How Companies Can Adjust Pay Structures To Help Ambitious Millennials Make More
With the pressure of student loan debt, the rising cost of living and a growing entrepreneurial attitude, millennials are looking for new ways to make more money. Starting a side hustle or freelancing are viable options, but how can ambitious young people with full-time jobs find ways to make more money at their current company? What kinds of internal changes need to happen to offer this opportunity?
A different kind of workforce
Bruce Tulgan, an internationally recognized expert on young people in the workplace, has been studying generational dynamics for more than two decades. In his research, he has seen many of the changes taking place at companies in response to the generational shift. One of the biggest changes, according to Tulgan, is “The younger an employee is, the more short-term and transactional they are.” By transactional, Tulgan means employees are more likely to trade achievements for perks or benefits.
One of the biggest areas influenced by the transactional mindset is earning potential. “Millennials want money. They want to know ‘Am I locked in, or can I earn more?’” says Tulgan. Companies looking to find and keep great millennial talent will include this information in the “attraction message,” the term Tulgan gives the story a company tells its prospective employees. “The more millennials know they can earn what they want, the better the retention rate,” says Tulgan.
Different routes to greater income
Everyone wants to make more money at their job, yet not every job has a clear path for making more money. One study says 77% of millennials prefer a raise over a promotion, but most companies assume a raise or promotion are the only ways to offer an employee more money. What if there were alternatives? What if a company could build a structure where employees could earn a salary and potentially make more money if they choose to? Added commission programs, profit-sharing, and rewards bucks are just a few ways companies are allowing ambitious young employees to make more money in a way that brings in more business and also promotes higher productivity and teamwork.
Let’s start with Somedia Solutions, an Atlanta, GA, social media marketing agency. It’s a remote company that focuses on cultivating a strong internal culture within its team. One of the compensation practices they have is offering the team an option to earn extra income beyond their set salary. If an employee generates a lead that turns into a client, the employee then gets a commission each month. This approach is not like your traditional sales strategy where an employee must meet certain criteria in order to maintain their salary. Instead, this is a bonus for the employee for helping bring more business to their company.
But why do this? According to cofounder and Chief Strategy Officer Randy Romanaux, “To keep them engaged and feel like they have some ‘skin in the game’ we encourage them to go out and network, to talk about the exciting projects they are working on.” Young people tend bring passion and excitement to their work when given autonomy. By leveraging that passion, Somedia is able to capitalize on that natural strength and turn it into a win-win situation for both the company and the employee. “They are difference makers for the company,” says Romanaux, “and it helps to keep them motivated on the clients they are working on.”
However, an added commission approach may not be the best strategy for everyone. Ramsey Solutions, a financial firm founded by Dave Ramsey, offers its team profit-sharing. Each employee receives a quarterly bonus based on the performance of their department. Why structure compensation this way? Because, as Dave Ramsey writes in his book Entreleadership, successful companies “take pay structures seriously, identifying ways to encourage overall productivity and incentivize excellent performance.” For Ramsey Solutions, profit-sharing empowers employees to take ownership of their work and the work of their team. Their focus, productivity, and success are rewarded in a tangible way.
Profit sharing and added commissions are great incentives for employees, but what other ways exist for rewarding hard work? Topgolf, a golf entertainment complex, rewards their employees for achieving their goals and excelling in the ordinary. Employees in the home office can earn bonuses by achieving their goals, and employees at the Topgolf sites earn bonuses through internal goals specific to the site.
Their mission hinges on “actively engaged associates,” and one of the ways they keep their associates engaged is through the “High Five Zone” and “Topgolf Bucks.” According to Amber Weiss, Director of Talent Acquisition and Compensation at Topgolf, associates earn bucks when they are nominated in the “High Five Zone” by another associate. A manager then assigns a Topgolf Bucks amount to that nomination, and the associate can then spend those dollars on an online portal for merchandise, trips, logo merchandise, and more. It’s a similar platform to the rewards debit card or credit card you have, only it’s exclusively for Topgolf Bucks. “This portal allows praise to happen in the moment instead of weeks later,” says Weiss.
So why are these options more attractive to millennials than traditional commission jobs? Millennials want more stability than what commission-based positions offer. The high risk associated with these positions is a turn-off for many, yet there is still a desire to earn money beyond a typical salary.
A commission-incentive approach, however, offers a financial bonus instead of making it a necessity. The pressure of hitting a goal is removed and ambitious young people can pursue added financial rewards without risk.
According to one study. productivity, engagement, and well-being improve when an employee has a sense of control in their work. Companies that successfully recruit and retain great millennial employees can leverage this desire for control in a way that benefits everyone. Not every company will offer commission, profit-sharing, or rewards bucks, but every company should determine what incentive works best for their team.