Hyper-Competitive, Rapidly Changing, Global Economy

¶ … hyper-competitive, rapidly changing, global economy attracting and retaining the best employees possible is at the center of many organization's strategic plan. Having the top-notch employees, who perform effectively and efficiently, is a valuable competitive advantage that can lead an organization to industry success. With this knowledge, organizations must combine the fact that the bulk of their workforce is now comprised of "Generation X" employees, and as such, innovative policies must be put into place to retain these valuable workers.

This paper discusses benefits as they apply to Generation X employees. An overview will be given to two core theories on employee motivation, as well as who Generation X employees really are. Next, a literature review will be conducted detailing research that has been conducted on this topic to date. Finally conclusions will be drawn regarding the development and implementation effective benefit programs for this unique demographic of worker.

Employee Benefits for Generation X

Introduction:

In today's hyper-competitive, rapidly changing, global economy attracting and retaining the best employees possible is at the center of many organization's strategic plan. Having the top-notch employees, who perform effectively and efficiently, is a valuable competitive advantage that can lead an organization to industry success. With this knowledge, organizations must combine the fact that the bulk of their workforce is now comprised of "Generation X" employees, and as such, innovative policies must be put into place to retain these valuable workers.

This paper discusses benefits as they apply to Generation X employees. An overview will be given to two core theories on employee motivation, as well as who Generation X employees really are. Next, a literature review will be conducted detailing research that has been conducted on this topic to date. Finally conclusions will be drawn regarding the development and implementation effective benefit programs for this unique demographic of worker.

Employee Motivation:

Organizations develop benefit packages for one simple reason, to motivate and build loyalty within their employees. Frederick Herzberg developed one of the leading theories on employee motivation. His dual pronged theory involved hygiene factors, or factors that the lack of these components had a negative effect on motivation, and motivation factors, where their presence had a positive effect on motivation.

Herzberg's studies found that the mere presence of hygiene factors were not enough to have a long-term motivational effect; however, their absence had negative effects. These factors include: working conditions, salary, status, job security, and interpersonal relationships. Herzberg concluded what many organizations have yet to discover, that although paying a below industry salary has a negative effect on motivation, retention, and loyalty, merely giving pay raises and bonuses only have short-term positive effects, before productivity and loyalty levels return to their previous levels.

Herzberg's motivation factors, however, did have a positive effect on long-term motivation, retention and loyalty. These factors include: achievement recognition, responsibility, advancement opportunities, and personal growth potential. Interestingly, these factors have shown up as some of the key motivators for effective benefit packages for Generation X employees.

Abraham Maslow also developed a theory on employee motivation. Maslow's hierarchy of needs is often demonstrated as a pyramidal shape made up of five levels. The bottom four levels are identified as deficit needs, while the top level is identified as being needs. In Maslow's theory, higher needs only come into play once the lower needs on the pyramid have been met.

The deficit needs are made up of: physiological needs, safety needs, belonging needs, and esteem needs. Physiological needs include items such as food, water, air, shelter, and the proper temperature, all of the items one needs to survive. Safety needs are just as the name implies. Once physiological and safety needs are met, an employee will seek fulfillment of his belonging need, one where they fill they belong to a group, are cared about, and fit in. And the last deficit need they will strive to fulfill is that of esteem, in the respect of others around them.

Once all four categories of deficit needs are fulfilled, according to Maslow, and employee will then seek to fulfill the being need category, which is self-actualization. Self-actualization is the desire of employees to make the most of their unique skills and talents. It is a desire to grow and learn and be all that one can be. This too has been found as a driving force for Generation Xers, and as such is a valuable factor for benefits to address.

Overview of Generation X:

Exactly who are these Generation X employees that have organizations in such a dither? Generation X refers to the approximately 44.5 million Americans born between the years of 1965 and 1976. They, as a demographic, follow the U.S. Baby Boom that occurred during the period of 1946-1964 and accounted for the birth of nearly 77 million children (O'Donovan, 1997).

Many Generation Xers have college degrees, however, more than a few have become extremely successful despite their lack of academia experience (O'Donovan, 1997). They despise limits, hypocrisy, and are fed up with corporate antics. The X Generation are powerful innovators that have a real sense of independence and are extremely goal-oriented (Southard & Lewis, 2004).

