A 2017 Pew Research Center study highlights how much our workforce has changed. Today, there are 56 million Millennials working or looking for work. The next largest group of workers, Generation X-ers, stands at 53 million, with Baby Boomers checking in at 41 million.
This increasingly diverse workforce means employee compensation and benefits—both direct and indirect—demand more than a one-size-fits-all design. Now, employers need to provide a variety of programs to appeal to the diverse needs and preferences of their workforce.
Jessi Ryan, Total Rewards Practice Lead at IMA Financial Group, In Denver, Colo., says in her ten years of experience many employers see rising employee engagement levels with rewards programs when they incorporate more variety in them to meet diverse employee needs. In her career, Ryan has focused on clients’ recruiting and retention strategies, especially how to uncover total rewards solutions that impact the entire employee experience. Ryan offers how and why employers should incorporate flexible total rewards programs that inject choice for their employees.
Direct compensation – what employers pay their workforce every pay period – has traditionally been considered a primary piece of the total rewards strategy, Ryan says, adding that there are other direct payment modes, such as spot bonuses and incentive pay.
Indirect compensation can include health insurance, paid time off (PTO), family leave, flexible scheduling, and telecommuting.
Today, indirect benefits are increasingly important because we now live in a world where “choice is king,” Ryan says, offering the analogy of how we used to listen to music compared to now: In the past, it meant buying an entire album or CD in order to get favorite songs. Today, you sign up with a streaming service and choose only tracks you want to hear.
“Total rewards, compensation, and benefit offerings are starting to reflect that same type of consumer-driven choice,” adds Ryan.
Life stage-based preferences
Of course, each life stage often triggers different employee needs and wants. While there may be unique needs for certain groups, crossover can occur. Ryan breaks it down:
- Fresh out of school or young professionals: Apart from health insurance, these employees are often seeking career path and growth opportunities, collaboration, flexible scheduling, student loan payoff support, social leagues, and telecommuting.
- Young Families: These employees tend to prefer strong, affordable medical coverage, parental leave, flexible scheduling, daycare assistance, 529 savings plans (for college), family vacation benefits, and discounted voluntary benefit products such as disability and life insurance.
- Empty Nesters: For this group, employee compensation benefits such as medical coverage, sabbaticals, voluntary benefits, retirement benefits and savings plans, and mentoring relationships rank high.
- Employees facing imminent retirement or caring for aging parents or sick family members: Naturally, this group favors a benefits package with elder care and support, retirement savings plans, work flexibility and telecommuting, and job sharing.
Gaining insight and communicating well
No matter what compensation and benefits plan employers end up offering, always communicate with your employees to understand what life stages are driving their preferences, advises Ryan.
“You simply need to ask employees,” she continues. “That’s really my core philosophy. I feel a lot of companies miss that. They seem to try to throw things at the wall to see what sticks. That will fail and could potentially backfire.”
Ryan is a strong proponent of using employee surveys and focus groups to collect valuable data and understand employee preferences. Employee surveys should be formatted to get to a granular level to make it actionable. In other words, shares Ryan, encourage employees to make tradeoffs—or at least look at a variety of attributes—and then select which items are most important and least important.
“Employers can’t offer everything because they are typically working within a budget,” adds Ryan. “They need to make some trade offs. A well-crafted survey will ensure that employees identify the most important and least important total rewards components. And that information can help develop a plan that meets the needs and wants of a diverse, multi-generational workforce.”
Ryan says that once you have created a total rewards plan based on the diverse needs of your workforce, effective communication will ensure that programs resonate across the multi-generational workforce. Targeted communication campaigns to each employee group can alert employees to programs relevant to their life stage.
Ryan echoes this and adds, “Keep up the communication efforts throughout the year. Also, be careful not to inadvertently exclude any group from a particular program, which could trigger an employee backlash.
By listening to employees and applying available data, HR leaders can design programs that meet the needs of a multi-generational workforce. Choice and flexibility boils down to providing options, and making sure your total rewards lineup has enough in it to appeal to each life stage and generation within your workforce, Ryan says.
“Following that strategy not only will boost employee engagement and satisfaction levels, it also will deliver the maximum return on investment and bottom line results for employers,” she concludes.