Millennials and Employee Benefits: Generational Differences Matter
When it comes to millennials and employee benefits, a topic that's crucial to recruiting and engaging employees in today's multigenerational workplace, one size doesn't fit all. The expectations of millennial employees are very different from those of other generations. These differences include why they work, when they prefer to work, how they like to be managed and rewarded, and the ways they want to receive training and communication. It's not surprising, then, that millennials translate their different assumptions to the area of employee benefits too.
Millennials and The Evolution of Work
The ADP Research Institute recently issued a report, The Evolution of Work: The Changing Nature of the Global Workplace, highlighting many of the workplace trends being driven by millennials.
Let's look at some of them, and how they might impact employee benefits:
A Search for Meaning
Millennials want to be compensated fairly, but also want to do work that has meaning — work that has a positive impact on the community and makes a difference in the world. Organizations that stress financial gain as the only goal will face challenges when it comes to recruiting and engaging mission-driven millennials.
Work-life balance is a top concern for millennials. They'd prefer to have more choices about where and when they work. Companies that seek to recruit and engage millennials should have policies and systems in place to support increasing demands for flexibility among younger workers.
Millennials are the most tech-savvy generation in today's workplace. They've grown up with digital connectivity and expect it at work. Thus, recruiting, training, communication, etc. should have a digital component. Aligning your company with the digital and physical mobility that millennials expect is key to HR success.
Self-Service for Benefits
Millennials expect to receive information and options related to their benefits, preferably via digital platforms, as well as the capacity to make their own decisions. A top-down, take-it-or-leave-it approach to benefits does not engage this DIY generation. It's critical to provide millennial employees with accessible, understandable options and allow them to personalize their benefits.
How Millennials Evaluate Particular Benefits
According to the Society of Human Resources Management, millennials actually tend to understand their employee benefits less completely than other generations, which may explain why some millennials are less engaged by benefits.
A study by the Employee Benefits Research Institute (EBRI) found that "millennials are less likely than baby boomers and Gen Xers to report that the benefits a potential employer offers are extremely important in their decision to accept or reject a job. Less than one-third (31 percent) of millennials reported that benefits are extremely important compared with 39 percent among Gen Xers and 41 percent among baby boomers."
Let's look at the menu of specific benefits and how millennials and baby boomers view them:
- Health insurance. The EBRI study found that health insurance is viewed as the most important employee benefit by all workplace generations by a wide margin. However, millennials value it the least. While 67 percent of baby boomers view health insurance as the most important benefit, compared to 60 percent of millennials.
- Retirement savings plan. The findings are somewhat mixed here. While the EBRI study found that millennials value retirement savings plans less than other workplace generations do, a report by Fidelity Investments found that millennials increased their retirement savings rate from 5.8 percent to 7.5 percent, a bigger jump than any other generation from 2013 to 2015. Despite the recent acceleration in retirement savings by millennials, baby boomers still save the most — nearly 10 percent of their salaries.
- Paid time off. This is the sweet spot for millennials who value this benefit more than other generations, according to the EBRI study. In fact, 12 percent of millennials value PTO more than any other benefit, compared to 6 percent of baby boomers.
- Life insurance. Like PTO, millennials attached high value to life insurance. A paltry 1 percent of baby boomers viewed life insurance as the most important benefit, compared to 5 percent of millennials.
- Benefit choice and DIY. More than any other generation, millennials expect to be able to choose from a list of benefits. Millennials are also far more comfortable than other workplace generations in taking a lump sum of money to purchase their own benefits. A quarter of millennials favor that option, while less than one in five baby boomers feel the same, according to EBRI.
HR leaders who want to recruit and engage millennials should offer customized packages that millennials want. They should communicate effectively and deliver those benefits in ways that millennials prefer. In other words, what engages baby boomers won't necessarily engage millennials.