How is Total Rewards Affected by Different Generations?

How is Total Rewards Affected by Different Generations?

Nowadays, there are more generations than ever before in the workforce. As a result, many aspects of total rewards have been affected by the differences in these populations. Here, we take a look at how each of the key elements of total rewards is affected:

  • External Position Equity
    This refers to the job’s market value, and its competitiveness in terms of geography, industry, organization, position, and recruitment/retention trends. While generational diversity hasn’t directly impacted external position equity, it has caused some employers to rely more on internal position equity to value jobs.


  • Internal Position Equity
    Irrespective of market value, this element measures how valuable a position is to your organization. After the recession in 2008, many organizations developed “hybrid jobs” and began creating positions around employees. This allowed companies to take advantage of employees’ skillsets, especially those who held multiple positions or had many years of tenure in the company. For this reason, it’s no longer sufficient to look at the market alone when valuing jobs; specific competencies must also be considered as well.


  • Employee Pay & Recognition Equity
    Employee pay and recognition refers to how the company compensates and recognizes its people. Internal pay levels are determined by assessing internal and external factors, as well as appropriate methods for recognizing employee performance and seniority.


  • Total “Non-Cash” Compensation
    Non-cash compensation includes total rewards elements such as benefits and retirement. An important factor to note in this area is that there’s a growing need for flexibility in addressing generational differences in both benefit and pension design. For instance, recognition and respect for experience and tenure is a priority for Baby Boomers and Veterans.


  • Ability to Fund All Aspects of the Program
    Lastly, it’s essential for employers to determine the ROI of all programs to demonstrate the impact on effective recruitment and retention of staff required for the organization to succeed.


While total rewards programs have always been complex, the challenge of creating an effective program is now compounded by the varying needs of different generations in the workforce. Nowadays, the decentralization of total rewards has become a reality for many organizations. For most, it’s no longer effective to pay everyone the same. With up to five different generations in the workplace at the same time, there can no longer be a “one-size-fits-all” approach to total rewards. Thus, HR professionals must strategically shift resources to accommodate the needs of various groups while maintaining an economical stance on compensation.

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