Bridging the generation pay gap
The fabric of the modern organisation is woven by people from a number of different generations. Generation X and Generation Y. The middle generation and the older with a smattering of the youth – each one has its own measure of reward. Each one has to be met on a different level in order for it to thrive in the corporate workplace. Recognising these differences and understanding the value of rewarding the generations on an individual level is of enormous value to the business, both in the short and long term, and more easily managed and controlled when there is a trained reward specialist on hand.
“Having an engaged workforce which works for more than just money is extremely valuable to any organisation,” says Martin Hopkins, Exco member of the South African Reward Association (SARA) and partner at PwC. “It also assists in attracting and retaining great employees. By customising the elements of the reward strategy to each generation, the company is able to extract the most value from its employee value proposition – or EVP – and this is where the reward specialist comes in.”
A reward specialist plays a vital role in ensuring the corporate reward strategy is in line with the overall business strategy and fits in with generational requirements. The differences between each are often far greater than management realises.
Work-life balance, positive personal impact and developmental opportunities are of significant importance to the younger generation. The middle generation is interested in career development, insurance, bursaries for children and time flexibility – rewards which map to their needs and families. The older generation is interested in retirement savings benefits and the more conventional aspects of a reward package such as pay, incentives and share or equity rewards.
“The first critical step is to recognise that different generations have different reward needs,” explains Hopkins. “The next is to understand these needs and to recognise which elements of the reward offering are most valued by different generations.”
It is more cost-effective for the organisation to customise the non-financial aspects of the employee value proposition to be in tune with specific employee segments than it is to try and satisfy all employees with a monolithic, singular offering. The company is in a unique position to take advantage of the multifaceted skill sets of each generation by recognising their strengths and establishing a culture which respects their individual contributions.
“There have been numerous studies undertaken which allow the reward professional to take a more granular and scientific approach to the generational differences,” concludes Martin. “Their skills and training allow them to truly harness the advantages and mitigate many of the generational challenges through well-structured reward programmes.”