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March 31, 2009

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The classic mantra of the early '70s, "Never trust anyone over 30," was a statement of the struggle between the generations. The generation gap, the gulf that separated the flower children from the Establishment, was wide and deep. If you were on the hippie side of the chasm, you probably made the leap across a long time ago, or even thought it had been filled in.

It hasn't. There's a huge difference in the way people of different generations see things, and if you don't account for that in your human resources practices, you have a lot to lose. "I tell people they're going to have to deal with this, or it's going to take its toll," says Michael Maciekowich, national director of Astron Solutions (http://www.astronsolutions.com). "You're going to lose the loyalty of the Baby Boomers, and you're going to lose the superstars you need from Generation X and Generation Y."

To understand the issue and what you need to do to address it, begin with the Great Depression. "Boomers were often left money by the previous generation, the Depression babies," says Maciekowich. "The Depression babies were determined to never have their children in the position they were in. So they were going to send their children to college, make sure they were taken care of." Part of that was often building an inheritance, a nest egg they could leave behind.

"The Boomers said, 'Thank you, I'm going to have fun and spend this money,'" Maciekowich explains. "They became very materialistic. Everybody wanted to make a quick dollar, so they started investing for the quick return, not the long term. That was fine until the last five years [when the stock market went south]. So the impact on the older Boomers is that now they're extending their work life, going beyond the normal age 65. We're finding more and more people wanting to come back and continue working or to have a second career."

Gen X and Gen Y: 'I'll take care of myself.' Meanwhile, says Maciekowich, "The next generations have been watching this. That's part of the debate about Social Security. President Bush wants to allow people to invest some of their contribution; that's very popular with the younger generations. They're saying, 'Let me take care of myself. You guys screwed up. I don't trust you. I know better what to do with my money, and I'll take care of it.'"

The differences are more than just fiscal. The generations also have very different views of their work and their employers, says Maciekowich. Baby Boomers tend to be more loyal to their employer than successive generations do. "The next generation moves a lot. If you don't take care of them right away, they're out of here. They're constantly looking at what's the best deal for them." That creates an experience gap, says Maciekowich. "With that kind of movement, you don't get people to the point where they're seasoned enough where you can go back and hire entry level to build. According to our exit interviews, the average turnover is 3.5 years. People were just getting comfortable in their jobs, and now they're gone," he says.

To fill that gap, managers are increasingly turning to their senior employees, asking for another five years. "That changes the whole dynamic [of] how you're going to administer benefits and compensation," Maciekowich asserts. "As a person stays longer than age 65, he's going to be looking to the company to help out with more and more of his benefits. He's not as worried about his pay level increasing as he is about benefits and how much he has to pay for them. The younger person is the opposite. He wants money and often doesn't even want the benefits. That's the dilemma of a real crisis between the generations. That's why a lot of our clients are looking at how they can administer what I call 'generational benefits.'"

Keep reward strategies flexible. Generational benefits are all about flexibility. Maciekowich cautions that you need to beware of discrimination issues, but says there are ways to shape your programs that keep you within legal boundaries. For example, he says, a lot of his clients are now using seniority as a factor in paying for healthcare coverage, sending this message to employees: "'The longer you're with my company, we will pick up more and more of your healthcare costs. So if you're a 25-year person, and you stuck with us that long, your benefits are free. But if you're a new person, you have to share the cost.' The idea is to reward seniority, but not in the pay, because that causes artificial compression and problems with equity."

"There's a new sense out there that we have to look at people differently and ask, 'What rewards them more?'" Maciekowich explains. "Pension benefits are more important to your more aged Baby Boomers. Generation X and Generation Y are more concerned about their personal career development and their personal wealth accumulation."

Loyalty for sale. If it sounds like a way to buy loyalty, that's because it is. Often managers, who may be Boomers themselves, miss this particular boat. "What's happened is a lot of companies have lost their stars," says Maciekowich. "They said, 'Sorry, we're having a bad year, so there's no pay increase this year.' I always tell my clients when they're having a bad year: 'If there was ever a time to pay your stars more, now's the time.' Talk about creating loyalty from them! And if you lose your stars because you're shortsighted, you're going to have to pay in spades when things get back on track. In a bad time, your Boomer generation is going to say, 'What can I do to help?' Gen X and Gen Y, from what we're reading and seeing in real life, are totally the opposite. If you don't take care of them, even in bad times, you're going to lose them."

If this sounds strange and mercenary to you, you're very likely a Boomer yourself. "Most of management are Boomers," says Maciekowich. "And they're confused. It's very different from what they're used to, but we have to understand these differences in our compensation strategies. Those HR professionals who break the code, who figure it out, will be very successful."

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Filed Under: Workplace Issues

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