Today, Gen Z and Millennial employees make up 46 percent of the workforce. This percentage will only grow as Baby Boomers retire at an accelerated rate. According to Pew Research Center, almost 29 million boomers retired in 2020, up more than 3 million from 2019.
Each new generation that enters the workplace brings its own set of values, needs and ambitions. It’s because of this that there are negative stereotypes and myths that develop around younger generations (typically some version of “they’re lazy and entitled”) when really those sentiments are a byproduct of a failure to adjust to fresh perspectives and ideals.
But stereotypes or not, many companies spent the last decade making their workplaces and cultures more attractive for Millennials, and now they must start thinking about how to appeal to Gen Z. Not only that, but what both of these generations value has changed dramatically in response to the COVID-19 pandemic and sociopolitical upheaval of 2020, and employers must take notice.
These two generations aren’t more valuable or “better” than those that came before them. They will however become the dominate employee base in the coming years and businesses that want to be around for the long haul have to recognize and prepare for this.
Understanding what motivates Generations Y and Z is absolutely essential to future-proofing your workforce. With the such a tight tech talent market, these newest generations of professionals are likely to avoid employers whose benefits, work structures and overall ideologies are stuck in the past, and rightfully so.
Generation Z is the first to be born in the internet age. They’ve spent their entire lives inundated with screen time at home, school and work. The always-online world they grew up in has influenced their media consumption habits and made them savvy participants in media creation.
Our 2022 Most Wanted Benefits report identified this top 10 list of total rewards for Gen Z:
Members of Gen Z are less likely than any other age group to rate their emotional health as “very good,” so it’s no surprise that they value mental health benefits to such a high degree.
Employers seeking to secure Gen Z talent and build a pipeline of future leaders from this cohort would be wise to invest in burnout benefits.
Burnout benefits: Benefits that help curb stress, prevent burnout, and reinforce greater overall employee wellness
Investing in mental health resources and burnout benefits should go beyond getting a subscription to a wellness app. Employers should take a holistic view of burnout and consider offering mental health days away from work and greater flexibility within the workplace, as well as building a culture of trust where stress and burnout can be openly discussed.
Notably, There also seems to be a disconnect between the mental health investments employers think they’re making versus what employees actually see. While 82 percent of employers said their workforce has more access to mental health resources than in previous years, only 50 percent of workers agree. Nearly 80 percent of employers said mental health had improved thanks to the company’s resources, compared to only 35 percent of workers.
Gen Z ranked remote work lower than any other age group. These younger workers only have a few years of work experience and some have been in a remote workplace for their entire careers so far. So they haven’t experienced the advantages that an office can provide for workplace community, forming relationships with mentors and visibility of their work.
This generation also craves human connection and a sense of direction in the workplace, but many companies have failed to provide this in a remote setting. Bringing the cultural aspects of in-office life into remote and hybrid models is as important as ever. Employers might also consider offering in-person learning opportunities, which would likely be greeted with enthusiasm by employees in their twenties. By keeping work engaging, this type of learning and development can even be considered a type of burnout benefit!
While financial-assistance rewards are important to Gen Z, they value them the least compared to all older generations. In place of highlighting financial benefits, employers can implement and showcase other workplace elements that Gen Z values like work-life balance, flexible schedules and doing mission-driven work that aligns with their core beliefs.
Millennials have been in the workforce for some time now and many employers built their current workplaces with them in mind. In fact, “start-up culture” as we know it is largely built around Millennial values.
However, when the pandemic shook the world, professionals in this demographic reset their priorities. It may be time for employers to revisit how they’re serving both Gen Y.
As evidenced here, Millennials post-2020 (let’s call them “Millennials 2.0”) have a lot in common with Gen Z. Our 2022 Benefits report found that, compared to all older generations, Gen Z and Millennials are the least likely to prioritize benefits around: remote/hybrid work, retirement saving, and insurance. However, they’re the most likely to value mental health benefits and resources that help them save money in the short term, like free food and tuition reimbursement.
There are some small but noteworthy differences between Gen Y and Z. First, more experienced Millennials place a higher value on retirement planning and contributions than their younger peers. Additionally, Gen Y professionals report a stronger interest in remote work and a greater desire for flexibility.
When it comes to total rewards, Millennials and Gen Z are more similar than they are different. For example, employees across both generations are more likely to feel burned out than the rest of the workforce, so burnout benefits matter a lot to them. Part of this includes the flexibility to work within their ideal setup, whether that be remote or in-person some or all of the time.
Financial wellness benefits also matter a great deal but those benefits are typically more aligned with short-term rather than long-term goals like retirement. However, those sentiments start to reverse the older these professionals get.
The rewards listed here are the offerings that employers need to prepare to invest in, if they haven’t already, if they hope to secure Gen Y and Z talent moving forward.