With open enrollment just around the corner, now more than ever employers must provide employee benefits that maximize appreciation and engagement.
That’s easier said than done when you employ a multigenerational workforce with each generation preferring one benefit over another. (An employee in their twenties probably doesn’t have the same set of benefits priorities as their team member who is nearing retirement.)
With four generations in the workforce, a one-size-fits-all approach to employee benefits isn’t optimal. Instead, offer programs that focus on fundamentals like health insurance and 401(k). But include options like vision and dental to help meet your workers’ varying needs.
Your employees will receive more value and you’ll be rewarded with the ability to better recruit and retain employees.
What are the different generations?
There are currently four generations working today: Gen Z, Millennials, Gen X and Baby Boomers.
Gen Z (Born 2001–2020)
As the youngest generation, there may not be a huge Gen Z presence in the workforce today, making up only about 11%, but that will soon change.
Generation Z may be the tipping point for diversity in this country, given its makeup of at least 48% racial or ethnic minorities. Technology is first nature to Gen Zers as they were born with devices in their hands—or were gripping onto them before their first birthdays.
Equipped with tools that excite them, their instincts are strong and their potential is limitless.
Millennials (Born 1981-2000)
Millennials currently make up about 35% of the working population, making them the largest working generation.
Having come of age, Millennials are now in their working prime, from their late 20s to just turning 40. Millennials are the first generation to become adults after the Internet had made an indelible mark on business and culture.
Millennials are generally tech-savvy and digitally focused. Immigration has helped feed the Millennial workforce, adding to its already diverse base.
Gen X (Born 1965-1980)
The second-largest working generation, Gen Xers making up about 32% of the workforce.
Gen X is a high-earning generation that has bred many a business founder and CEO. Some 55% of startup founders are Gen Xers. They didn’t grow up with smartphones in their hands, but they helped invent the first social media platforms and apps.
Gen Xers question authority and think outside the box. They want a sense of harmony between life and work.
Baby Boomers (Born 1946-1964)
Baby Boomers make up about 22% of the current workforce. And while a couple of years ago they resisted retirement, that changed after the pandemic.
Shaped by the Civil Rights Movement and the Vietnam War, Boomers might have less belief in authority and hierarchy than those above them, but they still feel bound by duty and believe success is hard-earned.
What does each generation consider their top must-have benefits?
All workers put health coverage and a 401(k)—or a similar retirement savings plan—at the top of their employee benefits wish list. However, according to MetLife, other core benefits are valued differently depending on generation.
Here’s a breakdown of how each generation prioritizes benefits after health insurance and 401(k).
- Gen Z: Gen Zers are just starting their careers and put life insurance and paid/unpaid leave above dental insurance.
- Millennials: After health coverage and 401(k), Millennials prioritize paid/unpaid leave above life insurance and dental. Millennials are in the stage of life where they are traveling and starting families.
- Gen X: Gen X wants Dental and paid/unpaid leave above vision. This generation is putting kids in braces and sending them off to college.
- Boomers: Boomers prioritize their benefits in a similar manner to Gen Xers. They are less interested in life insurance and instead prioritize dental and vision insurance.
What about employees’ finances?
Benefits like 401(k) and life insurance can help employees prepare for the future and protect their families. But many employees still aren’t prepared to meet their short-term financial needs.
In 2020, just about four out of 10 employees had less than $1,000 on hand, with that number skyrocketing among Gen Z. And that was before the pandemic.
Except for Boomers, a majority of employees in each generation report their financial stress increased with the pandemic:
- Gen Z: 68%
- Millennials: 72%
- Gen Z: 62%
- Boomers: 46%
Student loan is one type of debt that Gen Z, Millennials and Gen X are actively holding but all generations are feeling the debt’s impact. While only 11% of Boomers have student debt, 45% have reported that debt has had a significant financial impact on them.
Best Way to Address Multigenerational Workforce
Employers looking to use employee benefits as a tool for recruitment and retention need to consider the needs of employees in different generations to maximize the value of their investment. This means taking into account both similarities and differences.
- After core benefits, offer voluntary options. Keep your attention on the core offerings of health insurance and retirement saving, the two most coveted benefits, and communicate them effectively.
If resources are tight, this is where to focus your benefits dollars for the most impact. Voluntary coverages that complement the health plan—such as critical illness and hospital indemnity insurance—enable employees to personalize their benefits package to meet their specific financial situation without adding employer costs.
- Consider benefits that help people address shorter-term financial needs. Employees across all generations are struggling with near-term money management, including student loan debt. Adding or sweetening your employer HSA contribution can help with out-of-pocket healthcare costs while voluntary offerings like pet or device insurance can insulate employees from unexpected expenses.
Non-Traditional Employee Benefits
Benefits, especially those that aren’t traditional like daycare and student loan reimbursements, can be a way for employers to recognize employees for their hard work and contributions. All generations appreciate recognition but its effect on their state of mind varies, according to MetLife.
- Gen Z: Increases loyalty and decreases depression and burnout
- Millennials: Increases productivity and decreases depression
- Gen X: Increases productivity and decreases stress and burnout
- Boomers: Increases productivity and engagement while decreasing depression
Using benefits to improve loyalty, productivity and engagement makes good financial sense. Offering Millennials student loan repayment or Gen X and Boomers better retirement incentives can keep your workforce productive and engaged. Browse our resources on benefits administration to learn more.