EY on the Gen-Z Workforce and How Organizations and Businesses Should Rethink Their ‘Plan Z’

Originally published at ey.com. EY is a Fair360, formerly DiversityInc Hall of Fame company.

 

On Nov. 4, Ernst & Young LLP released the 2021 Gen Z Segmentation Study, which tracks the generation’s personal and professional interests, as well as their outlook on issues ranging from mental health and climate change to social media and the workplace. This second iteration of the survey looks to measure changes in Gen Z’s sentiment after navigating an unprecedented year, uncovering shifts across interests and issues to help predict future business impact.

The world is changing faster than ever, and this digitally native and globally conscious generation, born between 1997 and 2007, is prepared to adapt to the rapidly transforming environment. Businesses should prioritize understanding Gen Z to maintain engagement with future employees and customers — developing a strong “Plan Z.”

Gen Z is the most racially diverse generation yet, even more so than millennials, and has strong opinions and unique experiences that will help shape our future society. Key insights from the survey include:

  • Mental Health: 67% are moderately to extremely worried about their physical and mental health, with 42% frequently feeling anxious or depressed during the COVID-19 pandemic. That anxiety is not evenly distributed from a gender perspective, with more than half (51%) of women feeling anxious or depressed compared to only 34% of males. During the pandemic, nearly a fifth (19%) of Gen Z report rarely or never receiving the social and emotional support they need.
  • Skepticism: 60% say most people can’t be trusted, and 48% say most of the time people are just looking out for themselves. Trust may be improving though, as these levels are slightly lower than in 2019, which found 67% and 52%, respectively. Relatedly, 57% feel life will be the same or worse for future generations.
  • Basic needs insecurity: 69% of Gen Z worried about running out of food since the onset of COVID-19, and over a fifth (21%) worried about it most of the time; notably, 28% lost their job, or someone in their family lost a job in the same time period.
  • Entrepreneurialism: 45% of Gen Z report being very or extremely likely to start their own business one day; and since the pandemic began, 44% are more interested in starting a business.
    – Since the pandemic began, males are more likely than females to have become more interested in entrepreneurialism (48% and 40%, respectively). Additionally, those already working are more likely (49%) to start their own business someday compared with those not in the workforce (43%).
  • High confidence in change: Gen Z is most confident that significant progress will be made regarding LGBTQ rights (85%), gender inequality (79%) and economic equality (68%).
  • Low confidence in change: Gen Z is least confident in progress happening toward the federal budget deficit (35%) and immigration policy (51%).

 

The five segments of Gen Z

As established in the inaugural report, the 2021 findings reiterate the importance of treating members of Gen Z as individuals with unique characteristics, goals and values. In 2019, the EY study uncovered five distinct groups within this generation. A comparison of where each member of Gen Z falls into each segment from 2019 until today finds that the biggest shift came from Carefree Constituents becoming Authentic Activists and/or Secluded Perfectionists. See breakdowns and segment descriptions here:

  • Authentic Activists: 22% (2021) vs. 16% (2019)
    – Motivated by the obligation to save the world — and the fear of what will happen if they don’t
  • Carefree Constituents: 5% (2021) vs. 16% (2019)
    – The definition of “go with the flow”; may not drive change, but will be the ones who adopt it into the mainstream
  • Secluded Perfectionists: 20% (2021) vs. 15% (2019)
    – Focused on being the best, not for money or accolades, but for the love of what they do
  • Stress Strivers: 35% (2021) vs. 35% (2019)
    – High achievers, driven by a fear of not being good enough

“This latest research reinforces that companies need to make and continually evaluate their ‘Plan Z,’ acknowledging the different personas within the generation,” says Marcie Merriman, EY Americas Cultural Insights & Customer Strategy Leader. “As more Gen Z move from being Carefree Constituents to Authentic Activists, we can glean that it has become less acceptable to be a bystander. The events of 2020, from COVID-19 to the social justice movements and more, reflect a loss of innocence for the generation and something that will shape their futures.”

 

Processing the pandemic’s impact

Unquestionably, the pandemic has changed everyone’s life one way or another, and for a generation going through pivotal life moments — high school, college, first jobs, forming mature relationships, entering adulthood — this couldn’t be truer. Nearly half (46%) of Gen Z surveyed in 2021 report feeling very or extremely worried about a host of issues, up from 31% in 2019. While the Stressed Strivers remain the persona with the highest percentage feeling extremely worried (54% in 2021 vs. 42% in 2019), Authentic Activists demonstrated the largest increase in percentage points (49% in 2021 vs. 29% in 2019).

Gen Z’s relationships with family and friends felt the effect of quarantine, banding together to weather the uncertainty of lockdown. According to the survey, 51% say their relationship with their family has become stronger since the start of the pandemic. When it comes to friendships, 65% of Gen Z report these relationships to be the same or to have become stronger since March 2020.

