Blog: Managing compensation & benefits of a multi-generational workforce

Employee Relations

Managing compensation & benefits of a multi-generational workforce

Understanding the employee overheads from the generational perspective helps the human resource department optimize this cost and utilize it to the advantage of the workforce.
Managing compensation & benefits of a multi-generational workforce

“Companies have to work extra hard to build the confidence of the millennials. [This] trust doesn’t form at an event in a day - it is built with slow and steady consistency and through creating mechanisms to allow those little innocuous [trust-building] interactions to happen”. 

In an interview with Inside Quest, Simon Sinek, an author, and motivational speaker talks about what organizations need to be doing differently to gain the trust of a millennial. Simon’s conversation is also indicative of how engagement strategies need to be carefully accommodative to all workplace generations. 

Today’s typical workplace constitute of cohorts of age groups consisting of Baby boomers(23%), Generation X-ers (30%), Millennials/ Generation Y-ers(35%) and Generation Z-ers(12%). These generations, characteristically have contradicting value systems since newer generations tend to question the ‘status quo’ (Theory of generations - Karl Mannheim). These polarities are also illustrations of the social phenomenon called the ‘generation gap’. Articulation of this tension and its sociology is key in creating effective cross-generational teams at organizations. 

This multi-generational perspective has great implications in the strategic management of human resources.  

With different aspirations, needs and perceptions of the different generations, a one-size-fits-all compensation and benefits package can prove to be counter-effective. Understanding the employee overheads from the generational perspective helps the human resource department optimize this cost and utilize it to the advantage of the workforce. 

Compensation & Benefits of baby boomers

Power and position are primary motivators to the Baby Boomers. They are not driven by variable pays but health insurance or a sturdy retirement plan, due to their high affinity towards stability. Nevertheless, perks, privileges, rewards, and recognition are critical to retaining them, since they are known to take great pride in the benefits of their employment.

Compensation & Benefits of Gen-X

Gen Xers are not merely motivated through monetary benefits, in fact, they are the least amongst the generations to be affected by compensation packages alone. They also need their organizations to provide them benefits that allow them to achieve work-life balance. Resultantly, they are the pioneers in demanding flexible work schedules. Non-monetary benefits, namely, individual recognition is very important to this generation.  Leisure activities are an important benefit that needs to be factored in from this generation onwards. 

Compensation & Benefits of Gen-Y

Infamously, millennials are known for their orientation towards monetary benefits. Thus, while structuring the Compensation & Benefits, monetary compensation should contain significant weightage. This generation is also driven by variable pay, as a result of their ability to flourish in a competitive environment. Benefits that signify purposes - such as career acceleration, mentorship and support group memberships - can affect their retention.  Specific, significant and sincere recognition is also important for them.

Compensation & Benefits of Gen-Z

Gen Zers are observed to be working extensively in dynamic job conditions - across jobs and across organizations. Monetary benefits are important to this group but the fact that they might be associated with multiple organizations or communities at the same point of time allows them to be moderate in their compensation demands. Nevertheless, they would require huge flexibility in working conditions and engagement periods.

The employee generation mix of an organization is a key determinant in deciding the compensation and benefits of packages. It is mandatory to note that, benefits should not be customized for individual employees as per their age, because it will account to age-based discrimination. Tiered total reward packages, based on the employee grades, is the best way these multigenerational studies can be implemented in order to remain compliant to the equal employee opportunity statutes. 

Similarly, the recruitment function of HR, too, needs to carefully consider the multi-generational aspect of the workforce and the next part of this article series aims to cover how generations affect recruitment and selection of manpower.


  • "Inside Quest" Simon Sinek (TV Episode 2016)
  • Becton JB, Walker HJ, Jones-Farmer A., ‘Generational differences in workplace behavior’
  • Bullen M, Morgan T, Qayyum A. ‘Digital learners in higher education: generation is not the issue’
  • Lyons S, Kuron L. ‘Generational differences in the workplace: a review of the evidence and directions for future research’
  • Mencl J, Lester SW. ‘More alike than different: what generations value and how the values affect employee workplace perceptions’
  • Papke, David Ray ‘Ageism: A Powerful Nemesis for Effective Workplace Discrimination Law 66’


This is part 1 of the three-part article series which intends to address how multi-generational insights can help in different HR functions to synergize a cross-generational workforce.

Image credit: Twingglee

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Topics: Employee Relations, Life @ Work, #GuestArticle

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