Compensation isn’t just a paycheck – it’s a powerful tool to show employees they matter. Get it right, and you boost engagement, loyalty, and culture. Get it wrong, and you risk losing your best people.

To successfully realign compensation and benefits with current employee expectations, HR and business leaders should focus on three key principles:

1. Customisation

Give employees greater control over their benefits. Introduce modular packages that allow for flexibility in areas such as insurance, well-being, and professional development. This is especially impactful in multi-generational workforces, where priorities can vary widely.

2. Clarity

Ensure compensation policies and structures are communicated clearly and consistently. Employees should understand how salary bands are determined, what drives performance bonuses, and what they can expect at different stages of their careers. Transparent communication not only reduces confusion, it also reinforces a culture of fairness and meritocracy. When employees see that rewards are openly discussed and linked to clear criteria, it builds trust and contributes to a more positive and engaged workplace.

3. Connection

Connect compensation and benefits to employee values. Run regular engagement surveys, host focus groups, and analyse exit interview feedback to comprehend what your workforce truly values. Tailor your programmes to reflect those insights.

The Business Case for a People-Centred Compensation Strategy

Why is this alignment so critical today? The APAC region remains one of the most competitive talent markets globally. According to the 2025 ManpowerGroup's Shortage Survey, 77 per cent of organisations in the region report difficulty finding skilled talent.

Furthermore, the cost of turnover is rising. According to Gallup, the cost of replacing an individual employee can range from 50% to 200% of the employee's annual salary. When employees feel undervalued or disconnected from their compensation structure, they are more likely to leave, taking their experience and knowledge with them.

On the other hand, companies that align compensation with what their employees care about tend to report higher engagement and stronger retention, as employees feel that their views are respected and valued. There is a greater sense of belonging when the workplace culture is inclusive and supportive, which in turn helps to improve employer branding. Such companies are more agile, better equipped to navigate change, and ultimately more resilient in an uncertain economy.

Final Thoughts

The definition of compensation is evolving, particularly in the Asia Pacific region. Today’s workforce values flexibility, transparency, and purpose just as much as they value pay.

These factors are important for creating a sense of belonging and help with talent retention, says Iris Lew, DecodeHR’s Senior Engagement Manager.

She adds,

Flexibility means empowering employees to select benefits that align with their needs. Transparency involves communicating clearly compensation philosophies and ensuring that pay decisions are made with a well-defined rationale. Purpose is about helping employees see meaning in their work and ensuring that they understand how their contributions drive the organisation’s overall success.

Organisations that embrace these shifts and modernise their total rewards strategies will be well-positioned to attract top talent, foster loyalty, and build a thriving culture.

At DecodeHR, we work with forward-thinking organisations across the region to design compensation strategies that meet the expectations of today’s workforce while supporting long-term business goals.