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Showing younger workers how to build for a successful future is key
Compared to their older colleagues, Millennials are less interested in—and less knowledgeable about—their workplace benefits, new research findings indicate. That could be driving low retention rates among young workers. In a survey of Millennials by Deloitte, two-thirds said they hoped to be working for a different organization in five years, if not sooner.
That lack of loyalty isn't helped when the employer's benefit package isn't valued. For instance, the nonprofit Employee Benefit Research Institute (EBRI) and research firm Greenwald & Associates compared findings on Millennials (people born in the early 1980s to early 2000s) with data on Baby Boomers (born 1946 through 1965) and Generation X workers (born from the mid-1960s to the early 1980s). Among the highlights reported in Worker Opinions About Employee Benefits, in the December 2015 issue of EBRI Notes:
• Millennials are less likely than Baby Boomers to report health insurance as the most important benefit they receive at work. Millennials are more likely than older workers to cite paid time off as the most important benefit.
• Millennials are less likely than others to find the benefits package a potential employer offers to be extremely important in their decision to accept or reject a job.
• Millennials are more likely than workers in other age groups to say they don’t know about their employer-provided benefits. Participation in various employee benefit programs is generally lower among Millennials than among Baby Boomers and Generation X workers.
“Millennials are the largest age group to emerge since the Baby Boom generation, and employers will have to make adjustments to how they engage them,” said Paul Fronstin, director of EBRI’s health research and education program and co-author of the report. “Employers that have depended on employee benefits as a primary tool to recruit and retain workers may need to rethink the role that employee benefits play with Millennials.”
Millennials also are more likely than those in other age groups to report that they would prefer to take the money employers spend on employee benefits and decide for themselves whether to purchase those benefits and how much to purchase, EBRI found. That suggests they are more likely to be comfortable with receiving a lump sum for health care and other benefits and purchasing coverage selected through a private exchange platform provided by their employer.
Preferences for communications about employee benefits also fall along a generational continuum. Older workers tend to prefer receiving messages through face-to-face meetings, written memos, phone, voice mail and e-mail, while younger workers prefer communicating via instant messaging, text messages, blogs, podcasts and videos.
“The key to reaching Millennials is twofold: make the benefits relevant and meaningful to them and communicate frequently,” said Jennifer Benz, founder and CEO at Benz Communications in San Francisco.
“Millennials have had less time in the workforce, so they don't have the length of experience to grow an understanding of the value of benefits,” she explained. “Helping them see how each plan and program supports where they are in their lives right now—and how to build for a successful future is key. Many times, employers assume that employees understand the value of each benefit—why they matter—and that is often not the case, even for core programs like medical and retirement plans.”
Most companies still do the majority of communication during annual enrollment, Benz noted. “This is especially not going to connect with Millennials, who grew up with real-time mobile communication. Spreading communication out all year and using modern—and brief—formats like blogs and videos will improve the effectiveness of communications,” for Millennials and all employees, she advised.
A lack of understanding about workplace benefits can be costly for workers as well as employers. A recent poll sponsored by Collective Health, a San Mateo-Calif.-based provider of benefits software and services, revealed that 80 percent of Millennial women—a demographic likely to incur maternity costs—and 69 percent of parents with a child under 18 in their home, said they are not prepared to handle an out-of-pocket medical expense of $5,000. Yet many workplace health plans are increasingly likely to have high deductibles, which employees should set aside funds to cover, if possible.
Also, compared with 61 percent of Americans overall, nearly three out of four (72 percent) of Millennials said they are often confused by the health care options available to them, as were 70 percent of parents with a child under 18 at home (versus 57 percent without a child).
Given the lack of understanding around health care benefits, especially among Millennials and young parents, employers may want to better educate their staff on the health care plans and coverage available to them—and how best to make use of them.
Millennials’ Savings Rate Improves
A recent development regarding Millennials and their benefits is an increased savings rate in their workplace retirement plans, although their savings rate continues to lag that of their older colleagues. According to findings released in January 2016 from Fidelity Investments’ biennial Retirement Savings Assessment study, between 2013 and 2015:
• Americans’ median savings rate improved from 7.3 percent of income to 8.5 percent.
• Millennials showed the greatest improvement, increasing their savings rate from 5.8 percent to 7.5 percent.
• Baby Boomers saved the most, stashing away 9.7 percent of their salaries, up from 8.1 percent.
“Millennials have the benefit of time on their side to save and invest,” according to the report. “For this generation, the single most powerful step is to increase savings.”
To adequately prepare for retirement, many financial advisors recommend an average savings rate of at least 15 percent throughout an employee’s working years.
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.
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