Should Rewards Be Tailored to Generational Differences?

WorldatWork releases today the results of its study "Rewarding a Multigenerational Workforce", which broadly finds that generational differences in the workplace are not currently top of mind for compensation and benefits practitioners.

From the study's summary of findings:

According to the results of this survey, 56 percent of organizations do not even consider generational differences when designing total rewards programs. This implies that organizations may not realize the importance of evaluating the needs of each generation uniquely and rewarding them accordingly. (See Figure 2 on page 6.) Findings also show that 80 percent of surveyed organizations do not have an organizationwide formal or informal strategy in place. (See Figure 3 on page 6.) Considering today’s workforce blend and its accompanying challenges, this likely will change in the near future as companies encounter the need to establish a strategy that meets the diverse needs of a multigenerational workforce. But for now, these figures reflect a general lack of concern among employers, as well as reveal that generational differences are not at the top of practitioners’ minds — and perhaps are not even on their radar screens.

My response?  I admit that it falls somewhere along the lines of: You say that like its a bad thing...

Should rewards be tailored to generational differences?

Part of my struggle with responding to this question is the increasingly broad nature of the term rewards, which we now find to mean not only compensation and benefits but also professional development, work/life initiatives, work organization/flexibility and an increasing list of other things.  That's a pretty heterogenous mix.  And the different elements of this mix each exist to serve very different objectives. So my answer to the question above is: It depends.

If you ask me the question relative to the programs and offerings I traditionally think of as benefits, then ... maybe.  Benefits, to my mind, serve a distinct purpose in the overal reward portfolio.  They exist, mostly, to support and strengthen the health, welfare and financial security of employees (along with their dependents).  And since many of an individual's health, welfare and financial security needs do track with age and life stage, I see the possible wisdom of tailoring benefits to generational differences. I also think we've already taken steps in that direction, though, by offering cafeteria or flexible (Section 125) plans that allow employees to spend benefit dollars in line with their particular needs and preferences.

Direct compensation is another matter.  Cash compensation - particularly salaries and bonus/incentives, even recognition - serves a very different purpose than benefits (or any other reward element), and that is to recognize and provide fair exchange for the experience, skills, commitment, productivity, performance and desired behaviors that an individual brings to their role with the employer.  Here I struggle to see a legitimate place for generational tailoring.  And with pay for performance playing an increasingly prominent role in all manner of direct compensation, I question the wisdom (and ultimately the good business sense) of pushing generational differences as a legitimate pay criteria.

Full disclosure: I am a Boomer and admittedly prone to thinking that we get a little carried away with all this generational difference business.  My life experience suggests to me that we're all different ... and similar, and that we all share characteristics with many peer groups - not just generational, but gender, religious, geographic, occupational, recreational/hobby/dining preference, etc.

Am I all wet on this?  Readers, what say you?

For more information on "Rewarding a Multigenerational Workforce", contact WorldatWork.

Comments

[Career Encourager]

Ann - I am not a boomer and I think you are definitely NOT all wet in your thinking. A well-thought out, broad cafeteria-style benefit plan that is includes professional development funds, the opportunity to buy extra vacation, etc. that provide each individual the chance to buy what s/he needs more effectively address generational, cultural and other individual differences/preferences without locking people into demographic categories they they may not personally identify with. Cash compensation on the other hand should be driven by the business and the market. The growth opportunity for business leaders - as always - is to educate their employees on how the market is impacting the company, and how salaries/bonuses are derived. Far from being a tedious managment task, these types of educational converstaions are actually critical employee development/engagement activities. Employees who understand that business aren't just entitites with huge cash coffers that are being hidden from them, but that businesses are living, growing entities with expenses and profit margins that shrink and grow based on numerous factors (that inclcude employee behaviors) are much better employees AND they tend to have more career satisfaction too - a win-win!

[Ann Bares]

CE:

Thanks for the affirmation, and for doing a better job of articulating my point than I was able to!

[Dan Barber]

Annual incentive pay is partly a way to communicate what is important to the organization, what it requires of its employees to ensure success. Altering the incentives for various groups or introducing choice into the types and delivery methods of key rewards only serves to confuse the message and dilute focus.

[Ann Bares]

Dan:

Great point - I couldn't agree more.

