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Millennial Pay -- What Works and What Doesn't
The document discusses effective pay strategies for engaging millennials, highlighting their unique characteristics and workplace expectations. It emphasizes the importance of adapting to trends in employee empowerment, workplace culture, and purpose-driven employment to attract and retain this generation. Companies are urged to treat millennial pay as a marketing strategy, addressing their diverse needs and career stages to foster growth and enhance performance.
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Millennial Pay -- What Works and What Doesn't
- 1. Millennial Pay— What Worksand What Doesn’t
- 2. 7700 Irvine CenterDr., Ste. 930 Irvine, CA 92618 (888) 703 0080 www.vladvisors.com www.phantomstockonline.com www.bonusright.com Founded in 1996 Over 450 Clients in North America
- 3. Vision: Help BusinessesBuild and Sustain a Performance Culture Accelerate performance capabilities by designing pay strategies that transform employees into growth partners.
- 4. If you dothat… • Quality of talent will improve. • Employee engagement will expand. • Performance will be magnified. • Business growth will be accelerated. • Shareholder value will increase.
- 5. 55 Talent Trends One ofthe biggest headaches for CEOs is making sure that the organization has the right people to cope with what lies ahead. There’s the basic question of planning for the skills that are needed now and in the future: Which roles will be automated? What new roles will be needed to manage and run emerging technology? What skills should the company be looking for, and training their people for? Where will we find the people we need? PwC’s 18th Annual Global CEO Survey
- 6. 66 But more importantly,CEOs need to be sure that the business is fit to react quickly to whatever the future may throw at it – and that means filling it with adaptable, creative people, working in a culture where energy fizzes and ideas spark into life. If they can’t be found, they must be created. PwC’s 18th Annual Global CEO Survey (continued)
- 7. 77 Key Prediction By 2020,the worldwide shortage of highly skilled, college-educated workers could reach 38 to 40 million, or 13% of demand. (Source: McKinsey Global Institute)
- 8. 88 Employee Empowerment Employees todayhave increased bargaining power, the job market is highly transparent, and attracting top-skilled workers is a highly competitive activity. Companies are now investing in analytics tools to figure out why people leave, and the topics of purpose, engagement, and culture weigh on the minds of business leaders everywhere. Deloitte 2015 Study & Report
- 9. 99 The Irresistible Organization …Theemployee-work contract has changed: People are operating more like free agents than in the past. In short, the balance of power has shifted from employer to employee, forcing business leaders to learn how to build an organization that engages employees as sensitive, passionate, creative contributors. We call this a shift from improving employee engagement to a focus on building an irresistible organization. Deloitte 2015 Study & Report
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- 11. 1111 Employer Brand Employeeperception Potential Employee perception Consumer perception of you as an employer Not completely in your control Requires a marketing/branding effort effort Impacted by financial value proposition More critical than ever because of social media
- 12. 1212 Employer Brand “…some 80%of job seekers today will research an employer online before deciding whether to apply to a position there. When candidates don’t find enough information to convince them you’re worth working for, they’ll pass. That much is obvious, but employers are only now beginning to reckon with the consequences. In other words, job seekers are making a consumer decision, too: If you aren’t good enough to work for, why buy anything from you? “Showing pride and confidence in your company’s employer brand sends a strong message: ‘These are our employees. See for yourself how they make our company great.’ And, like any good brand strategy, the key is to know how your employees are unique and then flaunt it.” (J.T. O'Donnell, Fast Company)
- 13. 1313 Why Talk aboutMillennial Pay? • Largest generation in global workforce (Pew Research) • Myths abound • Unique frame of reference • Limitless potential impact • Mystery to business leaders
- 14. 1414 Why Talk aboutMillennial Pay?
- 15. 1515 Who Are Millennials? PewResearch Center analysis of U.S. Census Bureau data: 1/3 of Workforce Ages 20 to 36 in 2017 24% of the US population (77 million individuals) The median income: Younger Millennials-- $25k Older Millennials-- $48k
- 16. 1616 Who Are Millennials? 2014Nielsen Research 21% of Millennials are married (42% of Boomers married at same age) 23% have a Bachelor’s degree or higher (most educated generation) Most ethnically and racially diverse generation (19% Hispanic, 14% African- American,5% Asian) 36% of women are mothers 2 in 3 Millennials are US-born 38% of Millennials are bilingual
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- 18. 1818 Millennial Myths “...studies havestarted to dispel the myth of the itinerant millennial. Using data from the U.S. Bureau of Labor Statistics, for example, the website FiveThirtyEight.com has shown that millennials change jobs less frequently than gen Xers did at the same age.…at least 40 percent of millennials see themselves staying at their current organization for a minimum of nine years — a much longer period than the 16 months to three years that’s often reported.“ Millennials Play the Long Game, Strategy+Business, Jennifer Deal and Alex Levenson
- 19. 1919 Trend for JobChanges
- 20. 2020 Myths Translate intoMistakes Using myths as an excuse Treating millennials as a monolithic group Resisting change Making assumptions
- 21. 2121 Roundtable Discussion Perplexed Business Leader: “Ourcompany initiated a profit sharing bonus plan and it just bombed.”
