This post was originally published in June 2015 and was updated with new information about multigenerational compensation strategies in May 2025.
Did you know you might be managing a workforce made up of employees from as many as five different generations? From Gen Z to the Silent Generation, people who are just starting their careers, experienced pros, and those approaching retirement all work alongside each other. That means your HR team has to tune in to the varying priorities of a multigenerational workforce, including when it comes to your compensation strategy.
No matter the generation they belong to, employees are at different stages of their lives and careers, and their priorities when it comes to compensation can vary quite a bit. You need a multigenerational pay strategy that works for your people’s present and future.
Keep reading for more on how to create an employee compensation strategy tailored to your workforce and designed to attract and retain top talent at every stage of their careers.
Why a Multigenerational Pay Strategy Matters
We might have five generations in the workforce, but just because employees are around the same age doesn’t mean their wants and needs are identical. These are some of the work benefits most valued by different age groups:
- 53% of Gen Z employees want permanent flexible work arrangements, like a four-day work week or hybrid schedules. This benefit is in the top five most-wanted benefits across generations.
- 42% of Millennials cited mental health support as an important benefit.
- For 84% of baby boomers and 77% of Gen X, retirement savings are a must-have.
While it’s important to understand some of the common differences in what Gen X and Gen Z expect at work, it’s equally important to design a compensation strategy that satisfies everyone. Be sure not to lean on stereotypes to inform your multigenerational pay strategy.
When you create a compensation philosophy that considers employees at every level, you’re not just ensuring you remain competitive as an employer. You’re signaling to job seekers and your current employees that they’re a valued part of the organization. More importantly, you’re fostering a workplace culture that balances fairness with innovation, making your company a standout in the market.
Your compensation management strategy also shows employees that you’re considering their needs long-term and that you want to foster equity and transparency in the work environment. That leads to greater loyalty from your people — more than 90% would stay at their company for an additional five years if it had a great company culture and fair pay.
A well-thought-out, inclusive compensation strategy creates a foundation for better engagement, improved retention, and higher performance across all demographics in your workforce.
6 Tips for a Multigenerational Compensation Strategy
Make your compensation strategy work for every generation by balancing shared values with individual needs. With a fair, flexible strategy, you can keep your people engaged and motivated.
We’re sharing six ways to create pay structures and offer employee benefits that truly help you attract and retain talent at your organization.
Betting on Benefits
Payscale reported that fewer employers are advertising these popular benefits this year compared to last:
- 5.5% fewer companies offer fixed holidays
- 4.5% fewer companies offer work-from-home
- 3% fewer companies offer flextime schedules
If these perks are part of your benefits package, be sure to use them to stand out from the crowd.
1. Tie Compensation to Performance Metrics
Performance-driven rewards, rather than tenure-based pay systems, are highly appealing to high-performing employees. By tying compensation — whether in the form of bonuses, pay increases, or other incentives — to measurable performance outcomes, you can ensure employees at all levels feel appreciated for their contributions.
When you tie compensation to real outcomes, you promote a culture of fairness and achievement at your company. Whether they’re seasoned pros or brand-new talent, your employees can trust that rewards are correlated with productivity, not just seniority.
2. Offer Flexible and Customizable Benefits
There’s no such thing as a standard salary-and-benefits package in today’s world of work. Employees often prefer a benefit like a remote or flexible work environment over pay increases.
The ability to customize benefits boosts employee engagement and retention. For example, if employees have the option to work from home, even just a few times a week, they’re less likely to want to search for a new job. Providing perks like hybrid or remote work, student loan support, additional PTO, work equipment stipends, or pet insurance, just to name a few, means you can meet diverse needs for employees across generations and career stages.
3. Invest in Learning and Development (L&D) Opportunities
Offering professional growth is quickly becoming one of the biggest differentiators for employers. 52% of employees would leave their job for one with continuous L&D, and 94% of employees would stay longer at a company that invests in their development.
Providing access to training, mentorship programs, and clear pathways for career advancement boosts engagement and shows your employees you’re invested in their success. When they grow, your company thrives.
4. Leverage Technology to Promote Fairness
Did you know that over 80% of people said they’d be more likely to apply to a role if the salary is listed? With pay transparency laws going into effect around the world, many companies are embracing the new standard, whether they’re subject to any laws or not. Being up front about salary promotes fairness in hiring and job offers and helps promote pay equity at the organization.
You can use technology to analyze pay data and identify any disparities to keep your compensation strategy clear and unbiased. Find a software platform — like an applicant tracking system (ATS) or talent management system — that can leverage your data to highlight inequalities and reduce bias when determining compensation. Give your employees confidence in your comp strategy and ensure they’re being paid fairly with the help of technology.
5. Regularly Review and Adapt Your Strategy
If you want your compensation strategy to be the best, it can’t stay stagnant. Market conditions, talent needs, and employee expectations change constantly, and your compensation approach should do the same. Ensure salaries and benefits are fair and competitive with regular benchmarking against your industry standards.
Even if employees are not underpaid, if they feel underpaid, they’re more likely to start looking for a new role. Stay proactive with fair pay, transparent pay structures, and regular strategic adjustments to keep top talent on board.
6. Non-Monetary Rewards Matter, Too
Employee recognition isn’t always about base salary bumps, bonuses, and paid time off — 53% would stay at their jobs longer if they felt more appreciated. Non-monetary rewards like giving a shout-out during a meeting, providing tailored development opportunities, or even just saying thank you help foster a culture of belonging and motivation. A little gratitude goes a long way in keeping your team energized and inspired.
Plan Employee Compensation, Increase Retention
With an employee compensation plan in place, you can help every generation plan for the future. Your compensation strategy can show everyone on your team they’re valued, respected, and integral to your company’s success.
Retention isn’t a guessing game — it’s an intentional effort. Now is the time for leaders to take a closer look at their compensation plans. Evaluate, adapt, and invest in a strategy that aligns with both your business goals and the needs of your workforce.
Start the conversation about ClearCompany Compensation Management.