Generation Xers are the driving force behind the Internet revolution, the entrepreneurs that forged the way with companies like Yahoo.com, eBay.com, and Amazon.com. As one Fortune article noted, Generation Xers "don't climb ladders (...) but dangle across a jungle gym, making shrewd moves that broaden their skills. They are sponges soaking up technical knowledge that eclipses their Boomer predecessors" (as cited in O'Donovan, 1997).

Most Generation Xers were raised in families where stay-at-home moms were non-existent. Their parents were most often divorced, and they were the first batch of 'latchkey kids' (Southard & Lewis, 2004). They often attended daycare, and would come home after school to an empty home. Television, video games and friends became their focus, rather than family. They have been bombarded with advertising campaigns since birth, which has led to their desire for variety, options and brevity (O'Donovan, 1997).

This has led to a variety of outcomes. First and foremost, Generation Xers grew up quickly. They had to become self-reliant. This coupled with parental leniency and indifference has led to Generation Xers having issues with traditional authority. They've experienced a lot, and much of it on their own, and therefore demand respect (O'Donovan, 1997).

Generation Xers are wiser in money matters than many people think and are smarter than their Baby Boomer parents. The X Generation was the first generation to grow up with computers, and as such thrive on bleeding edge technology. They have also been exposed to a history of downsizing, bank failures and political scandal, making them a bit cynical and has heightened their need of self-reliance (Clement, 1999).

They were forced to make decisions on their own at a young age, and this has carried over to their professional lives as well. Generation Xers enjoy decision making. They also want to control their own schedules to determine when and how the work will get done. They see this as being synonymous with independence (Southard & Lewis, 2004).

Generation Xers are also very savvy about benefits. Where their Boomer predecessors stayed with one company for the majority of their career, waiting for the attainment of a golden watch and a farewell party, the X Generation have other concerns. They believe Social Security will not be around when they retire, therefore retirement, as well as their children's education, are their primary concerns (Clement, 1999). For this reason 401(k) plans are one of the biggest benefits to members of Generation X (Matthew, 2004).

Literature Review:

Several studies have been performed regarding the various aspects of benefits and Generation X employees. A survey by Harris Interactive in 2004 was conducted of 300 small business executives and 600 full-time small business employees. It found that nearly seven in ten Generation Xers began their retirement savings before the age of 25. This is in striking comparison of Baby Boomers who had a result of only 3 and 10 that had started their retirement savings before the age of 26 ("Transamerica," 2004).

Interesting, the survey noted that members of Generation X placed a lower value on benefits overall. The results showed that if given a choice between a job with an excellent salary but poor benefits or one with a salary that only met their minimum requirements and excellent benefits, that only 46% chose benefits over salary ("Transamerica," 2004). This result seems to be in the face of both Maslow and Herzberg's theories on the importance of salary in employee motivation.

A study by King (1997) found that members of Generation X were more particular in the jobs they accepted then their Baby Boomer predecessors. They consistently expressed a desire to work in a corporate culture where fun and camaraderie complimented bleeding-edge technology.

For this reason, King (1997) found many companies changing benefit packages and corporate culture to meet these desires. Organizations had begun customizing working hours and implementing corporate wide whitewater rafting trips, all in an effort to attract and retain the best talent available. They found that in addition, these activities helped offset job burnout and helped build team spirit.

These changes to meet the needs of Generation Xers have led to increased productivity and increased loyalty. When these are added to the ability to work with bleeding-edge technology and business critical projects, Generation Xers are sure to be happy. According to King (1997) these employees are used to multitasking as a way of life, for this reason, lots of opportunity needs to be provided to keep them content.

Leschinsky & Michael (2004) provided research on production employees in the Generation X demographic. Their research focused specifically on the wood product industry, yet their results, they felt, could be symbolic of production employees in other industries as well.

The results of their study were enlightening. They found that Generation Xers ranked good salary and steady employment in the top three of motivational forces. They noted that even when an organization was not able to increase employee pay, focusing on benefits could be very important (Leschinsky & Michael, 2004).

By emphasizing the value of the complete benefit package an employee receives, Leschinsky & Michael (2004) feel that an organization can build the value and loyalty that a heftier salary normally requires. They note that an employee's income is much greater than simply their hourly pay rate. Benefits such as health insurance, retirement plans, etc. should be shown to the employees and that this can increase morale and motivation.

Mayfield and Keating (2003) reported on their research findings and implications of employment decisions of Generation Xers. Their research focused specifically on consulting engineers. It evaluated the factors Generation X engineers used in making their initial employment decision, specifically to work in a small consulting engineering firm, as opposed to other potential job opportunities.