Whitepaper: Why Millennials Want Innovative Reward Strategies From Employers

Why Millennials Want

Innovative Reward Strategies

From Employers

Iconixx // Whitepaper // 02

Why Millennials Want Innovative Reward Strategies From Employers

Contents

Introduction

What Do Millennials Want?

Creating Compensation Plans for Millennials

03

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05




Millennial workers are a vital part of U.S. corporate culture. As

the largest generation since the baby boom, they will make

up 75 percent of the U.S. workforce by 2025.1 They are already

making their presence felt by introducing different ideas about

the best ways to work and new sets of workplace values.

Managers are quickly realizing millennials need to be

managed and motivated differently than other generations.

Retention is one of the top concerns for managers of

millennials, according to Bloomberg Businessweek. The

publication reported millennials tend to stay about 18

months in jobs with high turnover and three years in other

employment settings. They tend to be more willing to leave

positions than their counterparts in other generations, which

means showing appreciation for the work they do is vital for

employee retention. One of the most effective ways to make

millennials feel appreciated is through incentive compensation.

Millennials prioritize their salaries to a large degree. A survey2

from Business Insider and News to Live By showed 69 percent

1 businessweek.com/articles/2014-08-22/how-to-keep-millennial-employees-from-getting- bored-and-quitting 2 businessinsider.com/survey-on-millennials-and-first-jobs-2014-6

What Do Millennials Want?

Millennials tend to stay about 18 months in jobs with high turnover and three years in other employment settings.




of millennial workers place pay as their highest priority when

searching for a new job. The Wall Street Journal suggested

this emphasis on compensation could be the result of this

generation being saddled with high student loan debt, as the

average graduate in the class of 2014 will have $33,000 of debt.

As much as they value competitive compensation, however,

millennials have other high priorities as well. Many aren’t just

driven by the money. Fifty-three percent of millennials said

they need meaningful work in their careers, and 43 percent

said they need positive relationships with their co-workers. Like

all workers, they also want to feel their company appreciates

them. Part of this does involve compensation, as 10 percent

of millennials said they would leave a job that did not pay

enough, or that they would take another offer if it paid better.

Millennials are not alone in these desires. Data from Towers

Watson3 showed only half of employees feel they are fairly

compensated for their work compared to others in similar

positions. A sentiment also shared by half of the workers

surveyed was that their managers fairly reflect performance

in their pay decisions.

According to data from PWC, however, incentive

compensation doesn’t necessarily need to mean cash. While

salary is important, the rewards millennials expect4 tend

to range further than what previous generations wanted.

A generous cash bonus may not convey the appropriate

message or be as motivating as employers had hoped, for

3 towerswatson.com/en/Press/2014/09/compensation-programs-falling-short-at-us-employers- towers-watson-surveys-find 4 pwc.com/gx/en/managing-tomorrows-people/future-of-work/managing-millennials.jhtml

As much as they value competitive compensation, however, millennials have other high priorities as well.



example. Instead, the focus for compensation could be on

creating opportunities for millennials to have experiences,

whether that means tickets to sports games or a company

retreat for high performers. Millennials also value feedback

strongly, and find it most meaningful when given as the

occasion arises. Something as simple as telling a millennial

worker what a good job he or she did as soon as it comes to

a manager’s attention could make all the difference.

Incentive compensation for millennials can serve many

purposes. The first is to increase base compensation and

work toward better retention in that way. This can be effective

particularly for sales teams that significantly reward their best

people, giving millennials the chance to have a key role in

determining what their own compensation looks like. However,

any incentive compensation program for millennials should

balance monetary rewards with other types of incentives.

“What we have found is that people differ in how they

want to be shown appreciation and encouragement,” Paul

White, co-author of The 5 Languages of Appreciation in

the Workplace, told Bloomberg Businessweek. “Verbal

compliments are meaningful to some. To others, words are

cheap and spending time with them is important.”

Millennials value recognition and feedback. If this recognition comes in the form of a meaningful reward that is not money, it will still be satisfactory.

Creating Compensation Plans

for Millennials



As discussed above, millennials value recognition and

feedback. If this recognition comes in the form of a meaningful

reward that is not money, it will still be satisfactory. This

could include gift cards, gifts like food and wine or tickets to

entertainment or sports events. It may also be as simple as an

office-wide email naming the top performers for the quarter

- who may then be rewarded with traditional cash bonuses

as well. Finding the right balance between cash and other

rewards and recognition is important for all sales managers

who have millennials on their teams.

Closely tied with incentive compensation for millennials is the

ability to give real-time feedback. Whether that highlights

areas where a millennial worker shines or where he or she

has a chance to grow, it’s necessary to give to have engaged

millennial employees. Incentive compensation software can

not only drive the right rewards structure for millennials, but

also alert managers to how their employees are doing. This is

vital in managing millennial employees effectively. Managers

of sales teams have many demands requiring their attention

and time, so a program that can help them alert to events that

require feedback is a tool that will prove invaluable for many.

This is especially true of managers who have a very large sales

team. Software can help managers provide personal incentives

and feedback even as they handle a high volume of people

and tasks throughout the day.

On a similar note, millennials who are recognized should feel

the achievement is special. As the Towers Watson survey

showed, some employees feel compensation does not always

match the results each worker brings to the company. Making

sure only to reward those whose achievements are outstanding

Closely tied with incentive compensation for millennials is the ability to give real-time feedback.

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will make the workers in question feel special, and it will

provide more incentive for the rest of the workforce to attain

the same heights of performance.

Millennials in PWC’s research said they found companies

that had opportunities for career progression to be the most

attractive employers. This suggests rewards may not be as

compelling as the chance to advance in the sales team itself.

Incentive compensation planning software can help managers

to review millennials’ performance records for the possibility

of a promotion, or development that could lead to one in the

future. This may be the most desirable incentive of all.

1. finance.yahoo.com/news/exclusive-survey-shows-hard-millennials- 173000455.html2. employers.glassdoor.com/blog/how-to-recruit-retain-millennial-employees/3. pwc.com/gx/en/managing-tomorrows-people/future-of-work/key-findings.jhtml4. pwc.com/gx/en/managing-tomorrows-people/future-of-work/managing- millennials.jhtml5. businessweek.com/articles/2014-08-22/how-to-keep-millennial-employees-from- getting-bored-and-quitting6. capstrat.com/elements/downloads/files/millennials-work.pdf7. businessinsider.com/survey-on-millennials-and-first-jobs-2014-68. towerswatson.com/en/Press/2014/09/compensation-programs-falling-short-at-us- employers-towers-watson-surveys-find