The Shifting Landscape of Work Incentives: How Leaders Can Keep Up

In 1980, the typical 25-year-old was married and just a few years away from owning their first home. Starting a family and buying property incentivized workers to be productive, contributing to the success of companies while achieving their own goals.

Over four decades later, incentives are shifting. Today, tying the knot in your late 20s and purchasing your first home in your 30s is typical. These traditional rungs on the ladder of life are being delayed or skipped over. Many people, especially in younger generations, may have different values that inform their motivation to work.

These values manifest in the de-centering of work. Many in the workforce are quiet quitting and stepping away from hustle culture to prioritize other experiences. Others are diving deeper into work than ever with the hope of retiring early. Workers are having fewer children, remaining single for longer, and even setting aside high levels of social standing in favor of flexibility and mobility.

Employers that want to compete for the best talent need to shift their incentives to match their employees’ interests. This is especially important in light of continued low unemployment and a shrinking talent pool that is putting pressure on wages.

“Hiring right now is all over the place. Some industries are pulling in candidates pretty easily, but others, like health care and leisure hospitality, are really struggling to fill positions. This kind of slow hiring creates a big challenge for businesses, pushing them to get creative with recruitment strategies so they can bring in more people and fuel their growth,” said SHRM Chief Data and Analytics Officer Alex Alonso, Ph.D., SHRM-SCP.

Understanding the role of incentives that traditionally motivated employees and what calls to workers now will provide insights to lead employers’ actions. Adapting will take time, but organizations that dive in now will be able to rely on established practices as competition heats up in the face of the changing workforce.

The Role of Traditional Incentives in Employee Motivation 

Only half a century ago, many workers sought stability to pay a mortgage, support a spouse, and raise children. The labor force participation rate for women was lower and the fertility rate was higher. Today, those incentives still stand for many. Parents, in particular, demonstrate a close attachment to their job. Almost half of parents with children under 18 (48%) are worried about losing their jobs, compared to 38% of nonparents, according to data from Justworks and Harris Poll. Parenthood provides an anchor for not only the worker but also the workplace.

However, other workers are forging different paths, with less emphasis on job security. When asked to select reasons to stay in a position, members of Generation Z prioritized fair treatment (cited by 50% of respondents) and a good manager (50%) just ahead of job security (48%), according to SHRM’s The State of Global Workplace Culture in 2024 report. But job security was still the reason given by the greatest share of Millennials (51%) and Generation X (54%).  

These generational differences can be explained in part by the ages at which typical life milestones such as home ownership and parenthood might impact priorities, but there is another indicator of shifting workforce priorities. Many workers are stepping away from full-time jobs, opting for part-time positions that offer more flexibility. In January 2023, 22.1 million U.S. residents reported working part time voluntarily and another 4.1 million people were working part time but desired full-time work, according to Federal Reserve Economic Data (FRED). This is the largest gap between the two groups in more than 20 years, suggesting that part-time work is its own goal for many in the workforce.  

Shifting Trends in Key Drivers of Motivation  

What is driving these changes in motivation? Economic pressures and personal desires as well as social and cultural changes have brought different paths into the spotlight. These social changes spill over to impact employers’ ability to recruit and retain top talent. SHRM research found that only 29% of HR leaders are satisfied with the availability of qualified candidates when filling open positions. Respondents cited a number of factors that impact the power balance in the labor market, with the top factor being employee demands. Organizations need to understand these shifts in motivation and respond through more relevant offerings in total rewards and career advancement. There are five key drivers of motivation for workers, each impacting decision-making when it comes to lifestyle and work.  

Homeownership Challenges  

In the 1980s, the typical first-time homebuyer was in their 20s, according to the National Association of Realtors. Today, first-time homebuyers are older than they’ve ever been, averaging 38 years old. The overall percentage of homeowners may shift a few points each year, but the increasing age of first-time homebuyers signals the difficulty of entering the market and the persistence of renting.  

Parenthood Choices  

More workers are choosing to bypass parenthood, equaling more independence and mobility. Almost half of adults ages 18 to 49 (47%) said they are unlikely to have children in the future, according to Pew Research. They are also waiting longer to get married, which opens up opportunities to explore new career options without the familial obligations that come with a spouse and children.

Experiences over Ownership

The choice to delay or outright forego marriage and children spans generations, but younger generations have led the shift in prioritizing experiences over ownership. Many members of Gen Z and Millennials desire to be unanchored to places or material goods such as cars.  

