America’s workforce has never been more diverse. Once a largely homogenous workforce of predominantly males, it has since evolved to one of gender, race, ethnic diversity and one newer trait that has further increased its heterogeneous quality. It is multigenerational. Where previously, two generations of workers represented the norm, we now have five different generations of employees working side by side. For employers, this diversity by generation introduces new challenges relating to corporate culture, policies and employee benefits. The latter, in particular, demands special consideration if employers are to both attract and retain the best and the brightest, regardless of whether they are a “Traditionalist,” born before 1946; a “Baby Boomer,” born between 1946 and 1964; a member of “Generation X,” born between 1965 and 1976; a “Millennial,” also known as “Generation Y,” born between 1977 and 1997; or a member of “Generation Z,” born after 1997. Understanding the generational differences and how best to meet each generation’s needs when it comes to their employee benefits is important for all executives and human resource and benefit managers.
“Our Nation’s Workforce”
According to the latest data from Statista, in 2018, there were approximately 155.75 million individuals employed in the United States. In 2018, it projected that number to increase by two million in 2020. Of course, due to the pandemic, the nation instead lost approximately 30 million jobs based on the U.S. Department of Labor’s May 29, 2020 jobs report. While the workforce shrunk, its diversity did not. Today, it is a melting pot of sexes (both traditional and non-traditional), races, religions, ethnicities, education levels and generations.
Pew Research’s “Labor Force Composition by Generation” presents this breakdown of the U.S. workforce:
- 2% Traditionalists
- 25% Baby Boomers
- 33% Generation X
- 35% Millennials
- 5% Generation Z
Each of these generations displays their own motivations and communication style. Research from the Purdue Global University found that: Traditionalists tend to be motivated by respect and recognition, whereas Baby Boomers are motivated by company loyalty and duty, Generation X is motivated by work-life balance and personal/professional interests, Millennials are motivated by responsibility, the quality of their manager and unique work experiences, and Generation Z employees are motivated by personalization, individuality and creativity.
As for their communication styles, the Purdue Global University research found that: Traditionalists are personal touch communicators using handwritten notes instead of email; Baby Boomers and Generation X prefer whatever is most efficient, whether a phone call and/or face-to-face communication; while Millennials and Generation Z prefer to communicate via IMS and texts, and differ only that Millennials also prefer email, while Generation Z prefers social media as their other forms of communication.
The generations’ differences in motivations and communications are not their only difference. To motivate and engage them executives, human resource managers and others in supervisory roles should recognize that each generation has been shaped by the period in which they have lived/are living. For example, shaped by the Great Depression and World War II, loyal Traditionalists respond to a stable work environment that provides opportunities. In contrast, competitive Baby Boomers, who lived through the Vietnam War and Civil Rights movement, fare better when they are given specific goals. As for the younger generations, the more flexible yet skeptical Generation X’s experience of having lived through the onset of AIDs and dot.com boom are more inclined to value flexible work environments that emphasize work-life balance. Millennials, who lived through the Columbine shootings, 9/11 and the birth of the Internet, are especially civic-minded and achievement-oriented and appreciate employers who take a personal interest in them and offer flexibility. Finally, Generation Z’s attitudes have been shaped by the post-9/11 period, the Great Recession and their involvement in technology from birth. As such, they prefer variety in their work assignment, projects that enable them to work independently and work-life balance. Of course, no one set of traits ascribed to any generation is an all or nothing thing. There are exceptions and degrees to which these various traits apply.
“The Generations’ Common and Differing Attitudes toward Employee Benefits”
Clearly, their life experiences and age differences influence their outlook and behaviors relating to health, financial security and risk exposure. Still, the generations do share some things in common related to benefits. Across the generations, achieving financial wellness is a priority. Glassdoor also found that nearly two thirds of job applicants, regardless of their generation, focused as much on benefits as they did on salary. That’s where the commonalities end. When it comes to their financial wellness, Baby Boomers in the workforce, many of whom have already observed a large number of their peers retire, are concerned with providing for their retirement years, whereas Millennials and Generations X and Z are concerned with paying off their student debt, among other concerns. As to the other priorities for each generation, Paychex, a leading provider of integrated human capital management solutions, reported the following regarding Baby Boomers, Generation X and Millennials.
