Generation Z demands flexible employer benefits

Generation Z demands more from their employers: mental health days, work from home two days a week, legal coverage, pet insurance, travel benefits, tuition benefits, college debt relief, access to live event tickets, and even access to one “Emergency Fund.” . The office gym is now the price of admission and yesterday's news.

The inherent tension is that older workers did not have access to this range of benefits when they were at the same point in their careers. Some will deny younger workers access to a broader benefits package because it doesn't fit within their old framework. Flexible benefits are today’s new CHRO mantra.

Flexibility is important. Ignore the myths you hear.

Did you know that by 2025, 27% of the workforce will be made up of Generation Z?

A 2023 report from Workhuman iQ found that flexibility is a key indicator of whether an employee is satisfied with their work arrangement. Additionally, Gallup found that remote-only and hybrid employees tend to have significantly higher employee engagement than on-site employees.

We've heard the myths about Millennials before – this generation of young people is lazy, demanding and unrealistic. Will it be even more difficult to work with Generation Z? Or is this really just new expectations fueled by a combination of new “Covid-19 rules,” technology that enables increased collaboration from anywhere, and other trends?

Daniel Pink, author of seven NY Times bestsellers, commented: “I don't think younger employees don't work as hard as their elders. Every incumbent generation in history has said this about the generation rising behind them. Gosh, that's what people used to say about Gen-Xers like me – and now they say we're crazy workaholics and relentless taskmasters!

“The more people live and work, the greater the need to rethink the structure of career paths and the nature of jobs. For example, since many people in their 60s are still working and there are only a small and fixed number of top positions, companies would do well to create new roles – such as senior scientists, team coaches or master mentors. I'm also a fan of reverse mentorship programs, where these seemingly laid-back young employees share their insights and advice on technology and social trends with their older colleagues. The new normal will be more idiosyncratic, non-linear career paths and job categories that people never imagined.”

Let's face it, I contribute to this Forbes, but I don't live in NYC. That would have been unlikely when I graduated from college in the late 1980s. As a member of the generation

Nothing stays the same forever.

Norms evolve.

Rules change.

Human capital remains scarce

The U.S. unemployment rate is 4.2%, well below the long-term average of 5.69%. Employers want to retain qualified employees, and the labor pool is currently thin. One of the old days is when people quit their boss.

However, companies have a duty to create a strong employment brand and build emotional bonds with employees. Emotional bonds help tip the scales in the company's favor when employees are poached.

Cris Grossman, CEO of Beekeeper. Cris added: “35-55% of frontline workers have changed jobs in the last 12 months. Employee retention is becoming a big issue. Access to communications and benefits must be available to all employees.”

Let's start with mental health

A GWI report highlighted that of all generations, Generation Z is the most likely to report suffering from a mental illness – and is also the most uncomfortable discussing the condition.

Megan Gerhardt, Ph.D. and author “Gentelligence: The Revolutionary Approach To Leading An Intergenerational Workforce” confirmed that there is a shift in norms regarding expectations on both sides – employer and employee.

Gerhardt and I spoke via Zoom and she said, “Generational differences need to be taken into account.” Generational shaming is not helpful. Generation Z comes to work with a different psychological contract. The generational norm today is that we ask for the things we want.”

Gerhardt explained: “The older Generation Z had only been in the workplace for a few years at the time of the pandemic outbreak and this was a formative phase in their professional careers. Work and health have been conflicting priorities during Covid. If you are sick, don't go to work. And for the first time, many business leaders were checking on the mental health of their employees on a large scale. Additionally, many employees questioned whether my job was safe. Generation Z has had a front row seat to mental health in the workplace.”

Now fast forward to today. Employers are expected to monitor the mental health of their employees. Generation Z sees no stigma around mental health as a topic they discuss not only with their peers but also in the workplace. It's no longer unusual to share my current state of mind.

76% of Gen Zers don’t understand their HR benefits

The Payroll Integrations 2024 State of Employee Wellness Report highlighted that only 24% of Generation Z fully understand the benefits of their company. Given the importance that Generation Z workers place on employee benefits, this “lack of understanding” is an opportunity for employer branding. You have a workforce that wants more unique benefits, and there is a communication gap regarding the company's offerings and its future roadmap for flexible benefits.

Doug Sabella, CEO of Payroll Integrations, noted, “Many Gen Zs are leaving money on the table at a time that is critical for them to begin securing their financial future.” Additionally, Gen Z attrition could be compromised by this lack of understanding of the benefits because they do not fully understand what is being offered.”

Missy Plohr-Memming, a MetLife executive focused on group performance, noted Covid's impact on tribal knowledge: “As we enter the workforce during and after the pandemic, many Gen Z employees have primarily experienced remote or hybrid work, what their opportunities for casual, “water cooler” conversations and sharing benefits with colleagues.”

A tsunami of flexible benefits is coming in 2025

As we attended the HR & Tech conference, it became clear to us that we were witnessing an explosion in employee benefits. Companies are quickly competing to offer more innovative and personalized packages. What was once a landscape dominated by basic health insurance and retirement plans has transformed into a vibrant ecosystem of offerings tailored to the diverse needs of today's workforce. Wellness programs, mental health support, flexible work, financial planning tools and experiences like live events are becoming increasingly important for attracting and retaining talent. As expectations of the workforce change, employees are looking for meaningful support that improves their overall well-being.

Adam Rossbach, live events expert and TFL President, commented: “Companies that embrace this change will remain competitive and increase employee engagement and productivity.” The benefits landscape is changing the way companies emotionally Build connections with your employees, who are often the first line of contact with the brand experience.”

Cristina Goldt, managing director at Workday, emphasized the power of technology in creating flexibility: “By leveraging AI and employee sentiment data, companies can understand in real time how their Gen Z workforce is using and thinking about their benefit options. This transparency will allow companies to customize their benefits offerings – be it improving mental health, providing pet coverage or improving paid leave options – and investing in the benefits their employees really want.”

Matters of organizational purpose

Generation Z wants more transparency and an awareness of company values. The truth is, I would call this a Generation Z mindset because older generations appreciate the same thing, but Generation Z started this trend.

David Klein, VP of Talent at Spirit Airlines and board member of Recognition Professionals International, is currently leading the change. He added: “Gen Z is a purpose-driven generation that emphasizes the need for HR leaders to be transparent and aligned to a broader mission when leading change.” It's important to personalize communications and focus on the ” Focus on the “why” behind the change so that Gen Z team members can see their role in the organization’s purpose. This connection promotes greater engagement and motivation.”

Gen Z is not the Snowflake generation

Generational shaming is a losing strategy. Working with Generation Z won't be more difficult, but it will be different. And another way of saying this is to make adjustments to the employer-employee contract.

We all know how to work with Generation X because we've been doing it for decades.

When leaders understand both the need for adaptation and the root causes, they can build a strong HR brand that is both flexible and enduring.