The current workforce includes four generations - Babyboomers, Generation X, Generation Y (or millennials) and, most recently Generation Z - marking a shift over past decades from valuing status and recognition (with matching financial reward) through a more autonomous independent approach, to today’s collaborative, networked younger employees.

These different groups of employees can have distinct attitudes toward motivation and what they expect in terms of pay and reward. For Babyboomers, seniority was the key to pay increases. The widespread adoption of pay linked to performance came about when Generation X was new in the workplace. 

Both these generations also shared a view that pay was a personal matter not to be discussed with others. Generation Y members are more likely to share pay information - and to leave if the comparison is unfavourable. 

Failing to design effective, durable reward systems that acknowledge these differences and consistently produce fair results runs two risks. For current employees, reward policies perceived as unfair are likely to reduce motivation and increase the chances they will look elsewhere for employment. 

For potential employees, initial interest in an employer may wane if they discover what looks like a questionable approach to rewarding employees - especially true for members of Generation Y who are likely to have picked up feedback on potential employers through their social networks. 

And it’s going to get even more complicated: last year’s UK Commission Employer Skills Survey (UKCES) predicts that by 2013 there will be four generations working together, including those in their 70s and 80s as people delay retirement. 

By 2020, in just four years, as the UK workforces ages the largest single employee age-group will shift from today’s mid-40s (44-46) to the mid 50s (54-56) - making things more complicated than ever for employers.

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