- 22. 2222 Roundtable Discussion All KnowingBusiness Leader: “What’s the average age of your people?”
- 23. 2323 Roundtable Discussion Perplexed Business Leader: “Probablybetween 22 and 31.”
- 24. 2424 Roundtable Discussion All KnowingBusiness Leader: “There’s your problem. Those are Millennials— and Millennials don’t care about money.” (Problem solved.)
- 25.
- 26. 2626 Eric Rea Graduatedin computer engineering Offered job with United Nations $100,000 salary non-taxable “No one ever leaves the U.N.”
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- 28. 2828 Millennial Pay Planas a Marketing Strategy Audience Do Believe Know
- 29. 2929 Identify the Audience NotAll Millennials are Created Equal Persona Age group Career phase Family Goals Living arrangements Millennial type Free time
- 30. 3030 Identify What YouWant them to Do Role Outcomes Impact Performance channel Unique abilities Fit
- 31. 3131 Identify What TheyNeed to Believe What’s possible Who benefits Why it matters Positive outcomes Simon Sinek: "Start with Why"
- 32. 3232 Identify What TheyNeed to Believe Focus on Purpose “The linchpin for connection is a sense of purpose. Most leaders and managers I talk with get this but don’t really know what to do about it. A 2015 study by the Harvard Business Review and EY Beacon Institute found that more than 80% of the 474 surveyed executives believe that purpose is important to many key measures of a business and 70% believe it is important to integrate purpose into core business functions. Less than half, however, believe that their organization has a shared sense of purpose or aligns its strategy to a purpose, and fewer than 38% say that employees are clear on purpose or that the business model and operations are well aligned with their purpose. Given my experience clarifying and activating purpose for organizations, I suspect the percentage of companies that have actually aligned their purpose with their business models or processes is likely much lower.” (Ways to Cultivate Purpose in the Workplace, Workspan Magazine, January 2017, pg 21-26)
- 33. 3333 Identify What TheyNeed to Know Company vision Business model & strategy Purpose Partnership Rewards Relevance
- 34. 3434 Millennial Career Segments Launchers Accelerators Catalysts
- 35. 3535 Launchers Young professionalsat the start of their careers. Just left the university or are within their first few years of graduating. Yours is their initial or perhaps second career-related job. Most of them are single.
- 36. 3636 Accelerators Have hadsome experience with more than one company Are now trying to settle in with an organization where they can rise in ability, recognition, contribution and influence. Most still single but a growing number are married or have life partners and are starting families.
- 37. 3737 Catalysts Entering orare well into their 30s Have gained meaningful experience and possess unique abilities. Able to affect significant (positive) change in an organization Companies are competing for their talents. They have leverage and are in a position to negotiate. Many married and have children. Julia Hartz, Eventbrite
- 38. 3838 The Emergence ofCatalysts The New Corporate Garage “…Apple’s inventiveness is no anomaly; it indicates a dramatic shift in the world of innovation. The revolution spurred by venture capitalists decades ago has created the conditions in which scale enables big companies to stop shackling innovation and start unleashing it.”
- 39. 3939 Catalysts Change GrowthTrajectory “…entrepreneurial individuals, or ‘catalysts,’ within big companies are using those companies’ resources, scale, and growing agility to develop solutions to global challenges in ways that few others…” (Harvard Business Review, September 2012) Jony Ive
- 40. 4040 The Millennial ValueProposition: 1.Compelling Future 2.PositiveWork Environment 3.Opportunities for Personal and Professional Growth 4.Financial Rewards Total Rewards
- 41. 4141 1. Compelling Future I see myself in the company’s future. I want a “seat at the table” in determining the direction of the company. I like the direction the company is headed. I embrace the company’s values. I believe the company can achieve its growth goals.
- 42. 4242 2. Positive WorkEnvironment I like the nature of the work I’m doing. I am working within my unique ability. My responsibilities have strategic purpose. I like the team of people with whom I work. There are channels and processes for solving problems and decision making.
- 43. 4343 3. Personal andProfessional Development As a result of my immersion in the culture and resources of this organization, my unique abilities will improve—and I will experience personal and professional fulfillment.
