Why benefits shouldn’t be based on generational labels

Segmenting your employee population and creating profiles for each segment can be useful when designing benefits strategies. But relying too much on generational labels such as baby boomer, Generation X or millennial can be counterproductive. In addition to understanding how generations differ broadly from one another, it’s also important to understand commonalities.

The 2016 Willis Towers Watson Global Benefits Attitudes Survey surveyed nearly 30,000 employees globally, including more than 5,000 in the United States, about their attitudes, preferences and behaviors toward their employer-sponsored benefits. The research sought to determine if generational differences exist when looking at employee attitudes about key issues affecting benefits, including financial strain, overall well-being, retirement, and health and benefits.

There has been much discussion about the stagnant economic environment and its impact on American families. The survey asked employees about their current financial situations to determine how different generations are coping. Comparing 2016 results with those of previous years, the survey showed that all employees — defined by each of the typical generational buckets — have experienced double-digit increases in satisfaction with their current financial situations since 2009. This is especially true for boomers, who have seen their retirement savings rebound since the end of the financial crisis.

In fact, boomers are more confident financially than either Gen Xers or millennials. However, millennials’ satisfaction rates are closer to those of boomers than Gen Xers.

While knowing this is valuable information when designing benefits strategies, satisfaction rates alone do not provide insight into why the differences between the generations exist. Are millennials happier than Gen Xers because their boomer parents are? Or are Gen Xers less happy because they are still in the thick of the financial stressors associated with raising a family?

In other areas, such as concern about debt, millennials look a lot more like Gen Xers than their boomer parents. But perhaps even more importantly, all generations have these concerns. In fact, more than one-third of employees worry often about their debt and one in five said their financial situation is negatively affecting their life.
See also: Debt should be priority in financial wellness

Counterintuitive or a natural evolution?

What these findings — and the questions they raise — show is that surveys can ferret out broad trends, but it’s also important to consider how specific products can benefit employees regardless of their generational classification.

This concept may seem contrary to the work social scientists have done to craft these generational profiles. But instead, it’s the natural evolution of these models. While the boomer or millennial label may be helpful classifications at the macro level, within these groups, there are numerous subgroups. For example, while macro trends may show that Gen Xers have a higher level of financial stress than other generations, there are subgroups within the Gen X category that have low levels of stress. Perhaps the Gen Xers who have low stress have developed a comprehensive financial strategy and managed expenses, while those with high stress have not.

Consider another finding from Willis Towers Watson’s survey: When asked about their biggest financial priorities, housing was top of mind for millennials while saving for retirement was most important for older workers. All generational groups identified paying off debt as a second priority: at the high end were millennials at 53%; at the low end were boomers at 42%.

The point is employers need to be careful to avoid one-size-fits-all benefits based on generational labels.

These results also point to a need for employers to not only offer benefits that meet the diverse needs of their workforce, but also to communicate the value of the benefits at both the macro and individual level, based on differences and similarities in needs. This is essential education if employees are to choose options that are right for them and their unique circumstances.

Decision support can help employees personalize benefits

This is where responsible decision support can come into play. Whether delivered by a benefit counselor via phone or in person, or via technology in the form of a recommendation engine, guided Q&A, or even an avatar, decision support can help employees understand their needs and guide them to make thoughtful choices about their benefits purchasing. All of these methods help employees by probing below the surface and their initial reactions to determine underlying needs and suggest potential product choices.

A recent study by the Private Exchange Research Council, “Understanding Product Offerings and Choices on a Private Exchange,” showed that employees respond favorably to a technology-based decision support recommendation engine offered as part of a private exchange from Liazon. The study showed that when the recommendation engine recommends a product to employees, they are three to five times more likely to select it than employees that do not get the same recommendation. (It’s important to note that the recommendations are based on employees’ self-reported needs.)

The study also showed that employees’ positive feelings about responsible decision support grow even more positive over time. From 2013 to 2015, employees buying a recommended health plan increased from 32% to 38%. At the same time, the number of people purchasing a more expensive plan option, which oftentimes is more insurance than is needed, fell from 43% to 31%. The study concluded that this uptick may be due to employees becoming more comfortable shopping for their own benefits on an exchange, and therefore becoming more trusting of the recommendation engine over time.

The takeaway for employers is that regardless of whether an employee is a baby boomer, Gen Xer or millennial, all employees have many of the same fundamental benefits drivers and needs. Their needs will ebb and flow over time as individuals and their families move through life stages or phases. But the underlying need to protect and promote financial, physical and emotional well-being will always be there. Bottom line: While there are differences in benefit needs and behaviors across generations, the similarities far outweigh the differences.#

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