Today’s youngest employee group is estimated to be bigger than the Baby Boomer generation. This so-called Millennial generation is bringing a huge influx of 20-somethings into the workforce.
Their worries, expectations, and goals are different than those of previous generations. They’re less concerned about health care and retirement and more concerned about landing a socially conscious job that pays enough to trim down student loan debts and offers valuable experience. Millennials desire flexibility and mobility — they’re not looking for a long rewarding career with one firm, but rather a series of rewarding opportunities that offer personal and professional satisfaction.
Most companies want their stables full of Millennials because they typically are more affordable, eager to please, and naturally help companies market themselves as being progressive.
These employees, born after 1981, are entering the workforce just as the corporate world is relinquishing its long-held paternalistic control over retirement benefits. While Traditionalists, Baby Boomers, and to a lesser extent, Generation Xers, are scrambling to make sense of their new-found personal accountability, Millennials are entering the workforce knowing nothing else.
Millennials who embrace their individual accountability — and the freedom to make their own choices about where they work and how often they change jobs — aren’t waiting until a company decides they’re valuable, said Garry Adams, Talent Business Leader, Pacific at Mercer. “I think I’m high potential now. So how can I prepare myself for career A or B or C in terms of the development that I want to get?” Adams said, describing the mindset of this generation. Adams said Millennials aren’t necessarily driven by money, but the compensation has to be “strong enough to take that question off the table.”
“It needs to be fair, relevant, and competitive,” Adams said. “But then it gets to the question of, is this exciting work, am I with really smart colleagues, am I learning, am I developing, do I get a chance to grow internationally?”
Companies that can clearly define their value proposition to Millennials are likely to be a destination spot, he said.
“Let’s be really clear, if you come to work for us, here is your pay, but beyond that, this job is compelling for people who are wired like you,” Adams said, summarising a company’s proposition.
Perhaps more than previous generations, Millennials are interested in their company’s philanthropic mission and how it impacts the world around them.
“They want to work for a place that is socially conscientious, does good things in the community, or creates a product that has an impact,” Adams said. “They also want to work in an environment that reflects the community they live in.”
To attract and retain the highly mobile Millennials, employers must also change how they think about company benefits. Will a long-term retirement program be enough? Or will more immediate perks, such as Google’s on-site physicians and free legal advice, become the differentiator these young workers seek in an employer?
When it comes to career advancement, companies will need to delicately manage Millennials’ expectations within the corporate hierarchy without discouraging them or giving them a reason to leave.
“Millennials may have the misconception that if they can demonstrate capability, then the rules of pay and hierarchy needn't apply,” Adams said.
Adams recalls interviewing a recent graduate who was unemployed because she had only been applying for vice president-level jobs.
“I thought it was fascinating,” Adams said. “She was clearly smart, but thought she could leapfrog into a senior role, beyond the middle.”
There are cases where a promising Millennial deserves to be put on the fast track for leadership; passing on these gems could be a costly mistake for the company. Adams said a well-organised employee assessment strategy would enable a company to make safer bets on which workers to pluck from the pack and usher into leadership training.
Companies will play an important role in shaping Millennials’ view of retirement and ensuring they have appropriate options available.
“Everything points to the employee taking charge,” said Michelle Smith, Partner and Financial Advice Leader, Pacific at Mercer. “We’re asking these young people to make complex financial decisions that will have an impact 30 or 40 years later.”
One strategy that companies are trying with success is applying behavioral science to improve retirement savings patterns. Behavioral scientists have studied how people make tradeoffs between present and future rewards. They say low savings for younger workers is partly a result of “hyperbolic discounting,” which means that people value money spent today much more than they value the idea of deferring their spending far into the future. Put another way, buying stuff today provides a bigger psychological boost than saving money for later.
“One can argue that the way plan sponsors are presenting information to their participants is actually compounding this problem,” according to an article from Mercer and the Stanford Center on Longevity entitled “Knowing your future you, applying behavioral science to improve retirement savings patterns.”
Most young workers can’t reasonably entertain the idea of retiring for at least another 35 years. It’s difficult for them to imagine what their super balances might convert into in terms of a retirement income. “Even those forward-thinking sponsors who provide income projections are likely to find that presenting income numbers alone will not change savings behaviour,” according to the article.
Researchers at the Stanford Center on Longevity have found that when participants viewed an aged-enhanced, 3-D avatar of themselves, they were willing to put an average of 6.8% of their salary into a retirement plan, versus only 5.2% for people who had not seen the avatar.
The young invincibles tend to be more fluent and comfortable shopping online. Similarly, they’ll be looking to online health insurance providers to allow them to compare prices, benefits, and performance of plans to decide which option is right for them.
For employers, successfully integrating and supporting this growing Millennial workforce may mean performing a delicate balancing act. From a career standpoint, the advancement expectations of these young employees need to be carefully managed. They also may need to be convinced of the importance of planning for their retirement. But when it comes to researching and choosing health benefits, they’re ready to be set loose, as long as they’re given access to the right information and decision tools.
Meaghan Morberger, Business Development Manager, Mercer Marsh Benefits, Pacific, notes that “these employees greatly value a company owned voluntary health plan where the employer has been able to use their purchasing power to obtain a discount and better product features. By making these benefits available to staff online, employees can save time and money”.
|Baby Boomers: Caught in the Middle >|
|Generation X: Overwhelmed and Under Pressure >|
|Millenials: Managing Expectations of the Young Invincibles >|
|Traditionalists: Living Longer is a Good Thing >|
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