Reward Implications and Strategies for Millennials June 2018 - - PowerPoint PPT Presentation

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Reward Implications and Strategies for Millennials June 2018 - - PowerPoint PPT Presentation

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Reward Implications and Strategies for Millennials June 2018 Prepared by Aon Talent, Rewards & Performance | Broad-Based Compensation Rutherford County MTSHRM Todays Discussion Topics The Millennial Mindset Implications for

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Reward Implications and Strategies for Millennials

June 2018

Prepared by Aon

Talent, Rewards & Performance | Broad-Based Compensation

Rutherford County MTSHRM

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Aon Hewitt | Talent, Rewards & Performance | Broad-Based Compensation Proprietary & Confidential | BBC/WaW/Millennials.PPTx/001-Z7-04029 05/2017

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Today’s Discussion Topics

  • The Millennial Mindset
  • Implications for Rewards
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Meet the Millennials

Born 1925–45 Born 1946–63 Born 1964–80 Born 1981–96

Silents Gen X Millennials Boomers

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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
  • ptions
  • 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

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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

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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.

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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

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5 Generations Comprise the Workforce in 2020

Diversity in the Workplace

Source: Aon Hewitt 2015 Health Care Survey

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How Millennials Differ

Source: Corporate Executive Board

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Life Through the Eyes of a Millennial

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Life Through the Eyes of a Millennial

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Life Through the Eyes of a Millennial

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Things Millennials Don’t Use

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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

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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

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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 Percentage of Payroll

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 2017 Projected Percentage of Payroll

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

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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
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Fulfilling.

(adj). Making someone satisfied or happy because of fully developing their character or abilities.

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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

  • pportunities

Provides meaningful work Provides stimulating work Is an organization that empowers employees

Source: Aon Hewitt Workforce Mindset™ Study 2016

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Expectations for Promotion

68% 89% 53% 77% 2 years or less 5 years or less Millennials Other Generations

Source: Corporate Executive Board

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Diverse Experiences Retain Millennials

Maximum Impact of Intent to Stay for Millennials 23%

  • 1%

Opportunity for Lateral Career Moves Accelerated Promotion Path

Source: Corporate Executive Board

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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

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Job Factors Valued as Important

30% 28% 25% 5% 12% 50% 12% 12% Meaningful work High pay Sense of accomplishment Responsibility Millennials Managers

Source: Levit and Licing, 2011 in Rikleen, ND

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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 your

  • rganization currently offers

A highly skilled direct manager More engaging day-to-day work A more senior position in the organization A more valuable professional development

  • pportunity

A more rapid career advancement A 15% increase in total comp package Millennials Gen X Boomers

Source: Corporate Executive Board

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Flexible.

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

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Expectations vs. Differentiators

50.7% 49.3%

Differentiator Expectation

Has a flexible work environment

Source: Aon Hewitt Inside the Employee Mindset Research

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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

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Fun.

(adj). Amusing, entertaining or enjoyable.

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Expectations vs. Differentiators

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

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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

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Implications for Rewards

Attribute Alternatives Progression Path Vertical Progression Vertical and Horizontal Progression Unconventional Progression

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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

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Unconventional 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

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Implications for Rewards

Attribute Alternatives Progression Path Vertical Progression Vertical and Horizontal Progression Market Structure Unconventional Progression Career Flexibility Traditional Grade Structure Flatter Structure

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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

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
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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

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
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Implications for Rewards

Attribute Alternatives Progression Path Vertical Progression Vertical and Horizontal 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

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Organizational/Individual Performance Incentives Clerical/Technical Individual Contributors Managers Directors

  • Sr. Leaders

Executives

Organizational Performance Weighting Individual Performance Weighting

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Implications for Rewards

Attribute Alternatives Progression Path Vertical Progression Active Education and Training on Rewards Vertical and Horizontal Progression Selective Sharing of Information Organizational/Individual Performance Incentives Market Structure Unconventional Progression Transparency Reward Relative Performance Career Flexibility Individual Performance Incentives Organizational Performance Incentives Data/Information Accessible

  • n Demand

Traditional Grade Structure Flatter Structure Ongoing Channels for Feedback Informal Feedback Structured Feedback Regular Feedback

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Feedback

43% of millennials want feedback every week, over 2x the percentage of every

  • ther 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

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Implications for Rewards

Attribute Alternatives Progression Path Vertical Progression Active Education and Training on Rewards Vertical and Horizontal Progression Drive Rewards to Top Performers Ongoing Channels for Feedback Selective Sharing of Information Organizational/Individual Performance Incentives 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 Individual Performance Incentives Organizational Performance Incentives Data/Information Accessible

  • n Demand

Traditional Grade Structure Flatter Structure

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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

Source: Corporate Executive Board

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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

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Implications for Rewards

Attribute Alternatives Progression Path Vertical Progression Active Education and Training on Rewards Vertical and Horizontal Progression Drive Rewards to Top Performers Ongoing Channels for Feedback Selective Sharing of Information Organizational/Individual Performance Incentives 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 Individual Performance Incentives Organizational Performance Incentives Data/Information Accessible

  • n Demand

Traditional Grade Structure Flatter Structure Special Recognition Bonus Payments Base Pay Increases Recognition

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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

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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

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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!

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For Further Information

Ken Abosch Compensation Strategy, Development and Marketing Leader Talent, Rewards & Performance 1.847.442.3580 Ken.abosch@aon.com

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About Aon

Aon empowers organizations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design, and execute a wide range of solutions that enable clients to cultivate talent to drive organizational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon, please visit www.aon.com.

2017 Aon plc This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The comments in this summary are based upon Aon's preliminary analysis of publicly available information. The content of this document is made available on an “as is” basis, without warranty of any kind. Aon disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed

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