- 44. 4444 4. Financial Rewards I have some control over how much I can earn if I produce. I feel a sense of partnership with ownership. There is a philosophy that guides pay decisions and I relate to it. There is a mechanism for sharing value with those who help produce it.
- 45. 4545 Total Rewards Approach CompellingFuture Purpose Positive Work Environment Autonomy Opportunities for Personal and Professional Growth Mastery & Purpose Financial Rewards Partnership
- 46. 4646 Financial “Hierarchy ofNeeds” Cash Flow & Living Standard Security Retirement Planning Wealth Accumulation Qualified & Executive Retirement Plans Comprehensive, Flexible Benefits Plan Short & Long-Term Incentive Plans Salary & Bonus Wealth Multiplier Commitment Clear Pay Philosophy 1 2 3 4
- 47. 4747 Hierarchy & MillennialSegments Launchers Area Orientation Cash Flow/Standard of Living • Pay expectations still being formed • Modest needs • Competitive salary and mentoring Risk Protection • Basic needs • Don’t want to pay anything Retirement • Small or little concern VS/Wealth Accumulation • More concerned about money for this weekend • Short-term preferred over long-term
- 48. 4848 Hierarchy & MillennialSegments Accelerators Area Orientation Cash Flow/Standard of Living • Context: • Experience • Peer Pay • Life Responsibilities • College Debt Risk Protection • Adequacy of coverage— family focus • Cost sensitive Retirement • Growing Focus VS/Wealth Accumulation • Emphasis on increased cash flow • Short-term preferred over long-term
- 49. 4949 Hierarchy & MillennialSegments Catalysts Area Orientation Cash Flow/Standard of Living • Prefer median of market pay but with high upside potential Risk Protection • Want flexibility and options • Maximum Control Retirement • Two areas of focus: • Retirement accumulation • Current tax savings • Deferred compensation VS/Wealth Accumulation • Large area of emphasis • Focus on long-term opportunity • Mirror owner opportunity
- 50. 5050 Salary Performance Incentives Sales Incentives Growth Incentives Core Health & Welfare Plans Executive Benefit Plans Qualified Retirement Plans Nonqualified Retirement Plans Salaries Competitivewith market standards? Tied to strong performance management process (merit)? Managed within a flexible but effective structure? Performance Incentives Tied to productivity gains? Clear, achievable and meaningful? Self-financing? Sales Incentives Challenging yet achievable? Reinforcing the right behaviors? Differentiating your offering? Growth Incentives Linked to a compelling future? Supporting an ownership mentality? Securing premier talent? Core Benefits Responsive to today’s employee marketplace? Allocating resources where most needed? Evaluated to eliminate unnecessary expense? Executive Benefits Flexible enough to address varying circumstances? Communicating a unique relationship? Reducing employee tax expense? Qualified Retirement Plans Giving employees an opportunity to optimize retirement values? Operated with comprehensive fiduciary accountability? Avoiding conflicts and minimizing expenses? Nonqualified Retirement Plans Optimizing tax-deferral opportunities? Aligning long-term interests of employees with shareholders? Structured to receive best possible P&L impact? An Aligned Millennial Pay Strategy
- 51. 5151 6 Reasons MillennialsCare About Pay Personal 1. Lifestyle & Wealth Accumulation 2. Career Measurement 3. Contribution Ambitions Business 4. Roles, Expectations & Priorities 5. Partnership 6. Continuity & Fairness
- 52. 5252 What Millennial PayNeeds to Reinforce Vision Where? Model & Strategy How ? Roles and Expectations My Contribution? Rewards What’s in it for me?Line of Sight
- 53. 5353 Market a Futurethat’s Relevant Communicate desire for a growth partnership Demonstrate commitment To the future business To key contributors Promote don’t just communicate Be consistent
- 54. 5454 Market a Futurethat’s Relevant Here’s our future Here’s how we’re going to get there Here’s the role we picture for you Here’s how we encourage our people to grow and contribute Here’s our philosophy about pay and rewards Here are our specific pay programs Here’s how our pay programs could work for you if we achieve our plan
- 55. 5555 Employer Brand Employeeperception Potential Employee perception Consumer perception of you as an employer Not completely in your control Requires a marketing/branding effort effort Impacted by financial value proposition More critical than ever because of social media Millennials are most connected generation
- 56. 5656 In Summary Treatmillennial pay like a marketing strategy Take a total rewards approach Gear pay strategy to career segments Reinforce line of sight Market a future
- 57. 5757 Today’s Presenter: Ken Gibson SeniorVicePresident (949) 265-5703 kgibson@vladvisors.com 7700 Irvine Center Drive, Suite 930 Irvine, CA 92618 949-852-2288 www.VLadvisors.com www.PhantomStockOnline.com ThankYou!