-Baby Boomers prefer inexpensive, quality health care, paid sick days, 401(k) matching contributions and a dental plan;
-Generation X prefers inexpensive, quality health care, bonuses, work from home days, paid sick days and flexible schedule; and
-Millennials prefer inexpensive, quality health care, paid sick days, work from home days, flexible schedules.
When it comes to the costs associated with their health benefits, the needs of the generations were directly linked to their life stages. For example, a Lockton report found that 20% of Millennials’ health expenses are related to maternity care and 49% is associated with acute care, whereas neuromuscular conditions including back pain are top expenses for Baby Boomers and Generation X. Other key findings of the Lockton report include that 37% of Baby Boomers’ health expenses are associated with acute care claims, 22% with chronic condition (i.e., diabetes, heart disease, high blood pressure, etc.) claims and 20% with cancer claims. For Generation X, 48% of their health expenses are associated with acute care, 17% with chronic conditions and 16% with neuromusculoskeletal conditions.
As for the non-health or financial benefits, a study by the European insurance group, ARAG, found that Millennials are the most risk-adverse generation and as such the most likely to purchase legal insurance with 41% of those surveyed saying so compared with other generations each of which only had 30%.
Given this data and the preferences of the different generations, employee benefit plan designs must allow for some degree of personalization. In fact, a HR Blindspot Report found that 91% of employees believe their employers should offer personalized benefits packages. One way they are able to do this is by supplementing group benefits such as group health plans, life insurance and 401(k) plans with voluntary benefits. Voluntary benefits enable employers/plan sponsors to offset their cost of benefits, while also accommodating their employees’ individual financial protection and health care needs.
“Voluntary Benefits – A Cornerstone of Benefit Programs”
In the last decade, voluntary benefits have gained in popularity with both employees and employers. In addition to helping control their costs, the use of voluntary benefits help employers attract and retain quality employees. Study after study has indicated that employees will leave one job for another if the benefits are better. A study by Unum found that 41% of all workers surveyed said that they would pursue new job opportunities in order to secure better benefits. There is no question that voluntary benefits enhance a company’s benefit portfolio and increase employee satisfaction. Employers recognize this and are making voluntary benefits a cornerstone of their benefit programs.
There are certain voluntary benefits that should be offered regardless of workforce demographics based on their popularity with employees of all generations as documented by many research entities including Eastbridge; which found that: critical illness, personal injury accident and hospital indemnity coverage are the top three growth voluntary products. Other products that have been steadily growing in voluntary sales include: accidental death & dismemberment, short-term disability and term life insurance. Relative to the generational differences, Millennials also value dental insurance for themselves, spouses and children, and Baby Boomers value long-term disability. All of the aforementioned products should be included in the voluntary suite.
When selecting these different products, look for those that offer features that matter most to employees, including: portability (i.e., the ability for employees to retain the coverage if they retire or leave the job for another), flexible terms, and spouse and dependent coverage. It is also important to select products from reputable insurance carriers. For life insurance products, seek out carriers with a high A.M. Best rating (A- Excellent), and for all benefits, seek out carriers with a reputation for high quality customer service and responsive claims handling.
Finally, offering a good selection of voluntary products provided by reputable insurance companies is not enough. Employers should provide education and information that helps employees make informed benefit purchases that will meet their specific needs. This focus on their employees’ financial literacy should not be confined to enrollment periods, but rather a year-round priority. Having benefit information online for easy, 24/7 access is particularly helpful to employees who often consult others (i.e., spouses, parents, etc.) before making a purchase of any insurance product or other benefit (e.g., fitness club memberships, financial planning services, elder care services, etc.).
By working closely with their broker and/or carrier, employers can customize their benefit plan including all support measures (e.g., product literature, online portal, webinars, etc.), and design an effective benefit program that accommodates all of the generations in their workforce.
