Reward Implications and Strategies for Millennials - …...Reward Implications and Strategies for Millennials June 2018 Prepared by Aon Talent, Rewards & Performance | Broad-Based

Reward Implications and Strategies for Millennials June 2018

Prepared by Aon Talent, Rewards & Performance | Broad-Based Compensation

Rutherford County MTSHRM

Aon Hewitt | Talent, Rewards & Performance | Broad-Based Compensation

Proprietary & Confidential | BBC/WaW/Millennials.PPTx/001-Z7-04029 05/2017 2

Today’s Discussion Topics

The Millennial Mindset

Implications for Rewards



Meet the Millennials

Born 1925–45

Born 1946–63

Born 1964–80 Born 1981–96

Silents Gen X Millennials Boomers



Evolving Generational Preferences and Values

Traditionalists

(1930–1945)

Boomers

(1946–1964)

Gen X

(1965–1978)

Millennials

(1979–1996)

Centennials

(1997– )

Values Conformity

Stability

Security

Personal and social

expression

Idealism

Health and wellness

Free agency and

independence

Street smarts

Cynicism

Collaboration

Social activism

Tolerance for diversity

Resilience and grit

Practical intelligence

Personal privacy

Incentives Appreciation and

recognition

Individual rewards Rewards for results

Team rewards

Constant feedback

Spot awards

Personalized

Benefits Embrace

defined benefit

retirement programs

Make employment

decisions based on

benefits

Self-reliance

Flexible benefit

options

Creative benefits

and time off

Create my own

package

Rewards Satisfaction of

a job well done

Money, title,

recognition

Flexibility and

autonomy

Meaningful work Divergent experiences

Base Salary

Loyalty to organization Internal

competitiveness

Hired

guns/mercenaries

Accessing opportunity Tailored to me

Pay Increases

Cost of living

adjustments

Seniority and internal

equity

Pay increases tied

to performance

Likely to share pay

increase information

Entire group likely to

leave if perceives as

unfair

Keep pay increase

information private

4

Source: Future of Workplace Survey



Country

Globally

China

Europe

Africa

How They Are Referenced

Gen Y

Post 80’s Generation

Lost Generation

Born Free Generation

Millennials Are a Global Phenomenon



Millennials Overtake Boomers as America’s Largest Generation

Projected Population by Generation (in millions)

Source: Pew Research Center tabulations of U.S. Census Bureau population projections released December 2014 and 2015 population estimates.



Births Underlying Each Generation (number of U.S. births by year and generation)

Comparative Number of Births by Generation

Source: U.S. Dept. of Health and Human Services National Center for Health Statistics



5 Generations Comprise the Workforce in 2020

Diversity in the Workplace

Source: Aon Hewitt 2015 Health Care Survey



How Millennials Differ

Source: Corporate Executive Board



Life Through the Eyes of a Millennial









Things Millennials Don’t Use



Global Nuances—Millennial Priorities Chartered Across the World

If you had to prioritize in life, what would you put an emphasis on?

Source: Understanding a Misunderstood Generation, Harvard Business Review



Generation Quickly Evolves Into Life Stage…

Financial Wellness Tools and

Advisement

College Loan Tools and Match;

Debt Repayment

Home-Buying Assistance

Enhanced Maternity/Paternity

Policies

Child’s Education Savings

Benefits for Parents

Parental Leave

Enhanced

Maternity/Paternity Policies

Reverse Mentoring

Phased Retirement

Benefits for Parents

Parental Leave

Benefits for Grandchildren

Elder Care

Early Mid Late



0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 3.9% 4.5% 4.2% 3.8% 5.7% 5.9% 6.4% 7.6% 7.5% 7.6%

8.0% 9.4% 10.0%

8.4%

6.2% 6.2% 6.0% 5.3% 4.8% 5.0% 5.3% 5.5% 5.0% 4.6% 4.3% 4.0% 4.0% 3.9% 4.0% 4.2%

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Pe

rce

nta

ge

of

Pa

yro

ll

Variable Pay Awards for Salaried Employees 1980–1998 Variable Pay

Salary Increase

A Millennial’s Perspective on Compensation Opportunity

9.3% 9.7% 10.8% 10.5%

8.8% 9.5%

11.4% 11.2% 11.8% 10.8%

12.0% 11.3% 11.6% 12.0% 12.0%

12.7% 12.7% 12.8% 12.8%

4.2% 4.3% 4.3% 3.6% 3.4% 3.4% 3.6% 3.6% 3.7% 3.7%

1.8% 2.4% 2.7% 2.8% 2.9% 2.9% 2.9% 2.8% 3.0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Projected

Pe

rce

nta

ge

of

Pa

yro

ll

Variable Pay Awards for Salaried Employees 1999–2016 Variable Pay

Salary Increase

Source: Aon Hewitt Survey—U.S. Salary Increases 1980–2016

First Millennials Born

Millennial’s Work Experience



The Millennial Mindset

Fun Flexible Fulfilling make it make it make it

A Company and Career That Offers…

Opportunities for constant growth

Work with personal meaning

The ability to see personal impact

Ongoing feedback and recognition

A strong brand

Where Things Feel…

Adaptive to change

Open to individual differences

Transparent

Easy to get stuff done

In an Environment That Is:

• Engaging

• Friendly

• Social



Fulfilling.

