As of May 2015, the Pew Research Center declared Generation Y, also known as millennials, the largest generation in the United States workforce.
At about 53.5 million strong, according to Pew, those born roughly between 1980 and 2000 have stormed the talent economy with their own brand of work style and skill, as well as their own expectations on how they should be compensated for their work.
While most millennials are like other generations and hope to be compensated commensurate with their experience at a fair market value, some of their compensation preferences are unique, according to Lydia Frank, senior director of editorial and marketing at online compensation data and software firm PayScale Inc.
Here are five millennial pay practices that will ultimately help executives attract and retain talent from all generations.
1. Showcase Transparency: Millennials are a savvy bunch. They don’t just want to know what they’re going to be paid; they want to know why as well. As a result, Frank said companies should be open with their pay practices by explaining how salary and other compensation offerings are determined. “Millennials especially have an expectation that they can get access to better information,” Frank said. “They just want to understand why they’re paid what they’re paid, which at the core of it really isn’t unreasonable.”
2. Consider Tuition Reimbursement: With U.S. student loan debt standing at a whopping $1.2 billion — and growing by about $2,726.27 every second, according to a MarketWatch estimate — it’s fair to assume that a lot of millennial talent is more focused on paying off their loan balances than saving for retirement. This makes tuition reimbursement an attractive compensation benefit for millennial talent, according to Brendan Duke, associate director for economic policy at the Center for American Progress, a nonprofit public policy research firm based in Washington, D.C. “We know that happy workers who don’t feel stressed out by their financial situation are better workers,” Duke said.
3. Offer Paid Leave: The U.S. is the only industrialized country that doesn’t provide paid family and medical leave on a national level. That means it’s up to employers, states and local governments to define how paid leave benefits should be offered. As some employers like video streaming service Netflix Inc. recently rolled out generous paid leave policies, others would be wise to follow. Providing employees access to paid leave to care for children and aging parents helps provide them flexibility to continue to contribute even as they tend to family and other personal needs. “If more employers were able to offer paid leave options, I think that actually represents an opportunity for millennials to do better than previous generations by avoiding that motherhood penalty,” Duke said.
4. Create Pleasant Work Environments: For most millennials, monetary rewards and compensation are only part of what makes a company an attractive place to work. Young talent has to enjoy coming to work each day and feel that they’re comfortable in their surroundings. In fact, according to a survey from financial services firm Fidelity, a majority of young talent say quality of life at work is more important than a fat paycheck. What’s more, many of the 25- to 35-year-olds surveyed said they’d be willing to give up an average of $7,600 in yearly salary for a better work environment that includes career development offerings and work-life balance.
5. Provide Purpose: Lastly, young employees need meaning in their work. “Millennials definitely seem to be motivated by purpose in their work,” PayScale’s Frank said. Leaders should articulate the purpose of the organization and showcase how millennials can create lasting impact through their work. Even if compensated fairly in other areas, if young workers aren’t engaged in the purpose or mission of the organization, it’s going to be difficult to keep them engaged.