In roughly ten years, the baby boomers will be retiring and the workforce will mainly comprise generations X and Y, plus the next cohort. Inspired by a presentation entitled “A Look into the Workforce of the Future” by Charles Donkor of PwC at the Swiss Life Network Client Day 2014, we look at the Millennials and explore the differences between the generations. How is this affecting the workplace and the business landscape? And how should insurance providers adapt in response?
There is no exact definition of the Millennial generation, also known as Generation Y (or the Facebook generation). However, most people agree that this is the group that came of age at the turn of the millennium, along with the rise of technology and social networks. It is the first generation to be truly globally connected.
Facebook and Co. are more than just applications for this generation. The Millennials grew up with technology and multimedia; these are integral to their lives. Globally connected via the internet and social networks, Millennials share constantly and demand instant feedback. They enjoy collaboration, and expect transparency. They think hierarchies should be based on ideas and knowledge, not position, and prefer to solve problems using collective wisdom, via conversations, instead of waiting for solutions to be delivered. They want to work for organisations that have a positive impact on society, with a corporate culture that flexibly meets their needs. In short, they are different to other generations. (See the research data from PwC’s Millennials at Work – Reshaping the Workplace at the end of this article.)
Workplace integration can be hard
George Orwell said, “Each generation thinks it is more intelligent than the previous and wiser than the next.” The modern workplace has three main generations: baby boomers, generation X, and generation Y (the Millennials). Their different work ethics, values, and styles of interaction and communication can lead to friction, which is often added to by misconceptions about each other. According to Charles Donkor’s research, baby boomers feel that younger people do not have as strong a work ethic as they do, while the Millennials believe they have a good work ethic for which they receive too little credit.
These perceptions make it challenging for management to deal with new entrants. In a 2011 survey of over one thousand global CEOs conducted by PwC and the World Economic Forum on the topic of key talent challenges over the next three years, 54% of respondents cited worries about “recruiting and integrating younger employees”. CEOs responded similarly when asked the same question more recently. But what does “integrating” mean?
According to Charles Donkor, who has extensive experience of managers in different companies, it often means: “they should work like the rest of us”. Many managers think the Millennials need to “grow up” to fit better into the workplace. Pascal Carpentier, Senior Vice President of LVMH Inc. and Benefits Director of LVMH Group concurs: “Today's teams are increasingly diverse with many new Millennials entering the work force. We must equip our leaders with the skills to manage in this new environment and not approach this generation in the same traditional way of management.”
Embracing difference helps attract and retain talent
However, many business leaders and HR professionals are just now realizing that they themselves have to change, firstly by acknowledging generational differences. The alternative is to risk alienating Millennials, who will go elsewhere, taking their fresh ideas, information-sharing skills, and innovative approaches with them. Organisations that do understand and embrace generational differences will find it easier to support employees to work better together, and thus attract and retain the best talent.
Charles Donkor stresses, however, that understanding and managing generational differences does not mean simply adapting the organisation to fit the style of the new generation. There will always be different generations sharing the workplace, and companies will benefit from introducing processes designed to bring out the best in all age groups: the younger generation joining the organization, and the older generations that will be remaining at work for longer, for both legislative and financial reasons.
Regardless of the approach, the key is to accept that there is constant change in the workplace, and each generation has different needs regarding career progression, work-life balance and employee benefits. Meeting these various needs is essential if we are serious about creating a productive and happy workforce. As Frank Arrindell, Benefits Analyst of IKEA Group says: “We may think we know it all right now, but there will be more changes coming up, maybe even within a few years, and we need to make sure that we stay up to date on the latest developments and understand how people are thinking and feeling.”
Millennials are customers too
Millennials will also form an increasing share of the customer base for every business, and as insurers, we must ask whether current employee benefit plan designs, and how we communicate with insureds and clients, are adequate both now and for the future. More importantly, Millennials will be growing into decision-making positions soon, and have the power to drive the market. What is the best way to build relationships with them to ensure we meet their needs?