(adj). Making someone satisfied or happy because of

fully developing their character or abilities.



55.8%

44.2%

73.4%

26.6%

58.0%

42.0%

Expectations vs. Differentiators

69.7%

30.3%

63.8%

36.2%

Differentiator

Expectation

Is a good fit

with my

values

Provides good

career/development

opportunities

Provides

meaningful

work

Provides

stimulating

work

Is an organization

that empowers

employees

Source: Aon Hewitt Workforce Mindset™ Study 2016



Expectations for Promotion

68%

89%

53%

77%

2 years or less 5 years or less

Millennials

Other Generations




Diverse Experiences Retain Millennials

Maximum Impact of Intent to Stay for Millennials

23%

-1%

Opportunity for Lateral CareerMoves

Accelerated Promotion Path




Experience Hopping, Not Job Hopping

Source: Ultimate Software

45% of millennials would quit a job if

they didn’t see a career path they

wanted in the company

Diverse organizational experiences drive

millennial retention more than fast career paths Source: Corporate Executive Board



Job Factors Valued as Important

30% 28%

25%

5%

12%

50%

12% 12%

Meaningful work High pay Sense ofaccomplishment

Responsibility

Millennials

Managers

Source: Levit and Licing, 2011 in Rikleen, ND



Reasons for Turnover

Likelihood of Accepting a New Job Based on Different Factors

41%

15%

24%

25%

46%

36%

26%

44%

38%

9%

23%

24%

51%

43%

45%

52%

35%

26%

37%

44%

48%

48%

28%

57%

A higher level of social responsibility

A higher quality work product than yourorganization currently offers

A highly skilled direct manager

More engaging day-to-day work

A more senior position in the organization

A more valuable professional developmentopportunity

A more rapid career advancement

A 15% increase in total comp package

Millennials

Gen X

Boomers




Flexible.

(adj). Ready and able to change so as to adapt

to different circumstances.




50.7% 49.3%

Differentiator

Expectation

Has a flexible work

environment

Source: Aon Hewitt Inside the Employee Mindset Research



Millennials Expectations for Work Flexibility

Work-Life Balance

– Part-time employment

– Flexible work hours

Technology

– Work remotely

– Attend meetings virtually

– Online collaboration vs. face to face

On-Demand Work

– Work as needed—freelancing

– Focus on their passions

Source: Inc.com, January 19, 2017



Fun.

(adj). Amusing, entertaining or enjoyable.




