It’s been well documented that Millennials and Gen Z employees emphasize different, and often additional, employment benefits. And it’s not just a wish, they talk with their feet — this is a group with less employer loyalty than any generation before them. So everyone now is dealing with new and different popular benefits such as tuition reimbursement, parental leave and a dozen other things. But that doesn’t come for free. What it does do is set up opportunities to track benefits as recruiting and retention savings. It’s not a stretch given the significant connection between Millennial employee attrition and employee benefits.
Why you should consider benefits as recruitment and retention investment
Everyone wants more benefits. So the immediate argument is often that it’s simply additional cost on top of the traditional benefits like health insurance and vacation. And you have to run a profitable business. It’s not just sunk costs; you are showing employees you care about the things they care about. There are ways to stop seeing it as pure sunk costs, but as an investment, with benefits as recruitment and retention tools.
Benefits as brand. Steve Jobs quite famously thought of innovation at Apple in terms of products, not profits. In a modernised version of “if you build it, they will come”, Jobs felt the appeal of the product, the quality associated with the company, and the strength of the brand would create the demand, that resulted in profits. Similarly, benefits need not be simply an added cost. Many Silicon Valley upstarts and even established businesses are well known for their more modern and more expansive benefits. But that is also a part of the brand itself – young, modern, forward-looking. But all companies can use benefits as a tool to associate the digital age branding with their own organisations.
Benefits for buy-in. Not all benefits have to be available to all employees on day one. For example, stock options and vesting dates are regularly tied to an employee work anniversary of a specific number of years. Similarly, a paid sabbatical, contributions to tuition reimbursement and other more significant benefits can be a reward for loyal employees. Millennials cite better benefits as the number two reason for considering new careers.
Benefits as bottom line. Benefits can, and should be, tied more directly to recruitment and retention savings. That’s because better benefits really can reduce attrition, which translates into real savings. According to one study, Cigna saved $1.29 in reduced turnover and recruiting costs for every $1 it spent on tuition reimbursement. When you take in the totality of recruitment time and fees, productivity downtime, and lost knowhow, benefits can help finance other operating costs. Companies can model out goals to track attrition rates and reduced recruitment costs just like other business milestones. Plus, treating benefits as an operating cost is more likely to be built into the budget and less likely to be low hanging fruit in cost-cutting exercises.
Employee benefits as recruitment and retention investment make sense.
Organisations might still think of Millennials as “young” people. But if Millennials generally are considered those born in 1980 or later, the oldest are nearing 40, and the majority are at least in their 30s. In other words, they’re parents and homeowners, and they take seriously “real adult” issues. And the youngest among them are still early in their college debt payments. Therefore it’s timely to make these changes in benefits sooner rather than later – so that when Millennials settle down you become part of that long-term plan.