Move over, Millennials. The earliest members of Generation Z, born in 1995 or later, are entering the workforce.
Employers have spent the past several years trying to understand and design employee benefits programs that will entice and motivate the Millennial generation, born from roughly 1980 through 1994. But now, as members of Generation Z graduate from college, employers will need to provide the support, freedom and flexibility these younger workers seek.
Here are a few examples of how employers are accomplishing this.
Personal and Professional Growth
"Younger workers want opportunities to grow professionally and personally," said Stephanie Penner, a senior partner with consultancy Mercer in Philadelphia. "They want to know that they are joining an organization that provides career movement and experimentation."
Job and career rotation programs, internal initiatives to which younger workers can contribute, and any and all training and development programs and resources are likely to appeal to these workers.
New graduates also want to contribute to something worthwhile and, like Millennials, are attracted to employers that place a high value on corporate citizenship. Detroit-based Ally Financial encourages employees to get involved in volunteer activities and provides eight hours of paid time off to do so per year, according to Kathleen Patterson, the company's chief human resources officer. "We have also designated the entire month of November as 'Giving Back Month' and provide numerous opportunities for employees to make a difference," she said.
[SHRM members-only toolkit: Developing Employee Career Paths and Ladders]
Help with Finances
It is no secret that student loan debt is a significant burden for many new graduates. Eight in 10 workers with student loans say they would value working for a firm that provides extra dollars for student loan debt repayment, CNBC reported, but only 4 percent of organizations offer student loan repayment as a benefit, according to the Society for Human Resource Management's 2018 Employee Benefits survey report.
While financial fitness programs are likely to be of some help to new graduates, that help must be realistic. Exhorting these workers to save for retirement is not likely to win converts when they are dealing with tens of thousands of dollars in debt.
"Unless you're offering student loan forgiveness, [new graduates] aren't looking for anything else," said Bill Gimbel, president of LaSalle Benefits in Northbrook, Ill. Employers that choose not to provide dollars directly for loan repayment, however, can show they care about helping with student debt in other ways that may resonate with Generation Z, he noted. For instance, they can provide:
- A financial planner for guidance on how to consolidate debt and establish an emergency savings account.
- Online services to evaluate and select loan-repayment options.
- The ability to pay off loans via automatic payroll deductions.
Employers can also provide access to, and explain the importance of, disability insurance. Younger employees "may not realize how important it is to maintain an income if they become disabled," Gimbel said, "but employers need to educate this group on why these things are important."
Employers can offer benefits that indirectly help employees improve their finances. To help these workers manage their daily expenses more easily, Gimbel suggested that employers consider:
- A casual dress code, which can help keep wardrobe costs down.
- Healthy food onsite offered for free or at a lower cost than at a restaurant.
- A safe place to lock up a bicycle or scooter.
- Shuttle service to and from public transit hubs.
Reducing health insurance costs can also help new graduates manage their finances better. Paycor, a payroll and HR services provider, waives health insurance premiums for one year for all single employees who are enrolled in the company's high-deductible health plan, according to Dave Rudemiller, the company's director of HR operations. Eligible employees participate in a wellness-promotion program to take advantage of the offer.
A New Twist on Student Loan Aid
Abbot Laboratories recently launched a benefit that helps its employees save for retirement while paying off student loans.
Abbott's Freedom 2 Save program enables full- and part-time employees who qualify for the company's 401(k)—and who are also contributing 2 percent of their eligible pay toward student loans—to receive an amount equivalent to the company's traditional 5 percent match deposited into their 401(k) accounts. The twist is that program recipients will receive the match without being required to make any 401(k) contributions of their own, allowing them to use more of their earnings to pay off their student debt.
"The benefit responds to recent financial challenges facing young employees—many of whom have undergraduate and advanced degrees in science, engineering and business fields—and adds to the strong appeal of joining the Abbott family," the company said in a press release.
"We see our young professionals coming to us with a problem: Student loan debt payments keep them from setting aside the money they'd like to put in savings for retirement," said Steve Fussell, executive vice president, human resources, at Abbott. "Helping them with this challenge is the right thing to do."
It also makes sense from a tax perspective. While an employer's 401(k) account contributions are tax-free to employees, student-loan repayment contributions are treated as taxable income. Abbott's approach avoids the taxes triggered when an employer directly gives employees funds to help pay off their student loans.
It's an App World
A generation made up of people who have spent almost their entire lives online is likely to respond to benefits that reflect the reality of their lives. For instance, in addition to the online financial services already noted, consider that:
- Discounted identity theft protection may appeal to those who conduct most financial transactions online.
- Online wellness solutions can track and subsidize healthy activities and provide virtual access to health coaching.
- Telemedicine programs can make it easier to get help for minor ailments and to get prescriptions refilled at a lower cost than if the employee had to visit a doctor's office.
- Virtual mental health counseling can meet rising expectations for convenient and mobile-friendly emotional support.
- Online employee recognition and rewards platforms can stoke engagement.
"Past generations have viewed their digital presence as simply a component of their lives," said HR leader Ed Wesley, vice president of people at DreamHost, a webhosting firm based in Brea, Calif. "In contrast, Gen Z views their online presence as part of their identity. They will require a more-personalized interaction with their workplace through the web."
Wesley said his firm is welcoming this generation by offering, along with many of the benefits highlighted above, an instant messaging platform where team members can set up a personal profile for chats in topic-related channels. "We are also implementing a system in which employees can interact with our HR team via social media," with more avenues for online interaction planned for the future, he noted.
The challenge for HR, Wesley added, "will be to find a way in which human connection blends with online authenticity and digital security."
Lifestyle spending accounts (LSAs) allow employers to make taxable contributions on employees' behalf. Employees can use these funds on products and services that the employer makes available, such as fitness classes, pet insurance or charitable giving.
"With an LSA, employees can … focus on their personal development. Many will love having the option to enroll in relevant courses, hire a life coach, or participate in alternative forms of therapy if they so desire," Toronto-based benefits provider League said in a blog post, explaining further:
You choose the yearly sum (let’s say, $1,500), and your employees choose what they want to put it towards (a gym membership and a new pair of running shoes, perhaps?). Then, you only pay for the amount they use. We repeat: You only pay for what they’ve used. This one small detail makes a huge difference at the end-of-year review. Not only does it help business owners eliminate those unpleasant year-end surprises, many end up owing less than anticipated.
An LSA adds flexibility to already existing benefits plans "and is a pay-as-you-go service that is easy to implement and control," according to Vancouver-based Finkelstein Financial Services. "It’s also a great way to promote wellness and a holistic lifestyle for your team members."
LSAs are currently more prevalent in Canada than elsewhere. "The only problem with LSAs is that a lot of companies don’t know about them," posted ADI Benefits, a Canadian-based benefits provider.
Mentors and Resource Groups
Younger employees who are new to the workplace often benefit from support from mentors and other employees. To provide this support, Ally Financial sponsors eight employee resource groups, which are formed around shared characteristics or life experiences such as military service, disability, gender identification and sexual orientation. These groups are made up both of employees who identify directly with the group and those who want to provide support to their colleagues.
Joanne Sammer is a New Jersey-based business and financial writer. Stephen Miller, CEBS, contributed to this article.
Related SHRM Articles:
Employers Beef Up Benefits to Keep Talent, SHRM Online Benefits, June 2018
Financial Wellness Perks Expand to Address Employee Needs, SHRM Online Benefits, June 2018
How Total Rewards Can Drive Performance Management Success, SHRM Online Benefits, May 2018
Take a Team Approach to Financial Wellness, SHRM Online Benefits, October 2017