Teenagers and young adults – the so-called Generation Y – have witnessed their parents working tirelessly in pursuit of bigger salaries and promotions and don’t fancy slogging their guts out in the same way. At least, that’s what several recent media reports would have us believe.
“Now, as [these young people] go in search of jobs, they have different priorities. They care less about salaries, and more about flexible working, travel and a better work-life balance,” stated an article in the Observer earlier this year.
Here is a group of people, aged between 18 and 28, for whom money and status are not high on the agenda: who want freedom at work, international travel, the chance to take sabbaticals and to work for a good employer brand.
Now, exclusive research by Personnel Today and Ipsos Mori, sponsored by voucher provider Love2reward, has blown those assumptions out of the water. Far from finding that Gen Y is looking for employers to offer this range of workplace benefits and rewards, the research shows that cash is, ultimately, king.
Last month, Personnel Today surveyed 265 adults defined as Gen Y, of whom 180 were currently in employment. ‘Salary and bonuses’ was cited as one of the three most important factors in choosing a job, along with holiday entitlement and recognition for good work.
Factors such as ‘working for a good name’, flexible working, opportunities for sabbaticals and international travel featured much further down their list of priorities. Learning and development was ranked as the fourth most important job factor.
When asked what would be the most important employee benefit to them in five to 10 years’ time, more than two-thirds (68%) – split evenly across both male and female respondents – said pay.
The next most important thing was learning and development, cited by just 10% of Gen Y respondents. Furthermore, an overwhelming 85% said they would prefer their employer to offer cash as an incentive to boost performance, with other incentives barely registering on their radars.
Why money matters
So why this intense focus on money? A combination of heavy student debt, struggles to get on the property ladder and the rising cost of living all seem to be playing their part, according to one leading HR director.
Alan Warner, director of people and property at Hertfordshire County Council, and lead on talent management at the Public Sector People Managers’ Association, said that in the current economic climate, the focus on money was unsurprising.
“Employers may argue it was ever thus, but trying to get decent accommodation at a reasonable price is a challenge for young people,” he says. “We have had incidents of young professionals being unable to access a mortgage because their student debt has been factored in to the calculations.”
Other senior HR professionals, however, claim the results don’t quite tally with their view of Gen Y in their own organisations.
Graham White, HR director at Westminster City Council, says he is amazed by the results.
“I can’t believe the generation that less than a year ago was saying ‘we are ready to change the world’ has drifted so far from that ambition. Surely the credit crunch and spiralling student debt can’t affect that level of energy and drive,” he says. “I accept young people want to move about and develop their experience, but not just to catch a few more pounds in the salary basket.”
Beth Aarons, talent development director at serviced office provider MWB Business Exchange, adds: “Gen Y employees tell us that they want training and development, they want career progression and they want challenges and development. During our team focus groups rarely do they mention financial gain.”
Learning and development
But, according to Karen Wisdom, research director at Ipsos Mori, it is common to find that younger people prioritise basic needs, such as money, over other job factors.
“Although at face value it is rather disappointing to confirm that the needs of Gen Y are dominated by monetary factors, it’s not entirely surprising, particularly given their career stage and the level of student debt these days,” she says. “It is encouraging though to see that learning and development remains high on the list for Gen Y-ers.”
Retirement may seem a long way off to those who have just left university or are about to enter the world of work. According to the research, many Gen Y-ers believe they are too young to start thinking about a pension. Just one in five said pensions were ‘very important’ to them in a job, with only 55% agreeing that it was important to save for their retirement.
But Wisdom says this reluctance to plan ahead is to be expected. “Gen Y are less focused on factors which they see as applying to them only in the future, for example, pensions and life assurance.” This holds true for other benefits featured in the research, such as flexible working options, childcare benefits and holiday entitlement. Gen Y undoubtedly lives in the present, rather than looking to the future, she adds.
The HR dimension
So what do these results mean for HR professionals, and how should they adapt their recruitment and retention strategies to better reflect the demands of Generation Y?
Too often the ‘personnel’ approach to young people is the equivalent of watching your dad dancing at a wedding – uncomfortable viewing, according to Deb Clarke, joint director of HR for Tower Hamlets Council and primary care trust.
“HR is trying to establish a virtuous circle where we employ and engage with young people so they can show us how better to employ and engage with young people,” she says.
Warner adds that the results should send warning signals to employers about whether their benefit packages are fit for purpose.
“The message I receive from my staff is that they don’t mind working hard if the rewards are commensurate with their efforts. Also they want to see their benefits package flexing as they go through different stages of their lives,” he explains.
Terence Perrin, chair of the Association of Graduate Recruiters, which represents some of the top employers in the UK, agrees that organisations must review the benefits they offer to Gen Y workers as their careers develop.
“When they join they will be interested in paying off debts, but as time progresses then childcare benefits and flexibility become more important,” he says.
Employers are getting more sophisticated in the way they look to both attract and retain Gen Y workers, he adds, with firms responding positively to employees’ concerns about where their career is heading and how they fit in the workforce.
Wisdom concludes that the importance of money should not mean employers take their eye off the ball in other areas.
“The results do not negate the need for strong employer branding in the marketplace, nor the importance of corporate social responsibility and ethical behaviour as these factors are important points of differentiation, once the basics have been met,” she says.
“It remains vital for employers to understand how well known they are among their target employee groups and how positively regarded they are on each of the factors that contribute to their overall employment proposition.”
But, despite their apparent obsession with cash, it does seem that Gen Y are at least blessed with a sense of realism. About two-thirds of respondents said they expected to be earning between £26,000 and £50,000 in a decade’s time. Just 3% expected to be earning between £70,000 and £100,000 and only a super-optimistic 1% thought their salaries would top six figures.
What do you think? Is HR tackling the Gen Y challenge? Email [email protected]
How should employers attract Gen Y workers and do the survey results relate to your experience? Join the debate in HR Space
See video interviews with Gen Y employees, plus a recruitment manager’s view on the survey results
Visit Personnel Today’s Generation Y web page for exclusive content and opinions
Gen Y research – HR feedback
Jackie Lanham, learning and development director, Norwich Union
“Within each generation there will be diversity in terms of what people prioritise, be it cash, benefits or career development. At Norwich Union we clearly link pay to performance and provide the development opportunities to improve performance and provide progression whatever generation employees are.”
David Smith, people director, Asda
“Many of [our staff] are much more concerned with ethical matters than just about money. They are concerned about the type of business they work for, and whether sourcing is ethical. Some of the traits the survey identifies feel more like Generation X than Gen Y-ers, and certainly are not what I’m seeing in my business.”
Deb Clarke, joint HR director, Tower Hamlets Council and primary care trust
“Gen Y is incredibly important to us Tower Hamlets has the youngest population any of local authority, and over half of our young people have Bangladeshi and Muslim heritage. This gives another dimension to Gen Y our young people have many attitudes and needs in common with their peers but recognising their uniquely rich heritage and religious beliefs is very important.”
John Wrighthouse, divisional director, HR, Nationwide
“It’s hard to say how much an individual is prepared to ‘trade-off’ with the job – how much more cash do they want to work for an organisation that has less ethical, social and community responsibility? Our experience suggests that cash is not king among Gen Y, however it is part of the royal family of factors that motivate them.”
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About Ipsos Mori
Ipsos Mori is a leading UK market research organisation and is part of the global Ipsos Group.
Its Employee Relationship Management (ERM) specialism has 40 years experience in conducting HR research among organisations, their employees and the workforce in general.
Ipsos Mori ERM works with clients to provide insight into what attracts, engages and retains employees, for the benefit of greater organisational effectiveness.