It is possible that changes in social media and digital communication habits have led to some changes in relationships too. Since COVID-19 arrived, 65% of Gen Z have been video chatting with friends more frequently, and 74% have used social media apps to communicate more often with their friends. Using social media for communication is not new for Gen Z; the previous EY report found that 80% of Gen Z use social media to connect with family and friends.

 

Work-life is defined by value, not money

As companies look to hire more Gen Z employees, it is a necessity for them to understand the generation to attract and retain the new talent. Almost two-thirds (63%) of Gen Z feel it is very or extremely important to work for an employer that shares their values. In a future job or career, most Gen Z prioritizes enjoying the work they do (69% in 2021 vs. 62% in 2019); other priorities are to be the best at what they do (40% vs. 37%) and to make a difference in the world (39% vs. 33%). Notably, since the last report, Gen Z places less importance on making a lot of money in their career (32% vs. 38%). Employers need to demonstrate their shared values and position Gen Z staff to be impactful through their careers.

Gen Z careers may also follow a trajectory different from that of prior generations. Outside of work, Gen Z is also planning for their personal futures, which may look different from the traditional path. The survey finds less than half (48%) feel getting married someday is very or extremely important. Similarly, only 48% feel having children someday is very or extremely important, and the median age they would like to be when they have children is 30.

 

Using their voice and getting involved

Gen Z is the newest voting generation, and even after a great deal of polarization in politics in 2020, more Gen Z still label themselves moderates (40%) compared with being liberal (32%) or conservative (22%), which is a consistent spread to the 2019 findings (39%, 28%, 25%, respectively).

But despite the bulk of the generation self-declaring themselves as moderate, Gen Z collectively still shifts toward activism when it comes to issues that matter to them. When asked how much of a problem certain issues are in the country, the majority agrees that drug addiction/abuse (87%), racism (85%), climate change (81%) and gun violence (80%) are significant problems. Additionally, more than a third (36%) have participated in a political rally or protest, signed a petition for a cause they agree with, or supported a political movement.

 

Protecting the planet’s future

Environmental issues and sustainable practices are growing in importance for Gen Z and are something that can’t be ignored by any business trying to connect with the generation. The majority (55%) of Gen Z said they are very or extremely interested in environmental issues, up from 40% in 2019, and a striking 81% believe climate change is a problem for the United States.

Gen Z is doing more than voicing their opinion too; they are taking action and putting their money where their mouth is to make a difference. Six in 10 (61%) recycle regularly, and, most notably for businesses, 57% think it is very or extremely important to buy from brands that protect and preserve the environment. Additionally, 71% report buying or having bought for themselves at least one used clothing item since March 2020.

“Youth have historically been the drivers of cultural change, whether it’s fashion, music, the adoption of new technology or business. Social and cultural change is often determined through how they spend their money, where they decide to work and the opinions they voice. Businesses seeking to understand which changes are fleeting trends and which will become cultural norms need to look no further than Gen Z,” says Marcie Merriman. “The research shows us that concerns related to mental health, climate change and social justice will remain top of mind for this outspoken group, and companies looking to attract this dynamic generation will need to find a way to share the voice on these critical issues.”

 

Implications for businesses

Acceleration is happening in seven key areas, and Gen Z is squarely in the center of it all. As these societal changes take place — if companies understand Gen Z, they’ll understand what’s “next.” Looking at these implications through the lens of Gen Z begins to show where these things are going, how society at large will be affected and how the other generations will have to learn to adapt to Gen Z’s speed.

  1. Digital acceleration: Gen Z will be early adopters and will push new technologies further into the mainstream. Businesses must embrace digital transformation and disruptive technologies in order to meet appropriately the needs of the digitally native Gen Z.
  2. Intentional consumerism: Given their unprecedented access to information and the innate ability to use it, Gen Z not only influences family purchase decisions more than the youth of past generations, but they are driving purchases in key categories, from automobiles to furniture and groceries. They will flock to brands that share their values.
  3. Purpose and ESG: For Gen Z, sustainability is now a matter of trust. Companies must consider Gen Z’s role in every part of the business — from sourcing and packaging to operations, footprint and investments.
  4. Trust, transparency and authenticity: Gen Z sniffs out inauthenticity with ease. They won’t overtly demand trust and transparency, but they will silently block a person or brand (literally and figuratively) from their lives and will have a distaste for anything that looks, feels or is, to them, “fake.”
  5. Health matters: Members of Gen Z are admittedly high-stress, anxiety-ridden and untrusting of the world around them, but they are open and willing to address mental health as an issue. Companies that understand this will recognize the need for Gen Z to find holistic outlets for mind and body in all aspects of their lives, not just in terms of fitness or nutrition.
  6. Workplace culture: Gen Z puts higher stakes into finding fulfilling careers where they are valued, vs. making money. They will remain loyal to companies that align with their personal values and make them feel their contributions are appreciated.
  7. Connected experiences: Brands and employers will need to be cognizant of this generation’s deeply intertwined digital and physical identities and consider the life cycle of the connected experience both virtually and in-person.

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