• Transportation: In 2022, 40% of people between the ages of 15 and 19 had driver’s licenses, compared to 48% of the same cohort in 2000. Instead of driving, many members of the younger generations rely on public transportation or ride-hailing apps to get around or simply spend more time at home.
• Travel: Half of Millennials (49%) reported traveling as an important goal for the next five years, according to a survey from Business Insider and YouGov. Gen Z and Millennials outpace Baby Boomers when it comes to travel, taking an average of five trips per year, compared to an average of four trips per year for Baby Boomers.

Younger generations may garner headlines for their consumer choices, but members of every generation can be found shifting their consumer mindset and becoming more price-sensitive in the wake of inflation over the past few years.  

COVID-19, Remote Work, and Globalization

Every generation was impacted by the COVID-19 pandemic in early 2020.  

• Approach to work: Over 50% of respondents in a 2023 study said that they re-evaluated their work in the wake of the pandemic, with a driving reason being family and friends. Many found new vocations that they felt better aligned with their values.
• Remote work and globalization: One of those values is remote work and the flexibility that comes with it. According to a FlexJobs survey, 84% of Millennials and 74% of Gen Z want more remote work options. Remote work is also going global, with a 62% increase in the number of U.S. workers employed by international companies in 2023, according to the State of Global Hiring Report by Deel.

Flexible work gives these generations more opportunities to handle family responsibilities or pursue other goals such as traveling to new places or extended time visiting friends. 

Unstable Workforce

The convergence of the key drivers of motivation above is the unstable workforce that employers encounter as they recruit and retain talent. Workplace loyalty has been declining, with younger generations reporting less interest in staying with employers for the long term. The median number of years that workers stay with an employer fell to 3.9 in January 2024, the lowest it has been since January 2002, according to the U.S. Bureau of Labor Statistics.

A New Approach to Employee Motivation and Retention

The changes in motivation for many employees in today’s workforce present an opportunity for employers to shift their total rewards offerings to better attract and retain talent. Long-standing talent retention strategies that include career growth and positive workplace cultures can be refreshed to meet the changing workforce, while nontraditional benefits offer a new way to connect with employees.  

Prioritize Career Fulfillment and Growth 

Today’s employees value self-fulfillment and advancement. Support this by offering clear pathways for growth — whether through mentorship, internal mobility, or professional development programs. The ability to transition roles, learn new skills, or relocate within an organization fosters long-term engagement.

Foster an Inclusive, Positive Workplace Culture 

A strong, supportive culture directly impacts motivation and retention. Prioritize inclusivity in hiring and feedback channels, ensuring every employee feels valued. Workers with fewer personal anchors may be more likely to leave if a workplace’s culture is lacking, making it essential to cultivate belonging and connection.

Offer Nontraditional Benefits

 Employees’ needs extend beyond traditional benefits. Consider adding:

• Mental health support: Programs such as Unilever’s psychological safety initiatives help support a positive work environment.
• Expanded caregiving leave: Companies including HP offer flexible parental leave policies to demonstrate forward-thinking support.
• Sabbaticals and personal growth opportunities: Bank of America saw retention gains after offering sabbaticals tied to personal fulfillment.

Actionable Takeaways for Employers  

The personal pursuits of the workforce will ebb and flow over time, especially as younger generations enter the workforce with unique perspectives and values. However, one thing that will never change is the need for skilled, motivated talent to help companies reach new levels of success. Here are three areas of focus to build and maintain a competitive edge in any talent market.

1. Reassess retention strategies: Regularly evaluate what motivates employees beyond traditional incentives. This can look like keeping up with HR trends and building opportunities for feedback into employee engagement initiatives throughout the year.
2. Invest in skill development: Offer resources such as mentorship, training, and internal mobility. Building these programs can take time, but once installed, they act as billboards for employees to imagine themselves on different paths that align with their personal motivation. Internal mobility programs that publicize internal job listings, mentorship programs, and other training opportunities have the power to improve employee experience and foster loyalty.
3. Foster community: Build a workplace environment that offers intrinsic motivation through culture, support, and innovation. A strong culture can buoy employees throughout their experiences with life events. Culture should focus on inclusivity and support through ensuring employees feel heard within their teams and on an organizational level. Employees should feel encouraged to support each other in their work as part of supporting the organization overall.  

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The New Workforce Is Here Now

The workforce is changing fast, and these shifts show no signs of slowing. Today’s employees value flexibility, fulfillment, and experiences over traditional incentives.

Organizations that rely on outdated strategies will struggle to attract and retain top talent. The companies that act now will lead tomorrow. Future-proofing your workforce is no longer optional — it is essential to stay competitive and ensure long-term success.