Only 1 in 4 employers clearly explain their reward program strategy, report finds
Summary
A Korn Ferry report finds only 24% of organisations clearly explain the “what, why and how” of their reward programmes. Most employers either do not communicate details or provide only high-level philosophy statements. With pay-transparency rules accelerating worldwide, 65% of surveyed organisations see transparency as a major driver of change in the next one to two years. The report also flags rising interest in skills- and performance-based pay over the next 3–5 years, limited use of employee input when designing rewards, and cautious adoption of AI tools for pay equity and transparency.
Key Points
- Only 24% of employers clearly explain purpose and design of their reward programmes.
- 76% either give no detail or only share broad philosophy statements about rewards.
- 65% of organisations expect pay transparency to drive change within one to two years.
- Skills-based and performance-based pay models are expected to grow in the next 3–5 years.
- Only around half of companies incorporate employee input into reward strategy; common methods are surveys and informal manager feedback.
- AI could help with transparency and pay equity, but HR readiness and employee trust remain limited.
- The report warns current common practices may not be fit for future regulatory and talent-market challenges.
Context and relevance
This matters for HR leaders, compensation teams and business managers because unclear reward communication undermines trust and engagement just as regulators push for greater pay transparency. Firms sticking to broad statements rather than explaining pay decisions risk compliance issues and weakening their employer brand when skills-based pay and targeted rewards are becoming more important. The findings align with wider trends: many organisations plan flat pay increases and are still focused on compliance rather than strategic use of transparency to attract and retain talent.
Why should I read this?
Quick and useful — if you work in pay, rewards or talent strategy, this is a five-minute reality check: most employers aren’t explaining pay decisions clearly, but regulation and market pressure mean you’ll need to. Saves you the legwork — here’s the bit you actually need to worry about.