As today’s HR professionals juggle the disparate lifestyle and financial priorities of the five generations now rubbing shoulders in the same workplace, Katharine Photiou, Head of Workplace Savings at Barclays Corporate & Employer Solutions explores the increasingly pertinent role of employee benefits in attracting and retaining an organisation’s top talent.
When Bob Dylan wrote the climactic final lines of The Times They Are A-Changin’ in 1963; “the order is rapidly fadin', and the first one now will later be last, for the times they are a-changin'”, few could have guessed that these lyrics would be just as relevant today as they were amid the changing political, social and cultural scene of the 1960s.
For the first time in history, today’s workplace now contains up to five different generations working alongside each other. This includes the generation who grew up listening to Dylan (Baby Boomers, born 1945-1960) and the older generation who told them to turn it off (Maturists, pre 1945), as well as the younger generations: from those who saw Dylan turn electric (Generation X, 1961-1980), those who ignored him (Generation Y, born 1981-1995) and to those just entering the workplace now who may not know who he is (Generation Z, born after 1995). Musical tastes aside, the vast differences between the generations in today’s workplace carry significant implications for HR professionals, especially when it comes to creating and tailoring employee benefits packages. For instance, how do you attract, engage, manage and retain talent across the generations through a benefits package when each has their distinct lifestyle, financial and career priorities and needs?
To provide a snapshot of some of these different generational stages, consider that whilst Maturists are leaving the workforce and looking for solutions as to how they will fund their retirement, Generation Y and Generation Z are focusing on today and may not ever expect to get onto the housing ladder (they might not even know when they will be able to move out of their family home). In the middle are Baby Boomers and Generation X, often sandwiched between caring for elderly parents and children, perhaps financially supporting both, and desperately seeking a work-life balance. It is clear that amid this generational tension, a one-size-fits-all employee benefits package is no longer fit for purpose as a talent management tool.
A recent report by Barclays, entitled Talking about my Generation: Exploring the Benefits Engagement Challenge, found that the benefits packages currently on offer to employees have been designed almost exclusively by the Baby Boomer generation – many of whom are soon to retire and who make up just 30 percent of the workforce. As a result, nearly nine out of ten (87 percent) employees from Generation X and Generation Y are being left dissatisfied by their employers’ benefits offerings, believing that they are not sufficiently flexible to meet their financial and personal needs. It is little wonder why they feel this way. If an organisation failed to update its IT software for twenty years, you can imagine its employees would be left rather frustrated. The same problem is arising with employee benefits packages. The report from Barclays, based on quantitative and qualitative research among over 1,200 UK employees, found significant shortcomings in how the priorities, needs and desires of the different generations are being met. The benefits most commonly available to employees were found to be company pension schemes (available to 67 percent of respondents), on-going training and personal development (60 percent), holiday flexibility (52 percent) and flexibility around working hours (45 percent).
However, a picture of what employees actually want revealed a disparity between expectation and reality, especially among the younger generations. Almost two-thirds (65 percent) of Generation Y employees said that they would value financial education or guidance in the workplace (second only to pay and rewards), but 83 percent of all employees surveyed confirmed that this was not available to them. At the same time, almost half (42 percent) of Generation Y employees said that they would value help with a mortgage deposit and a quarter (25 percent) would value access to a personal banker through work, although this was available to just four percent of all respondents. It is clear that this expectation gap is having an impact on organisations in hiring and keeping top talent: more than one in ten Generation X and Generation Y employees (15 percent and 12 percent respectively) have considered moving to an employer offering better benefits packages in the last 12 months.
Furthermore, there is evidence that benefits act as a driver for attracting talent, as 61 percent of all employees claim that the availability of a comprehensive benefits package is a key factor when looking for a new job. Of particular concern for employers and HR professionals who are not reviewing or adapting their benefits packages is the fact that recent statistics suggest that 59 percent of workers are either contemplating changing jobs or are in the process of submitting applications. These are the highest figures yet recorded. As HR professionals are now coming under more pressure than ever before to boost employee engagement and retain top talent, providing a more generationally-appropriate benefits package, as well as finding the best ways to communicate with a multigenerational workforce, could play a very important part in this.
So, who are the generations, what do they want and how can you reach them? Maturists (pre-1945) now make up just three percent of the workforce. Having a dedicated ‘job for life’ attitude throughout their career, their focus now is on transitioning to the next stage of life and retiring. Information and guidance on retirement solutions, delivered face-to-face or by formal letter is the best approach. Emails and Intranet newsletters are likely to go unread. Baby Boomers (1945 – 1960) once the largest generation in history, now make up 33 percent of the UK workforce and are likely to hold senior positions in their organisations. Although they are largely satisfied with their employee benefits packages (after all, the typical package was designed by Baby Boomers for Baby Boomers) what they now need in terms of engagement is on-going guidance and information about what is already available to them and what they may need to start paying more attention to, such as share options and health services. This is a flexible generation in terms of communications – they may have adapted to the digital world and function well online and via email, but they also appreciate face-to-face contact and bespoke seminars.
Generation X (1961 – 1980) is now the biggest generation in the workplace, making up 35 percent of the workforce. Most likely to be middle-managers, they tend to have complicated family structures and are typically time-poor and in need of better work-life balance. Options around flexible working, financial health checks and childcare arrangements are their most valued benefits, and they respond well to anything that makes their hectic lives easier. Whilst they may be too pressed to attend seminars or sit down in meetings, quick lunchtime briefings and advice from personal bankers in the workplace have been found to be popular among this group.
Generation Y (1981 – 1995) is the emerging generation that is shaking up the employee engagement handbook for HR professionals. Currently standing at 29 percent of the UK workforce and growing, Generation Y is seemingly much more demanding than previous generations, or is it just that the system is in need of modernisation? Although they are largely entrepreneurial and independent, they are likely to be confused about their financial options and would benefit from work-based financial guidance and information, as well as advice on mortgage deposits and financial products from personal bankers. In terms of communicating with this generation, despite being ‘digital natives’, having grown up with computers, they are now ‘digitally detoxed’ and want meaningful, straight-talking face-to-face contact.
Generation Z (after 1995) is currently employed in either part-time jobs or in apprenticeships, but it is a growing cohort and one that should be firmly on employers’ and HR professionals’ radars. They will be a highly self-sufficient generation, focused on multi-tasking and an interchangeable and work and home life. They will see themselves working ‘with’ organisations, rather than ‘for’ them, which puts employee engagement and benefits in a wholly different, more intense light. This generation will require a revolution in employee benefits, flexible, tailored and centred on them, in order to be truly satisfied in the workplace. With every day that passes, and with Generation Z beginning to enter the workplace, the current situation is only set to deteriorate. Generation Y is largely unsatisfied with a benefits system which has become defunct for many. With a high level of importance placed on employee benefits by the majority of job-seekers, companies who are willing to modernise their packages to suit the needs of Generations X and Y will be best placed to attract the top talent. And clearly, with so many in Generation X and Y considering pastures new, companies who are sluggish in realising the need to adapt could face a talent exodus as their brightest young employees find work where they feel they are better rewarded with more relevant benefits. For HR professionals, focusing their benefits strategy to better meet the needs of the younger generations while developing and promoting top talent – the future leaders and managers – must be a crucial imperative Katharine Photiou, Head of Workplace Savings