[[email protected]]

I agree with offering choice in benefits plans so that each person can make choices that best suit them and since there may be differing choices within the same generation, to avoid coloring the issue it should just be about 'benefits by (individual & not generational) choice". Organizations like Nokia offer such plans. However, when it comes to compensation, what one is paid needs to be defined by the role one is playing and not by the number of grey hair they have.I find it increasingly frustrating particularly in Asia where the number of years of experience sometimes comes before competence and actual experience when deciding compensation for the job. As a Gen X holding a job that would be envied by boomers as well, to me, this kind of differentiation dilutes the concept of "accelerated career paths" resulting in competent younger professionals hitting a glass ceiling which tends to be worse if you are a woman. Pay for Performance and Competence is the key to raising the game for the individuals and organizations.

[Almostgotit]

Q: Should rewards be tailored to generational differences?

A: NO.

What a ridiculous idea. Should rewards be tailored differently for men and women, Asians and Caucasians, too? Good heavens, how silly we all get, sometimes.

And how infuriated I would be to know I had (first) been assigned to some such category whether I asked to be or not, and (second) was being treated differently because of it. (I can see getting my little "reward:" an adorable flowered satchel containing nail polish and a spa certificate. While my male colleagues get football tickets, beer, and pizza....)

Better is to keep abreast of the most important and applicable trends (as any business should be doing, about every trend that touches their business, anyway) and grow/adapt the entire company to account for those trends. In an intelligent, and humanly-respectful way. (Need help? HIRE ANN. End of story.)

[Wally Bock]

I find the research on generations very helpful, but it's helpful in understanding some social trends, which is exactly what the original research set out to do. But when we try to shape individual rewards based on the group the individual belongs to, we have a name for it. The name is "prejudice."

[Ann Bares]

PH:

Great points and I appreciate hearing about the issue from the perspective of a Gen X'er. Thanks for the comment!

Almost:

I love your response - "how silly we all, sometimes"! I have the same reaction you do to being categorized in this way. Thanks for weighing in from your ever-wise perspective!

Wally:

You have hit the nail on the head - no wonder this feels so bad to me. None of like being treated differently - or "pre-judged" simply because we belong to a narrowly defined group. Why is there an overwhelming sense that this is OK to do with generational differences when we have all (supposedly) learned how not OK it is to do with other differences (like gender, race, etc.)?

Thanks for bringing the question into such sharp focus for all of us!

[Ankur]

cheers. This can be used as a ready reckoner anytime.

I also follow a blog on Importance of Human Resources:
http://managehrnetwork.blogspot.com/

Rgds,
Ankur
http://managehrnetwork.blogspot.com/

[Chris Young]

Ann - great post and great insight on this topic!

I pointed my readers to your post in my weekly Rainmaker 'Fab Five' blog picks of the week which can be found here: http://www.maximizepossibility.com/employee_retention/2008/09/the-rainmaker-4.html

Be well!

[Ann Bares]

Ankur:

Thanks for the comment and for sharing your blog with us.

Chris:

I appreciate the recognition - thanks much! Readers, see Chris' link for a great round-up of his top picks in the HR/Talent/Leadership blogosphere!

[Benefit Consultant]

Awesome article. It really made me think!

[MMG]

Ann-
Thank you for your detailed answer. Let me state that I do not work in HR, but I read several HR blogs. I loved your response to the article "You say that like it's a bad thing" I completely agree!
I would be completely outraged if my company tried to tailor compensation according to generations. I am stuck as a Gen X'er, (BTW, who, pray tell came up with THAT name? I sure didn't and I wouldn't have voted for it!) and as such can only feel the middle child syndrome as companies seem to kowtow to attract all this great talent from Gen Y/Millenials. Give me a break. My perception is that many already have an overly developed entitlement attitude. At the same time, I agree with you that there are many more similarities than differences among us. The era in which a person was born does not mean that we are all the same. It may have some influence on what our values are, but it doesn't dictate them.
I like your (and CE's) comment about cafeteria plans that allow individuals to select the benefits that are important to them. I would rather be allowed to make choices for myself in regards to 'benefits' than have them proscribed to me because the time frame in which I was born. As if I had a choice in that one!