Millennial workers are a vital part of U.S. corporate culture, as they are the largest generation since the baby boom. They are already making their presence felt by introducing different ideas about the best ways to work and new sets of workplace values. Managers are quickly realizing millennials need to be managed and motivated differently than other generations. One of the most effective ways to make millennials feel appreciated is through incentive compensation.

1. Why Millennials Want
Innovative Reward Strategies
From Employers

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Why Millennials Want Innovative Reward Strategies From Employers
Contents
Introduction
What Do Millennials Want?
Creating Compensation Plans for Millennials
03
03
05
Why Millennials Want Innovative
Reward Strategies From Employers

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Why Millennials Want Innovative Reward Strategies From Employers
Millennial workers are a vital part of U.S. corporate culture. As
the largest generation since the baby boom, they will make
up 75 percent of the U.S. workforce by 2025.1
They are already
making their presence felt by introducing different ideas about
the best ways to work and new sets of workplace values.
Managers are quickly realizing millennials need to be
managed and motivated differently than other generations.
Retention is one of the top concerns for managers of
millennials, according to Bloomberg Businessweek. The
publication reported millennials tend to stay about 18
months in jobs with high turnover and three years in other
employment settings. They tend to be more willing to leave
positions than their counterparts in other generations, which
means showing appreciation for the work they do is vital for
employee retention. One of the most effective ways to make
millennials feel appreciated is through incentive compensation.
Millennials prioritize their salaries to a large degree. A survey2
from Business Insider and News to Live By showed 69 percent
1
businessweek.com/articles/2014-08-22/how-to-keep-millennial-employees-from-getting-
bored-and-quitting
2
businessinsider.com/survey-on-millennials-and-first-jobs-2014-6
What Do Millennials Want?
Millennials tend
to stay about 18
months in jobs with
high turnover and
three years in other
employment settings.
Why Millennials Want Innovative
Reward Strategies From Employers

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Why Millennials Want Innovative Reward Strategies From Employers
of millennial workers place pay as their highest priority when
searching for a new job. The Wall Street Journal suggested
this emphasis on compensation could be the result of this
generation being saddled with high student loan debt, as the
average graduate in the class of 2014 will have $33,000 of debt.
As much as they value competitive compensation, however,
millennials have other high priorities as well. Many aren’t just
driven by the money. Fifty-three percent of millennials said
they need meaningful work in their careers, and 43 percent
said they need positive relationships with their co-workers. Like
all workers, they also want to feel their company appreciates
them. Part of this does involve compensation, as 10 percent
of millennials said they would leave a job that did not pay
enough, or that they would take another offer if it paid better.
Millennials are not alone in these desires. Data from Towers
Watson3
showed only half of employees feel they are fairly
compensated for their work compared to others in similar
positions. A sentiment also shared by half of the workers
surveyed was that their managers fairly reflect performance
in their pay decisions.
According to data from PWC, however, incentive
compensation doesn’t necessarily need to mean cash. While
salary is important, the rewards millennials expect4
tend
to range further than what previous generations wanted.
A generous cash bonus may not convey the appropriate
message or be as motivating as employers had hoped, for
3
towerswatson.com/en/Press/2014/09/compensation-programs-falling-short-at-us-employers-
towers-watson-surveys-find
4
pwc.com/gx/en/managing-tomorrows-people/future-of-work/managing-millennials.jhtml
As much as they
value competitive
compensation, however,
millennials have other
high priorities as well.

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Why Millennials Want Innovative Reward Strategies From Employers
example. Instead, the focus for compensation could be on
creating opportunities for millennials to have experiences,
whether that means tickets to sports games or a company
retreat for high performers. Millennials also value feedback
strongly, and find it most meaningful when given as the
occasion arises. Something as simple as telling a millennial
worker what a good job he or she did as soon as it comes to
a manager’s attention could make all the difference.
Incentive compensation for millennials can serve many
purposes. The first is to increase base compensation and
work toward better retention in that way. This can be effective
particularly for sales teams that significantly reward their best
people, giving millennials the chance to have a key role in
determining what their own compensation looks like. However,
any incentive compensation program for millennials should
balance monetary rewards with other types of incentives.
“What we have found is that people differ in how they
want to be shown appreciation and encouragement,” Paul
White, co-author of The 5 Languages of Appreciation in
the Workplace, told Bloomberg Businessweek. “Verbal
compliments are meaningful to some. To others, words are
cheap and spending time with them is important.”
Millennials value
recognition and
feedback. If this
recognition comes
in the form of a
meaningful reward that
is not money, it will
still be satisfactory.
Creating Compensation Plans
for Millennials

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Why Millennials Want Innovative Reward Strategies From Employers
As discussed above, millennials value recognition and
feedback. If this recognition comes in the form of a meaningful
reward that is not money, it will still be satisfactory. This
could include gift cards, gifts like food and wine or tickets to
entertainment or sports events. It may also be as simple as an
office-wide email naming the top performers for the quarter
- who may then be rewarded with traditional cash bonuses
as well. Finding the right balance between cash and other
rewards and recognition is important for all sales managers
who have millennials on their teams.
Closely tied with incentive compensation for millennials is the
ability to give real-time feedback. Whether that highlights
areas where a millennial worker shines or where he or she
has a chance to grow, it’s necessary to give to have engaged
millennial employees. Incentive compensation software can
not only drive the right rewards structure for millennials, but
also alert managers to how their employees are doing. This is
vital in managing millennial employees effectively. Managers
of sales teams have many demands requiring their attention
and time, so a program that can help them alert to events that
require feedback is a tool that will prove invaluable for many.
This is especially true of managers who have a very large sales
team. Software can help managers provide personal incentives
and feedback even as they handle a high volume of people
and tasks throughout the day.
On a similar note, millennials who are recognized should feel
the achievement is special. As the Towers Watson survey
showed, some employees feel compensation does not always
match the results each worker brings to the company. Making
sure only to reward those whose achievements are outstanding
Closely tied with
incentive compensation
for millennials is
the ability to give
real-time feedback.

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will make the workers in question feel special, and it will
provide more incentive for the rest of the workforce to attain
the same heights of performance.
Millennials in PWC’s research said they found companies
that had opportunities for career progression to be the most
attractive employers. This suggests rewards may not be as
compelling as the chance to advance in the sales team itself.
Incentive compensation planning software can help managers
to review millennials’ performance records for the possibility
of a promotion, or development that could lead to one in the
future. This may be the most desirable incentive of all.
1. finance.yahoo.com/news/exclusive-survey-shows-hard-millennials-
173000455.html
2. employers.glassdoor.com/blog/how-to-recruit-retain-millennial-employees/
3. pwc.com/gx/en/managing-tomorrows-people/future-of-work/key-findings.jhtml
4. pwc.com/gx/en/managing-tomorrows-people/future-of-work/managing-
millennials.jhtml
5. businessweek.com/articles/2014-08-22/how-to-keep-millennial-employees-from-
getting-bored-and-quitting
6. capstrat.com/elements/downloads/files/millennials-work.pdf
7. businessinsider.com/survey-on-millennials-and-first-jobs-2014-6
8. towerswatson.com/en/Press/2014/09/compensation-programs-falling-short-at-us-
employers-towers-watson-surveys-find