The bottom line has long been the subject of focus across public and private organisations. However, as budgets continue to be tight, it is clear that organisations must invest both time and money in its greatest asset – its talent.  An effective compensation & benefits strategy is an opportunity for an organisation to differentiate itself from its competitors, who might otherwise prise talented individuals away. Organisations need to be clued up on the evolving needs of the working population to ensure they offer the most competitive package.

As many organisations struggled to stay afloat during the depths of the recession, their employees showed great loyalty, pulling long hours often on reduced pay. Now, full market recovery is still some way off and, while significant pay rises may not be viable in some sectors, employees feel they should be rewarded for their hard work. Through a compensation & benefits package that caters for their needs, employers demonstrate that they value their workforce. 

To create the most attractive compensation & benefits package, employers must now address the fundamental landscape change in workforce requirements and demands. Generation X, those born in the 60s and 70s, have ceded place to a new generation of workers, the so-called Generation Y. A flexible approach to compensation & benefits is required to satisfy the different priorities of these generations.
‘Planning for the future’ has long been the dictum governing Generation X’s approach to their careers and so, traditionally, generous pension provision has been the key to attracting workers. For Generation Y, priorities are far different. In research hyphen conducted last year, just 4% of 16-24 year olds were attracted to their employer because of their pension contribution, compared to 17% of 45-54 year olds. Indeed, younger workers are increasingly questioning the traditions of the workplace and now pension plans, previously synonymous with security, are considered unstable. Widespread media attention focussing on the “pensions time bomb” and the demise of the final salary pension scheme has compounded this issue, and led many employers across public and private organisations to question their approach to compensation & benefits.

At hyphen, we are now seeing Generation Y workers seeking flexible benefits that can be tailored to their individual needs. The most popular employers offer a menu of benefits, rather than pre-defined plans. In particular, we have seen high demand for flexibility on holidays. Offering prospective employees time off on top of annual leave, for example a day off for their birthday or additional time between Christmas and New Year, is now critical to attracting top talent to an organisation. Hyphen’s 2010 survey found a quarter (25%) of 16-24 year olds chose their employer based on number of holidays.

Also symptomatic of the Generation Y work culture is a breaking out of the traditional ‘job for life’ mould of Generation X. Workers are looking for variation in their career path, and at hyphen we are seeing Generation Y candidates drawn to employers who demonstrate a commitment to their personal development. Employers who offer secondments, particularly abroad, or sabbaticals are attractive.
Allowing employees to move around like this does of course impact on the organisation and employers would be advised to engage in meticulous workplace planning to ensure extended absences do not negatively impact on the efficiency of their team.

However, the positives of exercising such flexibility far outweigh any inconvenience. At a time when organisations continue to expect a lot of time and commitment from their employees, flexibility can help employers to develop a reputation for care and altruism. We are seeing savvier team leaders of Generation Y applying for monthly budgets for team building, as they look out for the collective welfare of the workforce as much as their own personal development. In this way, far from being an additional part of the employer-employee relationship, compensation & benefits packages can play an effective part in restructuring internal culture fostering a stronger sense of teamwork and organisational drive.  This is certainly something Generation Y value; our research last year found one in ten (11%) 16-24 years were attracted to employers who hold social events, a sentiment echoed by less than 1% of all older age groups.

Success is thus repositioned as shared success. Viewed in this way, the greater the investment in people, the greater the benefits for the entire business model.  By breaking out of rigid compensation and benefits packages focussing on pensions, employers can cater for Generation Y’s desire to take control of their work/life balance and foster a sense of organisational altruism, which ultimately helps them to attract and retain the best talent.
(Article taken from HR magazine, March 2011)