They have been called the “glass generation”. They have been accused of being fragile and uncommitted and not having clear long-term goals. However, the new generations of the workforce are demonstrating, with each passing day, that they are made of a unique material: flexible to the labor, economic, and social changes that came with the pandemic and with the digital transformation, committed to the sustainability of a world that they inherited sick in many aspects, committed to diversity and inclusion; in short: with values and adaptability. They no longer “marry” with a single employer or are tied to a single working path. They are attentive, they look for possibilities, permanently connected through networks and platforms; they change if necessary, they break down hierarchies and establish new forms of collaboration. With all this complexity, it is unrealistic to think that the old forms of reward will serve to motivate, attract, or retain these talents. The world has changed and with it the rules of the game in labor relations. How can we understand and design strategies to compensate this workforce?

As Generation Z steadily enters the workforce, their expectations and values are reshaping workplace norms. Although they currently make up only 5–10% of employees, their influence is growing, compelling HR leaders to rethink traditional Total Rewards strategies. 

To attract and retain this new generation of workers, companies must align compensation, benefits, and career development opportunities with Gen Z’s evolving priorities. Employers that fail to adapt risk losing out on top talent in an increasingly competitive job market.

The Changing Landscape of Work and Compensation

“This fastest-growing generation, which is rapidly taking over where Baby Boomers are retiring, is making waves regardless and breaking out of employment traditions that many Gen Xers and Boomers have lived through and endured comparatively passively, while compelling employers to adjust to the new norm”, says Rachel Wells, author of the research Is Gen Z Asking For Too Much? “Employers who want a successful workforce will need to revisit their entire talent attraction strategy and company culture. Gen Z demand to be heard and have their voices respected in areas that matter the most to them and society at large; they are quickly expanding across the global population and have full careers ahead of them. To encourage and attract this talent necessitates reasonably higher salaries, solid career progression pathways, and flexible working solutions that encourage employee input wherever possible”.

Unlike previous generations, Gen Z is not solely motivated by salary and job titles. While financial stability remains crucial, they place equal importance on flexibility, work-life balance, and purpose-driven employment. According to a World Economic Forum report, Gen Z will make up more than a quarter of the global workforce by 2025. Given their increasing numbers, organizations must recognize that outdated compensation structures and rigid workplace policies may no longer be effective.

One key aspect of Total Rewards that Gen Z prioritizes is fair and transparent pay. Pay transparency has become a major demand, with younger employees expecting equitable salaries and clear pathways for financial growth. They are less inclined to accept opaque compensation models or long, uncertain promotions. The high cost of living and economic instability have also made financial security a major concern, leading many Gen Zers to pursue side hustles or freelance work. Employers who offer competitive salaries, clear career advancement opportunities, and additional financial perks such as student loan assistance or performance-based bonuses will be better positioned to attract and retain this workforce.

Flexibility, Well-Being, and Career Development

Flexibility is no longer a perk—it is an expectation. The pandemic normalized remote and hybrid work, and Gen Z employees see flexible work arrangements as essential rather than optional. A Gympass report found that 78% of Gen Z workers view well-being at work as equally important as salary. This generation values autonomy over rigid structures, preferring employers who allow them to manage their schedules while maintaining productivity. Companies that enforce strict return-to-office mandates without justification risk alienating young talent.

Mental health and holistic well-being are also critical components of Total Rewards for Gen Z. This generation has grown up in a time of increased mental health awareness and expects their employers to prioritize it. Offering comprehensive wellness programs, mental health resources, and wellness stipends can make a significant difference in engagement and retention. Preventative mental health support, flexible PTO policies, and an emphasis on work-life balance all contribute to a more appealing workplace for Gen Z.

Career growth and learning opportunities are other key factor in Gen Z’s workplace preferences. They are eager to upskill and seek employers who provide continuous learning experiences, mentorship programs, and clear career progression paths. Traditional corporate hierarchies do not appeal to them as much as skill-based growth and meaningful development. Companies that invest in personalized career planning, skills training, and leadership development will have a stronger competitive advantage in attracting Gen Z talent.

Purpose-Driven Work and Social Responsibility

Beyond personal benefits, Gen Z seeks alignment between their employer’s values and their own. Unlike previous generations that prioritized job security and corporate loyalty, Gen Z employees are drawn to companies that actively support social causes such as sustainability, diversity, equity, and inclusion (DEI). A Mercer report suggests that Gen Z is more likely to leave a job if they feel their employer lacks commitment to social responsibility.

Employers must move beyond performative gestures and demonstrate genuine commitment through action. Offering sustainable benefits, supporting underrepresented groups, and engaging in meaningful corporate social responsibility (CSR) initiatives are effective ways to connect with Gen Z workers. They are quick to recognize inauthentic messaging and will disengage if they sense a disconnect between a company’s stated values and its actual practices. Companies that integrate social impact into their business models will not only attract Gen Z talent but also enhance their overall employer brand.

Recognizing and Rewarding Gen Z Employees

To engage Gen Z successfully in the workplace, HR leaders must implement recognition strategies that resonate with this generation’s values. Kate Devlin, director of human resources at Rymax, outlines several ways to provide targeted recognition to Gen Z employees:

• Go digital with recognition – Mobile recognition apps enable employees to give and receive recognition on the go.

• Ensure timeliness – Employers can provide instant recognition through spot awards and digital “thank you” cards.

• Add a personal touch – Providing extensive choice in rewards allows employees to receive recognition aligned with their preferences.

• Support social recognition – Employees value peer-to-peer acknowledgment, and programs should allow them to provide feedback and share appreciation.

• Gamify the recognition experience – Leveraging Gen Z’s love for interactive and competitive experiences can boost engagement and participation.

Workhuman’s research with Gallup finds that younger employees are significantly more likely to want frequent recognition. Among younger millennials and Gen Z workers, 78% say they want recognition at least a few times per month from their manager or supervisor. Additionally, 74% say they want the same frequency of recognition from their peers.

Sarah Hamilton, vice president of human experience at Workhuman, emphasizes that recognition programs need to be both frequent and flexible. She notes that recognition should include an element of choice, as younger employees prefer rewards that are personally meaningful. Companies that offer experiences, rather than just physical items, tend to see higher engagement from Gen Z workers.

Key Takeaways for HR Leaders

• Flexibility is essential – Hybrid and remote work options, flexible hours, and mental health days are highly valued by Gen Z employees.

• Pay transparency matters – Equitable salaries, clear financial growth opportunities, and benefits like student loan assistance can enhance retention.

• Well-being is a priority – Holistic wellness programs, mental health support, and self-care benefits can boost engagement.

• Career development is key – Gen Z values continuous learning, mentorship programs, and transparent career pathways.

• Social responsibility drives loyalty – Companies must authentically support sustainability, DEI initiatives, and social impact causes to maintain credibility.