Managing a multigenerational workforce is no easy feat for today’s Human Resources (HR) departments. While Boomers set sail into retirement, bright-eyed Millennials crop up in their place, bringing with them wildly different experiences and expectations that challenge the meaning of “workplace benefits” as HR currently knows it to be.
What’s Keeping the Millennials Up at Night?
Only 27% of Millennials could survive beyond 6 months if they lost their source of income.1 We have a responsibility as organizational leaders to help them turn this around. One thing affecting this generation of workers is the decline of the middle class,2 a state of living that used to be synonymous with financial security and comfort. Today, only 60% of Millennials are categorized as middle class compared with 70% of Baby Boomers when they were in their twenties.
Pair this with stagnant wages and mounting amounts of student debt, and it’s no surprise Millennials are having difficulty saving for the future. The members of this generation are worse off than their parents, and it subsequently affects what they look for in a job and how they approach their role in the workplace.
With this in mind, employers see the value of offering financial wellness programs as incentives to attract top Millennial talent in a competitive job market. However, many organizations struggle with motivating their younger workforce to capitalize on this valuable benefit.
Discovering a Whole New Generation of Behavioral Characteristics
When implementing a financial wellness program, it’s important to understand that Millennials have been raised in an entirely different world compared with Boomers and therefore have different psychological tendencies when it comes to planning, saving, spending, and managing financial risks.
The economic downturn of 9/11 and The Great Recession are two important catalysts for long withstanding effects on Millennial income and job prosperity. These events not only affected this younger generation’s ability to afford big-ticket items like a house but also made these individuals much more averse to purchasing long-commitment items.3
Living through disaster has programed the Millennial mind to avoid losses at any expense, even if that means missing out on similar or even marginally greater gains. This is how behavioral bias gets in the way of an individual’s best intentions—it alters his or her decision-making ability by foregoing completely rational actions when faced with complex situations.
However, those of this generation do not get the credit they deserve. They are often labeled as frivolous, with misguided priorities. The reality is that Millennials report spending about equal to or less than their income, but a majority have less than $10,000 of total savings and retirement.4 Most of this generation either currently is or yearns to be fiscally responsible. Unfortunately, forces beyond Millennials’ own control—like the current state of the economy—create daunting obstacles.
Harnessing Psychological Tactics as an Engagement Tool
Suffice it to say, there exists a great opportunity for employers—they are uniquely positioned to help make an immediate impact. By allowing financial wellness to be a focus in workplace culture through programs and initiatives, employers can help counteract behavioral biases and influence positive decision-making. But it must be done right for it to work. It must be a part of the organization’s culture, and employees must be motivated to participate.
Two drivers in engagement in financial wellness programs in the workplace boil down to the messaging and support from the employer. Because Millennials are loss-averse, a clear explanation of what these resources will help them gain (and what they might lose by opting out or ignoring them) will improve motivation and participation levels. Incentives are also a fun way to get employees excited and can be used at any point throughout the engagement period. Finally, removing any barriers to enrollment allows for a seamless onboarding process, with little to no effort on the employee’s end.
At the end of the day, we’re only human. That means behavioral biases aren’t going away anytime soon. Each generation will always be faced with its own unique blend of decision-making weaknesses. The point, however, is to acknowledge these shortcomings and overcome them by playing to our workforce’s greatest strengths.
David Kilby is the President of FinFit.
- FinFit Proprietary Assessment Data 2019
- FinFit Proprietary Assessment Data 2019