Traditional Compensation Packages Don’t Work for Millennials
Traditional Compensation Packages Don’t Work For Millennials By Carson Leith
Millennials believe that business success should be measured by more than profits (92% agree with this statement, according to Deloitte research). They’re also of the opinion that businesses have the greatest power to solve societal problems (52%, compared to 35% of business leaders). This generation is committed to making an impact, and they want employers who are on board for the adventure.
So what does this mean for your organization? Your baby boomers want the paycheck and standard benefits. Millennials want that same paycheck, but they need the benefits to reflect the new realities. Here’s what you need to know about structuring compensation packages for today’s young workers.
Yes, Millennials Are Thinking About Retirement
Throw out any pre-conceived notions that Millennials are bad with money. Time has found that working Millennials begin retirement savings at just 22 years old, compared to baby boomers who started saving at the age of 35. Benefits need to include robust 401(k) plans, not just foosball tables and free lunches.
Keep An Eye On the Competition
According to SAP, competitive salary comes in as a top priority for slightly more Millennials (68%) than older generations (64%). Today’s workers have plenty of resources like Glassdoor to compare salary offerings, so “competitive” has to actually mean competitive. Salaries must reflect industry-wide numbers, not just local geography, because Millennials are comparing their paychecks against peers nationally.
Focus on Responsibility and Advancement
Millennials place a stronger emphasis on opportunities to learn new skills (72%) and advance their careers (72%) than baby boomers do (58% and 48%, respectively), according to Payscale research. When a young job candidate looks at your compensation package, no sum of money can overcome a major deficiency in these areas. When recruiting, emphasize the value of things like paid certification classes, performance bonuses, and transparent access to senior management.
Benefits for Dependents Hold Less Appeal
Government data shows that the average age of the first time parent has increased from 21 in 1970 to 25.7 today (rising from 25.1 as recently as 2008). Workers who start families later in life are less likely to value compensation packages centered around benefits for dependents. Skew your benefits options to include other appealing items alongside the family-friendly plans.
Involve Your Team In Your Giving
An HNI survey of Millennials found that 51% want employers who provide the means for community involvement. You can leverage that desire within compensation packages by providing extra PTO to be used for volunteer days, or by allowing employees to suggest charities they are passionate about when you’re deciding how to give.
Relax A Little
Companies ranging from insurance firms to Netflix have implemented unlimited vacation time policies, an idea that has made headlines and which confuses many baby boomers. Millennials value such freedom and flexibility when you offer it — and the trust fostered by allowing self-direction is invaluable. When you’re structuring your compensation packages, consider shifting the value toward this freedom rather than concentrating it on pure financial benefits.
The differences between generations are significant — and understanding them is essential in order toattract and retain young talent. Have you seen inventive ways to include culture-driven perks in new compensation packages?