As the age profile of many workforces continues to diversify, are reward managers thinking differently when it comes to providing healthcare and other benefits to staff? Nic Paton investigates
The “greying” or ageing of the UK’s workforce has been well-documented. To cite just two of the more telling statistics out there: one in four (19 million) of us will be over-65 by 2050, against the 10 million who were in 2010 (according to the Office for National Statistics) and more than one million over-65s have chosen to stay in work since the scrapping of the Default Retirement Age in 2011.
This is leading to ever-more multi-generational workplaces, with often as many as five generations working in the same organisation or environment. In turn, this is forcing employers to review the mix and weighting of benefits they offer, as well as the way they target, communicate and deliver them.
The orthodoxy in this context has long been that, in such a fluctuating multi-generational working environment, “flex” is the answer. If as an employer you want to deliver benefits that resonate, it stands to reason you need to offer solutions that can be tailored to match the different life priorities and preferences of your employees as they age.
Or does it? A report earlier this year by Aon Employee Benefits, Employee reward and benefits for multi-generation workforces: generalisations about generations, has argued that, while the principle of delivering benefits that work for each generation is sound enough, employers, insurers and benefit providers too often fall into the trap of assuming that what each generation “wants” or will be most interested in will be broadly the same.
The study, by Aon reward partner Martha How, has argued that much of the generational segmentation that underlies flex is often far too simplistic. Not all workers and workforces display the same characteristics, and therefore employers need to become more sophisticated and nuanced when it comes to delivering employee reward and benefits.
“Making sweeping assumptions is dangerous. For employee demographics with wide age ranges, it is essential for employers to use multi-media communication strategies and consider carefully, and potentially even vary, content that truly gets the message across to the whole employment base,” How argues.
So, is she right? And, if so, how does this mean the delivery of benefits needs to change or be rethought?
“I am really pleased Aon has published this; we completely share its view. It is important to try to educate companies that taking a blanket approach is not appropriate,” agrees Carl Chapman, head of wellbeing at consultancy Barnett Waddingham.
“It is, of course, appropriate that communications are targeted, and with specific messages. But it needs to be a nuanced approach. Assuming younger people will be more interested in, say, travel and life insurance and older people in pensions is not necessarily true,” he adds.
“We have been putting out this message around the integration issue, the ageless workforce, for some time now. It is too simplistic to think about ‘millennials’ or older workers or whatever it may be; it is often as much as attitude and life stage as it is the actual age, and working to align things with that,” argues Andrew Potterton head of proposition development at Unum. “The key is to recognise that you cannot put a wrapper around each generation.”
For example, against the backdrop of the ageing workforce, the government’s “pensions’ freedom” changes and pensions’ auto-enrolment, financial education is at the moment a hot issue within benefits.
The Jelf Employee Benefits 2015/1016 survey, published in October, suggested 93% of employers feel there is an increased need for such education, despite just 40% offering help in this way. Recent research by Towers Watson has also concluded nearly half of UK employers (49%) are concerned about older workers deferring retirement because of inadequate retirement savings.
You might therefore assume financial education is a more natural “fit” for the middle-aged to older worker. But it would be a mistake not to consider the appetite for this among younger workers, perhaps saddled by student debt or worried about when (if ever) they might be able to get on the property ladder.
As Chapman argues: “Generally people in their 20s are unlikely to need loads of information about investment choices around their pension schemes; the message to people of this age is simply that they do need to be starting a pension.”
“For sure you can draw some general views about the different generations, but often it comes back to people wanting to be in ‘good’ work, within organisations they can engage with, rather than whether they happen to be 17 or 70,” agrees Iain Laws, managing director for healthcare and group risk at Jelf.
And technology, data and analytics are likely to become increasingly important in this context. This will be in terms of how benefits are delivered, and the personalisation that can be achieved as a result, but also in terms of the “conversation” employers are able to have with their employees, the richness of understanding around their priorities and behaviours.
“Even though we are talking about differentiation, at no point are we saying ‘if you are this generation you need to be interested in this’. Insurers are, I feel, waking up to the need to make this journey as easy as possible around each life stage,” points out Potterton.
“There is much more fluidity and change going on in many people’s lives. So it is not about targeting demographics, it is about looking at people’s lives and how they are changing, and providing choice against that backdrop,” agrees Laws.
What the Aon survey concluded:
Popular segmentation thinking argues we now have as many as five generations in the workforce and they, naturally, have differing needs and preferences, argues Employee reward and benefits for multi-generation workforces: generalisations about generations.
When taken in the context of employment reward and benefits, these are often caricatured by the “twenty-something” being uninterested in, say, pensions and keener on things like retail discounts, and the “fifty-something” being more worried about pensions and health.
From this, flex is deemed to be the answer, as a way for employers to offer choice and allow employees to tailor their package to suit their preferences and lifestyle.
However, this is far too simplistic a way to view the employment world; these generational preferences are not nearly as prevalent as one would think.
The psychological forces that people face – both inside and outside of work – influence attitudes regardless of age, although these can indeed be mapped to some extent against generational differences.
Broad generalisations can be misleading and not all workers and workforces display the same characteristics.
Employers should therefore address generational segmentation when delivering employee reward and benefits with great care.
However, regardless of age, most employees are concerned about:
* Cash sufficient to meet living costs, security for self and family
* Cash for “above-living costs”
* Recognition and career advancement, as it serves both point one and two
* Pension sufficient to fund retirement
* Healthcare (for themselves and their families)
* Recognition for achievement divorced from financial gain
* Good value benefits from their employer
Moreover, at the risk of making generalisations, there do nevertheless appear to be some items in respect of employment that consistently vary by age:
Professional training, education and career advancement
Generally eager for this.
Generally less eager for this post-50, although desire for personal development and recognition remains.
Personal pension contribution over 10% of earnings
Rare in under-25 age group. A desire to save more appears over the age of 30 but few can afford to do this.
>40 and >50 age groups are increasingly saving more.
Focus on cash sufficiency
For those under 30 student debt and the challenges of buying property drive attitudes. For those over 30 the same focus on cash may be driven more by family and mortgage commitments and this continues way past the 40s in many cases.
The only group where cash sufficiency is not front of mind is the >50s, and then only if there has been a long employment history, working spouse and/or consistent earnings >£50k.
Health and fitness
Health generally less of a concern for those under 30 but this is highly situation-specific. Many of the younger generations are health and fitness focused through exercise and fitness activities.
Older groups (>30)
Once people have children, family health can come front of mind. Again this is highly situation specific. Anecdotal evidence and the pattern of flexible benefit choices where employers provide no company medical funding suggests those over 40 value company health screens and PMI greatly due to both an appreciation of value vs market price and health awareness.
Younger groups (<35)
Highly social media receptive and savvy but evidence suggests this group is also highly receptive to face-to-face communication. The buying behaviour of peers is a strong influence here. Shorter messages and less desire for detail unless it is actively sought.
Older groups (>35)
Less social media savvy and more receptive to paper and email communications. This distinction is breaking down but multi-media is vital for the older groups. Some in this group want all the details in booklet format.
To this end, employers should:
* take generational thinking into account when determining HR and reward policy;
* understand their own employee demographics analysed by age but also by earnings;
* before formulating any conclusions about generational preferences analyse existing survey and data sources such as flex plan choices and engagement surveys by age and earnings;
* consider employee communication strategy;
* consider carrying out bespoke attitude research; and
* bear in mind that all employees at a fundamental level want the same thing – clarity, understanding, fairness, reward for performance and from their cash and benefits mix opportunity for personalisation and value maximisation.