How to Enable Generation Z to Thrive

Talent scarcity is the greatest concern of executives around the world. As Generation Z (the generation born in the mid- to late-1990s) enters the workforce, companies will need to fine-tune their Employee Value Propositions (“EVPs”) to favorably position themselves in the ongoing competition for top talent. This presents unique challenges to managers, supervisors, and Human Resource leaders in every sector.

In order to better understand the preferences of Generation Z, Mercer crafted and administered a survey, which:

• Solicited the views of 231 individuals to learn about what total rewards elements matter most to them when considering an employer using the conjoint survey method.
• Addressed three main categories: total rewards, elements of company culture, and respondent demographics.
• Held focus groups of Gen Z participants to gather qualitative data, and validate findings.

Based on our research, we outline five activities to enable Generation Z in your organization.

What We Learned

The survey data revealed that Gen Z considers the items in blue the most important factors for evaluating potential employers, and the items in red least important.

Below are the four factors Gen Z considers most important when evaluating potential employers:

1. Careers: It is interesting to note that formal career development programs, such as rotation programs and working in another department, did not rank highly in terms of preferences for this generation. While recruiters emphasize mentoring and networking, Gen Z prefers an intrinsically socially networked environment at the workplace.
2. Work Life Integration: Since Gen Z has been largely shaped by a recessionary economy, rising costs of healthcare, student loans, and the increasing use of social and emerging technology, we predicted key driving forces for their retention and engagement would reflect these financial and personal realities. Our hypothesis that Work/Life Integration and Culture would be important proved accurate, as these elements were ranked second and third, respectively.
3. Culture: Gen Z also placed great value on ‘Culture’ when asked ‘What differentiated a company’s EVP.’ Specifically, this group appeared to be interested in cultures that enable ‘quicker decision making,’ are high on ‘coaching and development,’ and they gravitate towards companies that are ‘supportive of innovation.’
4. Base Pay: Pay is a priority for Gen Z, but not the most important. They also have a greater desire for pay that is ‘fair and equitable’ and would like to see that ‘higher performers are paid more than average performers.’ Companies considering moving away from performance ratings or performance differentiation in pay should consider these preferences.

What to do to Enable Gen Z to Thrive

We also learned that there are gaps between what Generation Z prefers and what companies are emphasizing to this next generation. To achieve better coherence between the preferences of Gen Z and what your company provides as part of its EVP:

1. Acknowledge differences: We all know that a one-size-fits-all approach is no longer resonating, and we need to embrace the fact that meeting employees’ needs today is becoming more nuanced.
2. Align recruitment strategies with talent strategies: Recruiters should be clear about what your company is promising to potential candidates about “the deal” someone will get as an employee.
3. Construct and communicate a job architecture that demonstrates career advancement opportunities: Depending on your company culture, highlight upward, and / or lateral opportunities, preferably using career management technology given the digital fluency of Gen Z.
4. Design and demonstrate work/life integration programs: Explicitly state what Work/Life Integration options are available and how your employees can participate.
5. Educate and engage employees and their managers around rewards offerings: Ensure your employees are educated on what is rewarded, what drives decision-making on pay, and what the linkage is between career advancement and compensation.

Today’s multi-generational workforce is characterized by a broad and differing set of preferences. Organizations committed to enabling their workforce to thrive will take a data-driven approach to understanding workforce preferences and needs. They will also seek to actively tailor and constantly iterate their people programs to meet the needs of their employees today and tomorrow.

A version of this post appeared on Mercer's Voice on Talent blog. To download the full paper which includes more in depth analysis and recommendations (including gender preferences), click here.

Thanks to Louisa Dunwiddie and Kate Bravery for their assistance in developing this post.