Unlimited time off, flexible work schedules, free snacks, free lunch, free… everything.
Once upon a time, this was what employers thought younger generations (Generation-Z and Millennials) wanted, and many employers nearly lived up to it. But with the economy shifting, and younger generations stepping further into adulthood, priorities have changed.
Young Americans are being hit with the second recession of their lifetimes, and are finding themselves further held down by student loans and credit card debt. With these harsh realities, Generation-Z and Millennials are looking for compensation packages that fit their evolving needs.
You may be asking: Why should employers care?
Well, over half of Gen-Z and Millennial respondents would be more committed to staying with their employer for a longer period of time if they offered financial wellness benefits. When you consider the cost of replacing an employee is 16 to 20% of their annual salary, it is in a company’s best interest to care about creating a competitive compensation package to retain their top talent. A study by SoFi reveals that due to the onset of Covid-19, 59% of people feel it is more important now than ever that their employers offer financial wellness benefits.
Employee well-being also largely plays into a company’s success. When employees are experiencing financial stress, they are more likely to have a migraine, cardiovascular disease, insomnia, and absences from work. For the younger generations in the workforce, 61% of Gen-Z and 57% of Millennials reported they would feel less stressed about their overall financial situation if their employer offered financial wellness benefits. By doing what you can to alleviate their financial stressors you, in turn, can have more engaged and productive employees.
Here are three perks to include in a compensation package, and big surprise: it isn’t free food or beanbags.
1. 401(k) Plan With Matching Benefits
Their retirement and savings plans aren’t just for them. The advances of science and technology will prolong the life of both Millennial and Gen-Z parents, delaying the receipt of any inheritance, or maybe adding extra expenses to their budget. A shocking finding in a study by the IRI (Insured Retirement Institute) revealed that half of Millennials expect to financially help their parents during their parents’ retirement years- the time when most Millennials would also be building their own families and trying to save money for their own retirement. Saving for their parent’s retirement years as well as their own will add up quickly.
In addition, only 55% of Millennials are confident that Social Security will provide them with meaningful income, which makes retirement savings even more critical in their eyes. Having an employer that is willing to provide a 401(k) plan, especially one with a match, is a shiny prize in the eyes of Millennials and Gen-Zers.
2. Financial Counseling
According to the data, Gen Z and Millennials don’t know how to financially plan.
Due to Covid-19, 35% of Millennials and 30% of Gen-Z have reduced income from their job. Learning how to manage this budget shift is difficult and troubling to many. This struggle is starkly clear considering that one in three Millennials has fallen further into credit card debt since the onset of the pandemic. Having someone on-site to walk employees through budgeting, investing, and adequately saving their income is a huge perk these generations are looking for.
A study found that 57% of Gen-Z don’t know how much money they even have in their savings accounts. It’s pretty hard to make a budget and financial plan when you don’t even know where you stand.
Consider bringing in financial advisors that represent your company and help employees establish budgets. Set up webinars and tutorials that cover the specific financial platforms you use. If you are a public company and offer stock options, be sure to have someone on-site to train employees on how to take advantage of and best utilize the perks. You can even consider offering online courses in financial planning as a way to help educate your staff.
While this may not feel like your responsibility as an employer, remember that these offers make the majority of your workers more likely to feel invested in your company.
3. Tuition Support
Millennials carry an average of $34,770 in student loan debt while almost 3 in 4 Gen-Zers will have student loans to pay off, with most owing between $25,000 and $50,000. With numbers like this, it is to no surprise that two thirds of all workers say student debt is preventing them from saving for retirement.
If you want to stand out as an employer, offer student loan repayment assistance. Only 13% of people who currently have student loans work for an employer that offers student loan repayment assistance. When a talented candidate is considering two job offers, this financial assistance may just be what sways them your way.
If you can’t do it all, look to offer a hybrid approach: instead of paying into an employee 401(k) match program, consider providing a benefit to your employees for support with repaying their college loans. Due to the CARES Act, there is currently a provision that allows employers to make tax-free student loan contributes to employees. Once an employee completes their student loans, you can consider offering them the opportunity to transition to a 401(k) plan. Additionally, you can create guidelines around the repayment, implementing a required commitment of time from the employee in return for the loan support.
It’s time to keep up with the changing needs of the workforce. Gen-Z and Millennials make up the bulk of the workforce, and it is up to employers to be prepared to best support their needs.
If you want top talent, be prepared to provide top compensation.
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