- Not all rewards are monetary. Non-monetary rewards can be an effective way to motivate and inspire younger team members after accounting for competitive pay and benefits.
- Highlight Gen Z’s strengths over stereotypes. According to an iHire report, 34.4% of Generation Z workers fear stereotypes could adversely affect their job search and career prospects.
- Be aware of Gen Z stressors. These workers face a variety of concerns, including the cost of housing, student loans and their ability to pay their bills.
Generation Z’s share of the U.S. workforce is growing, and employers are looking to total rewards strategies to keep these employees and their work colleagues happy and healthy. Unfortunately for Gen Z workers, born between 1997 and 2012, many organizations still don’t understand what attracts and motivates them.
Persistent misunderstandings of Gen Z’s workplace beliefs and values may be the cause of some business leaders’ uncertainty in how to effectively engage with this workforce group.
According to a new report from iHire, “Gen Z in the Workforce: Decoding a New Generation of Job Seekers,” 34.4% of surveyed Gen Z workers fear stereotypes could adversely affect their job search and career prospects. This concern isn’t far from the truth — iHire also polled 252 U.S. employers and discovered only 14.7% and 13.5% described Gen Z as “hard-working” and “committed to career,” respectively.
As Gen Z rapidly enters the workforce and increasingly makes their mark on organizations, homing in on their aspirations and concerns can help employers connect with this generation of workers through total rewards strategies.
Total Rewards that Align with Gen Z’s Aspirations
According to the U.S. Department of Labor’s Bureau of Labor Statistics, Gen Z will comprise 30% of the nation’s workforce by 2030. This workforce group is big and influential enough to impact the broader workplace with their views, suggests a recent report from Mercer, “Gen Z: How to Attract, Retain and Engage Tomorrow’s Leaders Today."
“For senior leaders, this means rethinking their organizations’ approaches to job design and rewards. Gen Z will not toil away for years in unrewarding jobs,” the Mercer study’s authors wrote.
Research shows this generation, typically, is idealistic but also acutely aware of financial strain. Deloitte’s 2024 Gen Z and Millennial Survey, released in May, found that although nearly 9 in 10 Gen Z and millennial workers cite purpose and values as important to job satisfaction, their biggest concern about society is the high cost of living.
Employer awareness and sensitivity to these pressures can help organizations appeal more to Gen Z, said Allison Vaillancourt, vice president of the organizational effectiveness practice at HR consultancy Segal.
“[Gen Z workers] are subject to stressors that other generations haven’t had as much of,” she said. “Because of the cost of housing and student loans, they are very scared, and they want to make sure they can pay their bills. But they also want meaningful work and to know that jobs are [about] more than money.”
Vaillancourt also noted that Gen Z’s perspectives about work were shaped by several factors, such as coming of age during the COVID-19 pandemic and watching climate change transform the world around them.
To work more effectively with Gen Z, she shared these tips for employers:
- Leverage technology. Gen Z workers grew up with technology. Their managers can leverage this familiarity and affinity to promote available tech to help these employees balance work responsibilities and life.
- Offer self-care benefits designed around Gen Z. “Their mental health concerns just seem more acute than we’ve seen in a long time. They want to get therapy, use wellness programs and qualify for mental health days. These newer entrants want to talk about their mental health concerns, too,” Vaillancourt said.
- Rethink corporate loyalty. Vaillancourt added, “I would urge employers to think about, ‘How do we make this workplace so desirable that people don’t want to leave?’” When workers leave, organizations can prop the door open for former employees who might return later. Alumni programs can be a great way to continue engaging and create a positive impression.
For more impact, organizations may offer greater transparency around decision-making and compensation package development to reduce uncertainty, she noted.
Your Value Proposition for Gen Z Employees
Appealing to Gen Z also involves rethinking employers’ value proposition to employees. Not all rewards are monetary; non-monetary rewards can be an effective way to motivate and inspire younger team members after accounting for competitive pay and benefits.
“Companies that are concerned about Gen Z would be well-served to address the issues that matter to this generation in their value proposition to employees and ensure that the company demonstrates a commitment to employee physical, mental and financial well-being,” said Ronald Seifert, a senior client partner and North America total rewards leader at Korn Ferry.
As Korn Ferry noted in its report, “Who Is Gen Z? The Values Proposition,” appealing to this workforce generation is a good use case for the total rewards methodology. Employers can tailor their offerings due to younger workers’ financial pressures and interest in work flexibility and social issue advancement.
According to the Korn Ferry report, Gen Z workers want corporate values that align with their beliefs, for example; offering the right benefits and values such as sustainability practices may appeal to workers. Companies already offering strong pay and benefits should take note of other ways to round out their total rewards strategies.
Creating a value proposition for Gen Z should be a holistic exercise, not one where compensation is isolated from other aspects of work.
Organizations also likely need to tie their thinking around HR and total rewards into their broader business strategy, Seifert added.
“A company’s talent strategy is a function of their business strategy and reflects the needed skills and competencies to deliver business results,” he said. “Knowing the talent you need relative to the talent you’ve got helps inform the reward and development programs.”
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