Total reward encapsulates age-related nuances

Peter Reilly, director HR research and consultancy at the Institute for Employment Studies: We are well used to segmenting reward on the basis of grade or location. Think of the company car as an executive perk or the London allowance. According to the Chartered Institute of Personnel and Development’s (CIPD) Reward management survey 2006, a third of organisations use job families, thereby segmenting by occupation. But what of segmentation by age? This is especially relevant given demographic changes. The workforce is ageing at such a rate that by 2020 it is estimated that there will be 4% fewer people of working age under 40 years than above this.

The logic of segmentation by age is based on the assumption that different age cohorts respond to different forms of reward. So what does the research tell us about age and motivation? Good studies are few and far between, but work by the Radcliffe Public Policy Centre at Harvard suggests that wanting to earn a high salary declines with age, especially among females.

The need for work-life balance also falls with age, but rises again for those in their late 50s, particularly for males. The need for job security peaks among males in their mid-40s. Work challenge is the principal issue for men, except for those in their 20s, when work-life balance is key. The latter is the prime issue for women throughout their careers.

One cannot assume that US research results would be replicated in the UK, and one needs to acknowledge that the poorest (and richest) in society may have views that reflect their economic status. Gender also complicates the picture.

So if there are differences by age, and even generation, what might organisations do? Total reward can encapsulate the employment relationship in a way that is different for different age groups – security of income in the middle years compared to the opportunity for extra earnings at the younger end; flexibility of working hours at both ends of the spectrum; pension benefits stressed towards retirement or childcare benefits for the 30 to 40-somethings. Flexible benefits and flexible working arrangements are an integral part of this offer because they provide a practical opportunity for individuals to tailor to fit their own distinctive needs.

Peter Reilly, director HR research and consultancy at the Institute for Employment Studies