicate that 72% of HR leaders are prioritising digital transformation in compensation planning for 2025.
Victoria Terrington
Director – Specialist Markets
References
- Deloitte Global Human Capital Trends, 2024.
- PwC Annual Compensation Review, 2024; Chartered Institute of Personnel and Development (CIPD) Research Reports, 2024/2025.
- Mercer Compensation Planning Insights, 2025; Willis Towers Watson Rewards Survey, 2025; Industry-specific market research and HR technology adoption studies.
This white paper has been informed by comprehensive research from leading consultancies and industry experts, ensuring that the analysis reflects current trends and future expectations within the Reward market.