Rethinking NGO Benefit Strategies for Gen Z Employees
Who is your target employee? If you aren’t already asking this question before developing your benefits package, you should be. Increasingly, the answer to that question includes Gen Z in some way. According to research from Paychex, “While all other generations are decreasing in the workforce, Generation Z (born 1997 to 2012) has increased their employment share by at least 2 percent every year since 2018. The group surpassed Baby Boomers in July 2022 and are steadily gaining on Gen X and Millennials, despite experiencing the largest share of employment loss due to the COVID-19 pandemic.” This means that HR managers at international NGOs will need to rethink their benefits strategies to attract (and keep) the next generation of entry-level employees.
I teach graduate students about developing a benefits philosophy based on where their organizations fit within the working climate of the industry. If you’re a mature business with lots of Baby Boomer employees, they may be concerned with pensions — but we’re seeing that Gen Z is an increasingly important force in NGO employee populations. So let’s explore the ways these employees will impact how NGOs think about benefits.
What matters to Gen Z employees?
Gen Z is incredibly values-driven. From climate change to DEI, Gen Z cares a lot, and they expect their employers to care as well. Research from Deloitte found, “For values-driven generations like Gen Z and millennials, the ability to drive change on social issues has the potential to make or break recruitment and retention efforts. Nearly four in 10 (44% of Gen Zs and 37% of millennials) say they have rejected assignments due to ethical concerns, while 39% and 34%, respectively, have turned down employers that do not align with their values.” As Gen Z becomes an even more significant influence on the workforce, employers will need to ensure their benefits reflect their values. Many NGOs are already thinking about benefit equity, which is a good start.
If benefit equity isn’t already on your radar, it’s time to start because it will undoubtedly shape how Gen Z sees your company. Mark Beal, an assistant professor of professional practice and communication at Rutgers University, told Forbes, “[Gen Z] will pressure employers to establish a company's purpose in a way that contributes to a better society and prioritize a company's purpose along with profits. Having succeeded at remote learning, they will influence an increased transition to hybrid and remote work as well as the four-day work week.” I’ve found that Gen Z may also expect their employers to do more than pay lip service to their values and demand they donate time and money to the causes that matter.
What employment benefits matter to Gen Z?
When recruiting Gen Z employees, you will find that long-term benefits — like 401Ks, pensions, and health savings accounts (HSAs) — matter less to these recruits. Instead, they are focused on more immediate matters, like fair compensation. Other benefits that matter to Gen Z include:
Paid time off (PTO) — “Nearly half of Gen Zs (46%) told Deloitte researches they feel stressed or anxious at work all or most of the time, and admire peers with good work-life balance. Increasingly, Gen Z wants to know how employers support employees' health and well-being.
Mental health coverage — Research from McKinsey found “Gen Zers, ranging from middle school students to early professionals, are reporting higher rates of anxiety, depression, and distress than any other age group.” As such, acute and long-term mental healthcare is increasingly important for many employees but an absolute must for Gen Z.
Dental coverage — Though this is a largely anecdotal observation, Gen Z seems to care very much about the health and appearance of their teeth — and many expect a benefits package to include quality dental coverage.
Cashless execution of care — This generation has grown up expecting not to pay for their healthcare and employers should plan to accommodate this demand for accessible care. This doesn't mean that I am suggesting a 100% plan with no deductibles or copays, but it does mean you will need to get creative in how you package the components of your plan. For instance, you can opt to leverage an HRA model vs. an HSA or something creative to provide less of a financial impact to the staff.
Low-deductible healthcare plans — For entry-level employees who do not make much money, high-deductible plans are out of the question. Keep this in mind when you’re designing packages for entry-level Gen Zers.
Educating Gen Z about insurance
Many members of Gen Z are still eligible to be on their parent's health insurance plans under the Affordable Care Act. (If this is possible for you, it's encouraged to stay on your parent’s or guardian's insurance for as long as possible — it will save you a lot of money —and look into whether or not you’re Medicaid eligible before paying for an employer plan.) However, as Gen Z ages out of this protection, employers will find it important to spend time educating them about their benefits packages.
Employers may need to explain what a premium or a co-pay is, as Gen Z has no real user experience to inform them. Putting the time in to educate young employees about these issues will pay dividends in the long run. You can also take this time to explain how your benefits package reflects your values and the causes Gen Z cares about. For instance, LGBTQ+ issues matter to the youngest generation in the workforce. Explain how your benefits package — such as coverage of gender-affirming care — responds to those needs. And remember, even if Gen Z isn’t currently a major force in your company, they will be — and it’s time to get to know more about them. If you’d like to learn more about crafting a benefits package that Gen Z will love, reach out to talk with one of our experts.