The workplace in 2017 is changing at lightning speed. Millennials play a huge role in the major shift that is happening. The way companies conduct business is drastically different than just a decade ago. Millennials, who currently make up half of the workplace, are estimated to be 75% of the working economy in the next eight years.
An eye-opening research study by HUB International called, The Essential Guide to Compensation and Performance Practices: The Millennial Influence, illustrates important findings about what drives this generation.
Why does this matter to you? And how does this affect your company?
If you want to stay relevant, profitable, and affect change, understanding how millennials perform and how they want to be compensated matters…a lot. After looking at the key findings, we highlighted the top 5 ways to compensate millennials based on the success and feedback we’ve received at Launchbox working with over 5,000 millennials. Here they are:
1. Have Competitive Base Pay
Compensation matters to all employees, regardless of age. However, traditional compensation programs don’t motivate millennials. 68% of millennials strongly agree that their company “pays for the value and results I being to the company.”
Millennials actually want to be paid based on the value they bring. A compensation plan that includes value-based increases, instead of annual merit increases, is much more appealing to millennials. 60% of millennials say competitive base pay is the #1 factor for staying with their employer. If your company is not creating value-based incentives and compensation based on individual performance, your millennials will leave.
During our strengths and stories workshops, we hyper focus on how millennials can understand their strengths, improve upon them, and then communicate their value effectively in in WIFTthem (“What’s in it for them?”) fashion, so their employer understands the value they provide. As a millennial coach or manager, make it clear how your millennials can add value to your company, articulate it well, and therefore be paid more as a result.
2. Make Work Interesting and Challenging
Millennials are hungry for growth and development. They value career advancement, learning, and like to be challenged. Millennials, unlike previous generations, don’t see the value in merely “grinding it out” for years, and then rising to the op. They want to see a clear path to the top, and be engaged, challenged, and interested along the way.
As a millennial coach, you can create interesting and challenging work for your employees by tapping into their “intreprenuer.” Almost two-thirds of millennials wish to start their own business. They are hungry to innovate, and this can be a huge asset to any organization. Provide the structure so that millennials can experiment with new ideas and create new solutions within the company. A culture that promotes a healthy balance of structure, freedom, and feedback is attractive to millennials.
Working with thousands of millennials, we’ve found huge success in helping millennials learn to communicate their desire to innovate and improve certain areas in their company. As a manager in the workplace, make sure your millennials are comfortable coming forward with new ideas and feedback. After all, these ideas are will help your company succeed!
3. Show them a clear path to career advancement
It’s not enough to just tell millennials to work hard now and wait for success later. They need to know and be shown the opportunities available to them if you want them to stay with your company. Almost half of the HUB survey respondents said they were likely to leave their job within the next six months. The cost of this turnover is insane, and takes a heavy toll on your company.
A value-based compensation plan that rewards individual performance is a great way to appeal to millennials. It shows that they matter, and lets them understand that the sky is the limit. The more value they bring and communicate, the more money they earn. Then they get more responsibility, and more opportunities come their way. What business leader wouldn’t be excited by this?
4. Show the Connection Between Personal Impact and Success
Your millennials could be helping millions of people and earning your company millions of dollars. But if they aren’t seeing the connection between their results and the success, they will leave. Social impact and personal development are important to millennials. When they don’t feel the connection between the work they’re doing and the results they’re achieving, they feel dissatisfied. They start looking for other jobs. They leave
The cost of this disconnect and lack of engagement costs a whopping $30.5 billion to the U.S. economy.
Over half of millennials rated understanding how their own personal job directly impacts the success of the company as “very important.” Make sure your millennials can see the direct impact they are having in your company. By engaging your millennial employees in entertaining, challenging, and interesting work, they will find the purpose and challenge they are seeking. As a millennial coach, it’s up to YOU to make sure this happens…and make sure they know it’s happening.
5. Be Transparent about Compensation, Performance, and Feedback
Traditional compensation, annual merit increases, job/grade bands, and equity adjustments are NOT cutting it in 2017. As a leader in the workforce, you must change the formula if you want to succeed, and make it 100% clear to your millennials that they will be rewarded based on the value they bring to the company.
By having a transparent compensation and performance program in place from the get-go, you eliminate any confusion. Millennials need feedback. And they expect it quickly and in real time, just how they operate outside of work with social media. As a millennial expert, make it your job to engage with them regularly. Annual reviews won’t cut it. By having a clear plan in place, they will understand how their actions are direct related to their results, both personally (pay) and as a whole (company impact and success.)
Without frequent communication, millennial engagement levels drop to the floor. Over two thirds of millennials rank feedback directly from their manager as most valuable. Engagement plummets to 20% for millennials who don’t have regular meetings with their managers. As a millennial coach, make sure you are continuously engaging with your millennials and improving your relationship with them. Millennials want feedback in real time, not a month later. The quicker you can give them feedback, the better. Be real with them and give it to them straight. They appreciate tough love, as long as you show that you care.
The ways of the past aren’t working to engage and retain millennials in 2017. If you want to stay relevant, attract the top talent, and keep your successful millennial workers, compensate them the way they want to be compensated. Have competitive base pay. Have a clear compensation and performance plan in place from day one so millennials know they’ll be rewarded based on the value they bring to the company. Keep them engaged in challenging, interesting work by tapping into their “intreprenuer” and creating the space for them to excel within your company. Show them the exciting career path that lies ahead. Allow them to see and feel the impact they are directly having on both the company and the world. Be real. Be authentic. Communicate openly and often with your millennials. This is how you WIN and create kickass results.