What do young people want from a reward package? A sense of purpose
When we develop our reward strategies, who are we developing them for? As new generations enter the workforce, fresh, keen, and different to the one that came before, there’s one thing we’ve learned about generational preferences: we cannot always do what we’ve always done. To appeal to a younger, more progressive workforce, we have to progress ourselves.
Who Is Generation Z?
Generation Z (Gen Z) refers to people born between 1997 and 2012. They are predicted to make up 30% of the US workforce by the year 2030 and are the first generation to be classed as digital natives – sometimes referred to as iGen or ‘zoomers’. They are preceded by Millennials, also known as Gen Y, born between 1981 and 1996.
Gen Y and Z both place high value on having a sense of purpose in the workplace. For Gen Z, this outweighs salary expectations. But why must it be one or the other?
Pay is not an island
We mustn’t look at pay in isolation. While pay is often used to drive certain behaviours and achieve common objectives, we need to have clarity over our organisational purpose. Pay alone won’t solve our problems.
We need to create a real sense of purpose so people feel part of something bigger than just ‘doing their job’. This doesn’t have to come at the expense of a reasonable salary – rather, it's about understanding how pay goes hand-in-hand with having a sense of purpose and belonging in the workplace.
Look to values and culture
Pay may be one of the biggest factors we consider when applying for a new job, but once we have the job, we take it for granted.
A sense of belonging means establishing the right culture: putting values in place that are lived each day, by each employee. Before we develop a pay and reward strategy, we need clarity around the type of culture we’re trying to build.
When it comes to rewarding younger employees, a transparent approach is key. Pay transparency, unlike pay disclosure, is not about publishing salaries. Instead, it’s about giving people context to understand how pay decisions are made.
Ultimately, people want to feel that they're being treated fairly. Gen Z employees respect honesty and are more likely to stick around with a company that is realistic and upfront.
Practice what you preach
Gen Z has grown up in an era of unprecedented protest and unrest. The Black Lives Matter and #MeToo movements have put race and gender equality at the forefront of social consciousness, not to mention living through a pandemic and the looming climate crisis. Gen Z cares about the future and making a difference – and they expect the same from their employers.
Organisations who want to attract and retain people from this shrewd and progressive pool of candidates must demonstrate authenticity and a solid set of values around improving the state of the world – not just profit margins.
Benefits: one size doesn’t fit all
A great pension scheme may be what makes a Baby Boomer tick, but will you get the same enthusiasm from a Gen Z employee? Probably not.
Does your benefits package offer flexibility to employees who have different lifestyles, commitments, hobbies or passions? If it doesn’t, consider asking your employees what they would prefer.
Every generation has a different set of preferences. It’s unlikely that the Baby Boomer or Gen X/Y responses would mirror those of Gen Z. In addition to a sizeable pension offering, why not consider a volunteer day or training scheme?
If we want to attract and retain the best talent, we need to recognise that a one-size-fits-all approach isn’t the way forward. Managing pay in isolation is also not the solution. Increasingly, people want to work in an environment where they identify with the purpose of the organisation and feel a sense of belonging. It doesn’t have to be trade-off and it shouldn’t be – pay, purpose and culture must go hand-in-hand.
In partnership with 3R Strategy
Independent Pay & Reward Consultancy