By the year 2030, three in 10 of those in the U.S. workforce will be members of Generation Z (individuals born between 1997 and 2015). That’s the word from the U.S. Bureau of Labor Statistics. Although there’s nothing groundbreaking about segmenting employees by generation, given the sheer size of this latest workforce cohort, it may be worthwhile to focus on Gen Z as human resource departments consider their talent attraction and retention strategy.
Studies have shown Gen Z to be a very practical generation and particularly focused on finances.
However, Gen Z’s priority on finances does not directly translate to salary alone. Having seen the millennials before them navigate significant credit card debt and student loans, this incoming generation is looking for financial support in every aspect of their lives. Gen Z employees have a long-game perspective when assessing their benefits packages, which means HR and benefits brokers should too.
Knowing that benefits are a vital piece of the attraction and retention puzzle, HR leaders should make sure they package their benefits offerings with Gen Z expectations in mind. And offering top-tier benefits is only the first part. HR and benefits brokers must also effectively communicate those benefits to Gen Z prospects and employees. They need to understand why and how the benefits are competitive in order to find them compelling.
Part 1: Make financial wellness the crown jewel of your benefits package.
Gen Z wants to be able to custom-tailor their benefits coverage, particularly regarding financial wellness. With many starting off their careers while carrying student debt, they are all too aware that the world is an increasingly expensive place to live. For example, an Ameritrade Financial Disruptions Survey revealed nearly half (47%) of Americans believe that cost of living is the biggest threat to their financial security, and another 44% also fear the rising cost of health care.
Nearly one-third of Gen Zers prioritize health insurance as their most desired benefit, and one-quarter prioritize 401(k) and retirement benefits, according to the Zippia 2020 Generation Z Job Seekers Report. As such, employers featuring financial wellness in their benefits packages will certainly want to target this group, but this approach should not stop at Gen Z. In fact, a Prudential survey showed eight in 10 workers say they want their company to provide benefits central to their economic well-being.
Employees of all ages consider benefits such as health, disability and life insurance; paid family medical leave; and emergency savings programs important to their financial resilience, Prudential’s 2021 Pulse of the American Worker Survey revealed. That means HR and benefits brokers should stay creative and focus on how other benefits — especially health insurance — relate to employees’ overall financial wellness. Offering voluntary benefits such as buy-up life or disability coverage; critical illness, hospital indemnity and accident insurance; or even pet insurance can provide an important safety net for employees and their (two- and four-legged) dependents.
Part 2: Demonstrate how your benefits packages support financial wellness.
To support employee financial wellness, employers should make clear exactly how their offerings can — both directly and indirectly — support and supplement their workers’ security.
Benefits brokers should focus their communications on what employees want to know, what they need to do and what resources are available to help.
Keep in mind that for many Gen Z employees, this may be their first experience in selecting and using benefit plans. This provides a unique opportunity to provide education about choosing and using benefits coverage and to provide them with the decision-making skills they’ll need going forward. Explaining basic terminology and key concepts, as well as the economic impact of benefit decisions, will go a long way toward making workers — whatever their age — feel supported. In fact, almost 45% of respondents to a recent DirectPath study said that personalized education during the onboarding process would most improve their understanding of how health insurance works and what they should consider when choosing and using their benefits.
To start, brokers should spell out exactly how employees’ choice of coverage can make a major difference in their financial wellness — for example, demonstrating how the lowest premium plan is not always the most cost-effective, and how health care flexible spending accounts and health savings accounts can provide funds to offset medical costs while helping to reduce taxes.
Employees can especially benefit from one-on-one support during the enrollment process and throughout the year. Benefits educators or advocates can walk employees through enrollment and answer questions in real time throughout the year.
When it comes to using their plans, it’s critical for employees to learn that shopping for health care services is not only possible but important, given the immediate impact on their wallets.
Brokers should clearly point out that there is no fixed cost for any health service, show how dramatically costs can differ within the same network and ZIP code, use examples to show why this matters, and promote the online tools and other resources available to facilitate cost comparisons. Offering transparency services and enlisting health care advocates can help.
Advocates can handle the leg work and provide cost comparison reports, so individuals can make the most cost-effective choice. With hospitals and health systems in poor compliance with recent transparency regulations, such services may be particularly beneficial in helping employees facing inpatient or outpatient procedures.
Part 3: Make it personal.
Providing information and resources is all well and good. But for these messages to stick and resonate with Gen Z, employers must make the “what’s in it for me” abundantly clear. Liberal use of examples, calculators and other tools will enable them to “do the math,” while benefits brokers and health care advocates can provide individualized, one-on-one support at enrollment and throughout the year. Finally, implementing and maintaining a dedicated benefits site ensures that employees have all the information they need when they are ready to consume it and available at their convenience.
Every employee cares (or should care) about financial wellness — but because Gen Z has already shown a focus on this issue, HR and benefits brokers should take note. By acknowledging Gen Z’s priorities, packaging benefits offerings based on those needs and investing in their benefits education, brokers can help employers stand out in today’s hot job market. Gen Z wants to be heard — and a personalized compensation package shows an employer’s support from Day One.