As CEO of a large professional consulting firm, I make sure to spend a lot of time speaking to and meeting with colleagues at all levels. They raise their hands during corporate Town Hall meetings; I get stopped at the elevator bank and asked for advice.
When it comes to the youngest among our workforce—those who fall within the cohort labeled Generation Z (or, more colloquially, Gen Z)—it might be tempting to make assumptions about them based on common stereotypes: that they are overly entitled, have short attention spans, and lack loyalty.
But from my lens, this generation is curious, committed, and eager to make a difference. Differentiated from its predecessors, Gen Z is the most diverse, educated, and technologically adept generation in history. Affected by the continuous crises of their early career years and set apart by a lifetime of utilizing new technologies in their daily lives, Gen Z is leading the drive to create a post-pandemic world of work that includes a new “social contract” between employers and employees.
In one area in particular—the workplace and benefits landscape—these younger workers stand to make the greatest impact on the workplace of tomorrow, especially given their unique willingness to make career moves in order to thrive.
Right now, Gen Z comprises 15% of the U.S. working age population. As their share of the workforce increases (predicted to rise to 31% by 2031) businesses looking to remain competitive in the labor market and attract and retain top talent will have to demonstrate authentic leadership, adopt transparent communication practices, and understanding the expectations and values of Gen Z will be critical including when it comes to their benefit needs. Here’s what leaders should keep in mind:
Mental health
While Gen Z workers are thriving in their current roles, they also report high levels of stress.
A recent Mercer survey suggests that 49% of Gen Z employees in the U.S. (and 52% globally) feel stressed in everyday life. When considering their lives at work, factors such as work pressures (44%), lack of flexibility (35%), and toxic culture (34%) are the top three contributors to potential burnout for U.S. employees.
According to a report from Oliver Wyman and The News Movement, Gen Z employees also report a higher incidence of mental health issues: 65% compared to 51% of millennials, 29% of Gen X, and 14% of Boomers. Plus, 52% of Gen Z workers surveyed in Mercer’s Health on Demand report shared interest in alternative mental health therapies, citing these as helpful to them or their families. When asked what supports are provided today by their employers, 43% in the U.S. (and 39% globally) reported having access to tools to help build skills like mindfulness and resilience.
Businesses aiming to attract and retain top Gen Z talent will need to take note, and evaluate how their benefits packages address mental healthcare—from offering access to traditional resources to creating systems to support workers’ overall wellbeing.
Digital healthcare
Gen Z has grown up primarily in the digital age, instilling in them a strong familiarity and comfort with digital tools. Now, Gen Z represents a new wave of digitally native workers much more likely to embrace new technologies.
Combined with their greater acceptance of holistic or alternative healthcare methods, Gen Z is primed to open up to digital health resources. For example, we found that 69% of Gen Z employees favor a future of healthcare in which care was delivered at home through virtual reality and virtual assistants such as Siri or Alexa made their medical appointments for them. By comparison, only 56% of Gen X found this appealing.
As they continue to express interest in innovative healthcare, Gen Z is likely to be the driving force behind greater acceptance of digital tools and health benefits. Employers would be wise to expand their benefit packages to include mental health and digital resources.
Retirement and investment benefits
Gen Z workers have also developed their own unique perspective when it comes to financial planning. They prioritize security and stability—having witnessed their families navigate the 2008 financial crisis and then experiencing pandemic-related downturns themselves and now high inflation and elevated recession risks—and predict that they may be worse off financially than their parents’ generations.
However, despite their financial anxieties, Gen Z workers are still committed to plan for their future—they are just looking for something different from their predecessors. Compared to their Gen X or Boomer colleagues, for instance, Gen Z workers are interested in benefits beyond the traditional 401(k), such as emergency savings accounts, financial wellness programs, and tuition reimbursement support.
According to a 2022 Mercer report, 42% employees under 45 find employer match contribution for paying down student loan debt most attractive while 38% employees under 35 desire employer match contributions for contribution to health savings account (HSA) the most. Younger employees may not have the disposable income to contribute to retirement savings, and by matching retirement contributions for expenses that are often a significant portion of income, like student loans and healthcare costs, you can help them build their nest egg early—reducing stress and increasing retirement confidence for the future.
Additionally, as a highly socially conscious generation, they are also more likely to look for opportunities to direct their retirement savings toward dedicated sustainable investments.
Due to their repeated exposure to economic crises and a strong emphasis on social justice, Gen Z workers have different needs when it comes to financial planning. Employers looking to attract and retain Gen Z talent will need to align with Gen Z’s approach to financial planning and retirement and investment benefits.
Listening to Gen Z
In order to compete in the global economy, leaders will have to take into consideration the unique needs of Gen Z employees. In fact, many companies have already begun recognizing the upsides to expanded benefits for employees.
Many organizations have seen the tangible benefits of innovative and holistic healthcare resources. In a 2022 report, the Society for Human Resource Management (SHRM) found that 86% of HR professionals indicate that mental health resources can increase employee retention while 72% believe these resources help attract new talent.
Companies have also started to recognize how virtual health resources have the potential to cut costs and empower employees in their health journeys. And while the majority of workers would still seek in-person over virtual care for most healthcare needs, digital health resources are valued by employees, with 41% of all workers finding telemedicine helpful for them and their families.
With Gen Z rapidly becoming an important portion of the workforce, employers seeking to connect with new workers and demonstrate authentic leadership are likely to reevaluate their strategies to address this new demographic.
As a result, existing workplace trends will likely be accelerated by Gen Z, especially given the level of importance they place on benefits. Nearly half (48%) of Gen Z employees in the U.S. said they were less likely to move to another employer because of the benefits they are provided.
Employers aiming to attract and retain top talent and maintain their competitive edge in the labor market will need to quickly adapt while empowering Gen Z’s unique preferences and perspectives to change the benefits landscape. We are likely to see an evolution in this space as the newest working generation impacts the relationship between companies and their employees.
Martine Ferland is the CEO of Mercer.
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