Gen. Z Is Challenging the Status Quo When It Comes to Pay Transparency
When millennials began to enter the labor market nearly two decades ago, they turned the corporate world upside down. With the oldest millennials now nearing 40, it’s time for organizations to prepare for a new population to upend work culture once again: Generation Z.
Defined by the Pew Research Center as those born between 1997 and 2012, Gen. Z-ers were raised in the age of the internet and are known for their tech savvy and independence. These attributes can make Gen. Z-ers hard workers, but in our current tight labor market, it is difficult for companies to recruit this generation for entry-level positions.
With college graduation season in full swing, many Gen. Z-ers are now searching for the perfect first jobs, where they hope to feel engaged and explore their passions. Gen. Z-ers appreciate diversity, personalization, and transparency in nearly every aspect of their lives, including in the workplace. Armed with this knowledge, how can companies shift their recruitment strategies to attract and retain graduating Gen. Z workers?
Technology may be the answer.
Gen. Z Values Transparency in the Workplace
According to a beqom survey, Gen. Z-ers are more likely than the members of any other generation to share salary information with their colleagues. This speaks to Gen. Z’s desire for transparency in the workplace and the generation’s commitment to creating transparency where it does not already exist.
Beqom also found that nearly two-thirds of Gen. Z-ers and millennials want transparency into their CEOs’ salaries. Among those workers, 28 percent said pay transparency was important to creating a better company culture, while another quarter said knowing their CEOs’ salaries would motivate them to work harder and earn more money. Given that just 9 percent of Gen. Z-ers feel comfortable discussing compensation with their managers (compared to 20 percent of millennials), it is important for companies interested in attracting Gen. Z to take steps to help employees feel more satisfied with salary transparency.
One way companies can create greater transparency for employees is by giving each employee access to a total reward statement that provides an overview of the employee’s salary and non-cash rewards. Such statements can give each employee a clearer picture of their true value to the company. According to beqom, 58 percent of Gen. Z-ers rank non-monetary elements as the most important workplace benefits, so it is important that any compensation transparency efforts include these factors as well.
HR teams can also use technology to leverage industry compensation benchmarks and advanced compensation data analytics to show employees that the company is providing equitable pay.
The Importance of Diversity
According to beqom’s survey, 31 percent of US workers do not believe employees at their company are fairly compensated regardless of age or race. Gen. Z-ers, who value diversity as much as they value transparency, may feel transparency can create more support for diversity by building greater trust between all employees and reducing the potential for unfair compensation.
Companies can also support diversity by leveraging technology to eliminate unconscious bias in the compensation review process. Thirty-four percent of respondents to beqom’s survey said they believe their pay is based on what their manager feels they deserve, rather than on their performance. The right technology can take the emotion out of the compensation review process by using machine learning algorithms to measure trends and predict performance based on metrics like education and experience without accounting for age, gender, or race. Such an unbiased review process provides a more accurate picture of an employee’s capabilities and a more realistic base for compensation decisions, satisfying Gen. Z’s demands for both transparency and equality.
Personalization Is Key
Consumer brands already know that Gen. Z loves personalization, and many have started bringing more customization to their products and services to cater to this new generation of buyers.
Shopping isn’t the only place where personalization has power for this generation. Gen. Z-ers’ collective desire for personalization influences their workplace experiences and expectations as well.
Technology can help HR managers and leaders create this personalization. For example, compensation technology can help create more customized total reward packages, catering each employee’s particular compensation package (including non-cash rewards) to their individual needs. This can boost engagement and encourage Gen. Z employees to stay with the company for longer. Because Gen. Z is a socially active generation, companies may want to consider incorporating benefits like match programs for charitable donations or extra paid time off for volunteering into their compensation packages as well.
Employers can also turn to technology to help identify flight risks. For example, some artificial intelligence solutions can flag potential turnover indicators like low engagement, decreasing performance, and continued absences, allowing the organization to step in and address the employee’s unmet needs before the employee jumps ship.
Gen. Z employees demand their employers be transparent, support diversity efforts, and provide personalization. No one single effort is enough for Gen. Z. Instead, to successfully recruit and retain Gen. Z-ers, organizations must create total compensation management strategies, turning to technology to leverage employee preferences and data insights to create workplace cultures that Gen. Z-ers want to join.
Tanya Jansen is cofounder of beqom.