A seismic shift is underway in today’s workplace. Two massive generations with very different needs and expectations - Baby Boomers and Millennials - are testing the abilities of even the most talented human resources departments.
HR managers and CFOs must decide how companies are going to source talent as managing the four-generation workforce presents new challenges.
Boomers Change One Part Of The Equation, Millennials Change The Other
Born between 1946 and 1964, Baby Boomers differ from any other generation. Now, more seniors are working compared to any time since the turn of the century. According to a recent Pew Research Center study
, almost 20 percent of Americans age 65 and older - or around nine million people - are full- or part-time employees. In 2000, that number was less than 13 percent.
Boomers are rewriting the rules of retirement. In a recent Bank of America Merrill Lynch retirement study
, 72 percent of pre-retirees, age 50 and older, say their ideal retirement includes work in some capacity. They remain on the job for a variety of financial and personal reasons. For many Boomers, playing it safe means managing down their income and taking social security at a later date. For employers, it means addressing the unique needs of people in these later stages.
Meanwhile, Millennials - young adults who came of age around the year 2000 - are now officially America’s largest living generation and predictably the largest generation in the US. labor force
Millennials have their own priorities, while facing a unique set of financial challenges. Many are balancing student loans with the need to start saving for retirement. Unlike their Boomer colleagues, they value flexible working hours and training programs within the workplace, so HR managers must factor in these distinct preferences.
The HR Manager And CFO Must Adapt
The four-generation workforce is a unique demographic phenomenon — with two massive generations at opposite ends of the age spectrum — but it signals important changes for companies looking to attract, support and retain the very best talent.
What’s clear for the HR manager and the CFO - they’re dealing with four very different generations, born between 1946 and 2004, that are experiencing a wide range of financial challenges, from paying down student debt and purchasing their first home to supporting aging parents and easing into retirement. HR teams must broaden the conversation they’re having with employees to encompass financial matters far beyond simply encouraging people to take advantage of a 401(k).
A Solution? Addressing Financial And Physical Wellness Together
In the Bank of America Merrill Lynch workplace benefits survey
, 90 percent of large firms said they believe workplace financial solutions will become a standard element of benefits packages in the next decade. And one in four large firms said it currently offers or is considering incentives to encourage employee participation in workplace financial solutions like debt management, budgeting and college savings.
Employers rethinking or expanding their benefits for a multi-generational workforce are starting to look at benefits holistically, as part of a complete package, rather than in silos.
Standard health care programs will also need to be retooled. According to the Bank of America Merrill Lynch 2016 CFO Outlook, the top three benefits programs that U.S. companies use to attract and retain skilled talent are: healthcare insurance (97 percent); retirement funding (94 percent); and bonuses or other compensation incentives (87 percent). In addition, 65 percent offer wellness programs, 55 percent provide education funding, 49 percent offer flexible work hours, and 29 percent offer financial counseling services.
CFOs also said they view rising health care costs as the top business threat to expansion. According to the report, 69 percent of workers had an increase in health care costs in the past two years.
Companies need to manage health care expenses while balancing the need to grow and maintain a competitive workforce. As a first step, CFOs and HR teams need to identify opportunities for cost savings and efficiencies.
Heath Savings Accounts (HSAs) are one answer. Companies can consolidate HSAs with other plans and employees can save for both short- and long-term medical costs. Currently, 46 percent of employees say they have started to use or have increased their use of HSAs, or Flexible Savings Accounts (FSAs), as a response to higher medical costs.
There is a broad acknowledgement among CFOs that more must be done to attract, support and retain their very best employees — whether they’re 22 or 62.
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Derek Cohen is Senior Vice President of Commercial Banking for Bank of America Merrill Lynch, where he delivers strategic financial advice and solutions to help companies grow, improve liquidity and cash flow, manage U.S. and international payments, and invest for the future. Derek also serves as Market President for the greater Wilmington area for Bank of America, working to strengthen communication and integration among the company’s local businesses. Contact Derek at (910) 442-1860 or [email protected].