A New Generation of Compensation Practices
By Joyce MarshSenior HR Consultant CU Solutions Group
One of the top trends that experts in the compensation field have identified for 2017 is dealing with multi-generational workforces. Alongside baby boomers and generation X, millennials continue moving into managerial roles and the oldest of generation Z are finally trickling into the workforce. Companies are grappling with the challenge of managing different expectations across different age ranges, and one of the most difficult is the subject of compensation.
With as many as five different cohorts currently in the workforce (including the oftentimes ignored Traditionalists) from age 18 to 80, companies are struggling to come up with a one-size-fits-all strategy when it comes to compensation. Of course, the answer is that there is no magical solution that ties everything together. Employers will have to figure out a compensation strategy that works with, rather than against, the different demographics, priorities, and personality of each cohort. With such vast age differences, the different generations approach both work and compensation differently.
Many companies do not treat multi-generational workforces as a compensation issue, but market leaders do. According to Payscale’s 2016 Compensation Best Practices Report, more than 50% of average companies have not and do not foresee changing compensation strategies to suit millennials and younger employees. However, 35% of top performing companies are already doing so, enacting changes to paid-time off policies, wellness benefits, and retirement.
Identify Cohort Characteristics
The first step for many organizations in reviewing their compensation strategy for a multigenerational staff is to actually identify who is working in the office. Is it a hot new fintech startup with a skeleton crew of new college graduates and a few older visionaries? Or is it a massive financial institution with hundreds of employees across dozens of physical locations? How likely is this to change in the near term? A company that employs mainly millennials may not be looking into wellness programs for older employees or vice versa. Credit unions will likely employ a range of workers across the age spectrum, so it will be necessary to plan for a diverse workforce.