In 2010, the U.S. Bureau of Labor Statistics estimates 10 million jobs will be left unfilled as the Baby Boomers enter retirement. To attract and retain the best employees, there are a few issues businesses should address.
Historically, employees and HR professionals have been most concerned with salary and compensation. However, pay increase budgets have stagnated over the last few years, and benefits, such as health insurance and flexible schedules, are receiving more attention. As new generations enter the workforce, HR departments will have to evolve to meet the needs and differing priorities of their age-diverse staff. In 2010, the U.S. Bureau of Labor Statistics estimates 10 million jobs will be left unfilled as the Baby Boomers enter retirement. To attract and retain the best employees, there are a few issues businesses should address.
Understanding X and Y
When hiring members of Gen X and Y, it’s important to understand their priorities and how they differ from the Baby Boomers. For example, many Gen Xers, born between 1965 and 1977, were influenced by the lay offs and downsizing they saw growing up. Their experiences have caused them to be less loyal to a company than their Baby Boomer counterparts. In comparison, Gen Yers, born from 1978 to 1999, tend to view the world as unsafe, because of events like the Columbine shootings and 9/11, which shaped their perception of the world. These experiences have caused them to value the security provided by benefits, such as health insurance, retirement or disability. Gen X and Y both place a greater emphasis on their life outside of work and often strive to have work/life balance. Flexibility and time off are important to them.
Why Money Won’t Be Everything
Companies will have to examine their current benefit packages to attract and retain the X and Y employees. According to Compensation Data 2007 preliminary results, pay increase budgets have hovered around 3.5 percent from 2003 to 2006, increasing to 3.63 in 2007. In contrast, the cost of health insurance continues to increase putting a financial squeeze on companies. Employers have looked for new ways to reduce their costs by engaging in cost-saving activities, such as increasing cost-sharing, deductibles and co-insurance amounts and decreasing the benefits offered. Twenty-two percent of U.S. employers payroll dollars are being spent on voluntary benefits, and almost half of this amount (10.5 percent) is spent on health insurance alone. With the prospect of labor shortages following baby boomers’ retirement, companies will need to look to new methods to bolster their benefit packages.
Giving Them What They Want
When recruiting, there are a number of non-monetary incentives companies can offer the new generation of workers. Some employers, 12.4 percent, offer a bonus for staying a certain length of time, which may appeal to this less loyal group. The Compensation Data 2007 results revealed extra vacation time is offered by 15.4 percent of companies. This is another incentive which will appeal to those seeking work/life balance. To attract younger generations who tend to be high tech, 84.4 percent of companies are using Internet advertising, and 59.3 percent are performing Internet searches to find candidates.
As mentioned, Gen X and Y employees value flexible work schedules and time off. Flexible work schedules are currently offered to 41.2 percent of technical and professional employees, 39.4 percent of administrative and 39 percent of hourly employees. Although this could be an attractive alternative to large segments of the working population, 45.7 percent of companies do not offer it. Having traveled more than previous generations, Gen Yers in particular are more likely to value time off for travel. Today, companies typically offer first year, exempt employees an average of eight vacation days. Employers should review how their time off policy compares to others when trying to attract those in Generations X and Y.
Staying in the Game
The extent to which the workforce will be affected by the Baby Boomer’s retirement is still largely unknown. However, as the United States begins to introduce a new generation to the workforce, HR professionals will have to learn to adapt to this group’s values in order to attract the best candidates for their company. Given today’s climate, the policies and benefits that worked 10 years ago will not necessarily work today. To evolve and meet the needs of the changing market, there are a few issues to address. First, employers need to understand the differences between Generation X and Y and the Baby Boomers. Next, they should examine the current market trends to better predict which benefits will be attractive to future employees. And finally, they will need to look at which mix of benefits will best lend itself to the company’s success in recruiting and retaining top performers.