48.5%

51.5%

62.1%

37.9% 74.1%

24.9%

Differentiator

Expectation

Is a fun place to work

Has great employees

Encourages

collaboration

Source: Aon Hewitt Workforce Mindset™ Study 2016



Collaboration, Competition, and Connection

You heard millennials

like to collaborate But they’re actually

more competitive

than other

generations

The real preference is

for social

connectedness




Attribute Alternatives

Progression Path Vertical Progression Vertical and Horizontal

Progression

Unconventional

Progression



Vertical Progression

Grades Support Individual Contributor Management Executive

14 E14—Top Executive

13 E13—Corporate Executive II

12 E12—Corporate Executive I

11 E11—Senior Director

10 E10—Director

9 I09—Principal M09—Senior Manager II

8 I08—Expert M08—Senior Manager I

7 I07—Advanced M07—Manager II

6 I06—Career M06—Manager I

5 I05—Intermediate M05—Supervisor II

4 S04— Senior I04—Entry M04—Supervisor I

3 S03— Intermediate

2 S02—Entry

1 S01—Unskilled



Unconventional Progression






10 E10—Director








2 S02—Entry

1 S01—Unskilled






Progression

Market Structure

Unconventional

Progression

Career Flexibility Traditional Grade Structure Flatter Structure



Traditional Flat

Bands Band Descriptions

Global Org

Leadership

The highest level of leadership; organization with

multiple business units and global operations

Business Unit/

Functional

Leadership

Leadership of a business unit, subsidiary organization,

large functional area

Operational

Leadership/Expert

Contributor

Leadership roles or key experts within a defined

business area

Transactional

Leadership/Expert

Contributors

Managers or professionals who ensure the alignment of

team priorities with broader organizational initiatives

Individual

Contributors/

Supervisors

Individual contributors/supervisors with knowledge of a

technical/professional discipline

Support Staff Individual contributors that perform specific activities and

follow general guidelines and processes

Structure To Support Career Flexibility






10 E10—Director








2 S02—Entry

1 S01—Unskilled



Traditional Flat

Bands Band Descriptions

Global Org

Leadership

The highest level of leadership; organization with

multiple business units and global operations

Business Unit/

Functional

Leadership

Leadership of a business unit, subsidiary organization,

large functional area

Operational

Leadership/Expert

Contributor

Leadership roles or key experts within a defined

business area

Transactional

Leadership/Expert

Contributors

Managers or professionals who ensure the alignment of

team priorities with broader organizational initiatives

Individual

Contributors/

Supervisors

Individual contributors/supervisors with knowledge of a

technical/professional discipline

Support Staff Individual contributors that perform specific activities and

follow general guidelines and processes

Structure To Support Career Flexibility






10 E10—Director








2 S02—Entry

1 S01—Unskilled






Progression

Organizational/Individual

Performance Incentives

Market Structure

Unconventional

Progression

Reward Relative

Performance

Career Flexibility

Individual Performance

Incentives

Organizational Performance

Incentives

Traditional Grade Structure Flatter Structure



Organizational/Individual Performance Incentives

Clerical/Technical

Individual Contributors

Managers

Directors

Sr. Leaders

Executives

Organizational

Performance

Weighting

Individual

Performance

Weighting





Progression Path Vertical Progression

Active Education and

Training on Rewards

Vertical and Horizontal

Progression

Selective Sharing of

Information



Market Structure

Unconventional

Progression

Transparency

Reward Relative

Performance

Career Flexibility


Incentives


Incentives

Data/Information Accessible

on Demand


Ongoing Channels for

Feedback

Informal Feedback Structured Feedback Regular Feedback



Feedback

43% of millennials want

feedback every week, over

2x the percentage of every

other generation

80% of millennials prefer to

receive feedback in real-time

Annual Performance Reviews are

Not Enough—It’s about

frequency, not quantity

Source: Ultimate Software







Training on Rewards


Progression

Drive Rewards to

Top Performers


Feedback


Information



Market Structure

Unconventional

Progression

Informal Feedback Structured Feedback

Spread Rewards to

All Levels of Performers

Somewhat Greater Rewards

to High Performers

Regular Feedback

Transparency

Reward Relative

Performance

Career Flexibility

Degree of Differentiation


Incentives


Incentives


on Demand




Millennials Have a Strong Competitive Nature

Millennials Gen X Boomers

Percentile rankings of respondents who say that competition is what gets them up in the morning

Source: SHL 2012 Talent Report

50 54 59 30 70

58% 48%

Millennials

Other

Percentage of employees who agree that they compare their individual performance with the

performance of their peers




Drive Rewards to Top Performers

Exceeds Most 4.3%

Exceeds Some 3.8%

Meets All 2.8%

Meets Some 2.0%

Does Not Meet 0.5%

8.0%

6.0%

2.5%

1.0%

0%

Merit Budget

With Limited

Differentiation

Merit Budget

With Increased

Differentiation







Training on Rewards


Progression

Drive Rewards to

Top Performers


Feedback


Information



Market Structure

Unconventional

Progression

Informal Feedback Structured Feedback

Spread Rewards to

All Levels of Performers

Somewhat Greater Rewards

to High Performers

Regular Feedback

Transparency

Reward Relative

Performance

Career Flexibility

Degree of Differentiation


Incentives


Incentives


on Demand


Special Recognition Bonus Payments Base Pay Increases Recognition



Special Recognition Awards

3%

5%

10%

15%

26%

20%

25%

0%

26%

92%

2%

8%

14%

16%

22%

33%

25%

32%

32%

79%

6%

1%

8%

7%

11%

15%

15%

28%

31%

80%

0% 20% 40% 60% 80% 100%

Stock/Stock Options

Time Off

Trips/Travel

Other

Plaque/Trophy

Restaurant Certificate

Celebration

Retail Gift Card

Merchandise

Cash

Form of Award

2016

2006

1996

Source: Aon Hewitt Survey—U.S. VCM 1996–2016



Recognition Considered to Be Most Valuable

Most effective when unique and drives acknowledgement

– Handwritten notes

– Event tickets

– “Thank you” from peers/managers/leaders

Source: Aon Hewitt Making Recognition Programs Successful



Final Thoughts

Not just a paycheck—a purpose

Not job satisfaction—development

Not bosses—coaches

Not annual review—ongoing conversations

Not fixing weaknesses—developing their strengths

Not just a job—it’s their life as well

Millennials don’t want to work for you—they want to work with you!



For Further Information

Ken Abosch

Compensation Strategy, Development and Marketing Leader

Talent, Rewards & Performance

1.847.442.3580

[email protected]

mailto:[email protected]



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Reward Implications and Strategies for Millennials - …...Reward Implications and Strategies for Millennials June 2018 Prepared by Aon Talent, Rewards & Performance | Broad-Based