According to MetLife’s 2012 Study of Employee Benefit Trends, nearly 60% of companies have begun taking measures to understand what different generations of employees want from their company benefits. Several recent surveys reveal that Millennials think differently about benefits compared with older generations at the same age. Although the MetLife study is conducted in the USA, many benefit strategies seem to be of similar importance in both the USA and other countries. (see more research data from MetLife’s 2014 Study of Employee Benefit Trends at the end of this article.)
Millennials appear more interested in voluntary benefits that they can pay for themselves. By designing products and features that match the needs of each age segment, and framing the advantages of owning these benefits accordingly, their value will be more readily apparent. The older workforce may appreciate features such as guaranteed insurance with no eligibility restrictions for pre-existing conditions, while younger workers often want portable benefits, as they expect to change jobs more frequently.
Cafeteria plans are already well-established. These let employees select benefits based on their needs. In some markets, employees can invest their retirement contributions in funds on the market. A simplified version, which automatically invests for employees based on age and risk profiles, is found in lifecycle funds.
The culture of the Millennial generation will also impact how the insurance sector works. According to Charles Donkor, Millennial clients prefer different styles and channels of communication: “This generation has a unique digital culture and wants to be addressed differently. An example is using applications like WhatsApp instead of emails to communicate. If we use an outdated communication channel, we risk failing to reach the right target group. Providers that recognise these traits and adapt early will have an advantage.“
As for building and maintaining relationships, Charles Donkor’s approach is simple but profound. “They are the same people, whether as employees or clients. Speak their language. What makes them different as employees: their preference for conversation and collaboration, multimedia communication, transparency, etc., is the same when they are clients. Work with them to build a solution instead of just bringing them a plan. Use multimedia. Ask for feedback - and give feedback. These are all important elements for building relationships for the long term.”
Employers today are taking note of generational differences not only in the workplace, but also in their approach to benefits. As the number of Millennial employees grows, the importance of this will increase. Good insurers recognise the employee benefit challenges posed by different generations, and provide appropriate solutions and services to companies to meet these. They are also working to build long-term relationships with the Millennial generation, using the new styles and channels of communication that the managers of the future so clearly prefer.
About Charles Donkor
Charles Donkor is a partner at Price Waterhouse Coopers. He leads the Human Capital Consulting practice at PwC in Switzerland and Talent Management practice globally. His main area of consulting include Workforce Management and Planning, HR Strategy and Transformation, Talent Management as well as Cultural Change Management. He has close to 20 years of experience working for multinational consulting firms.
PwC Millennials at Work – Reshaping the Workplace
- 54% expect to have 2-5 employers in their career; 25% expect more than 6.
- 95% say the work/life balance is important to them.
- 41% say they would rather communicate electronically than face-to-face or over the telephone.
- 65% state that the most influential factor for them to accept a job is the opportunity for personal development.
- 73% say that customisable benefits and non-financial rewards are attractive to them.
- 51% say feedback should be given very frequently or continually on the job.
- 38% prefer mainly regular working hours with some flexible working hours; 32% prefer mainly flexible working hours.
MetLife 2014 Study of Employee Benefit Trends
- 86% of generation Y particularly value having benefits personalized to meet their individual circumstances and age.
- 54% of generation Y strongly agree that they need more help understanding how their benefits work and how these options help meet their needs. The overall percentage is 37%.
- Younger workers find technology helpful when selecting and enrolling in company benefits: 43% of generation Y choose live chat, 50% choose mobile apps, 48% choose social media, and 54% choose online tools. All much higher than previous generations.
- 69% of generation Y prefer to review their benefits at home, where it’s easier to discuss choices with a spouse or partner. This shows that it is important to ensure that access to company benefit websites is available from outside the workplace, to enable convenient access to benefit information and tools that employees appreciate.