Retaining Gen Z: Building a Workplace They’ll Stay For

Retaining Gen Z employees is one of the most pressing challenges facing today’s businesses. Born in the late 1990s through the early 2010s, Gen Z now makes up a growing portion of the workforce. They bring fresh ideas, strong digital skills, and a passion for social responsibility. But they also have distinct expectations about work that differ from previous generations.

Many businesses we speak with are struggling with high turnover among younger workers. As an HR and payroll professional, a 10+ year Rotary International member, and an avid volunteer for after-school programs, I’ve seen this firsthand. The reality is that traditional retention strategies just don’t always work with this generation. Gen Z has different priorities around career growth, compensation, flexibility, overall well-being, and organizational values.

The good news? With the right approach, retaining Gen Z workers isn’t just possible—it can strengthen your entire workplace culture. Read on to learn what Gen Z is looking for in a workplace, why it matters, and actionable steps to help your organization thrive.

Why Retaining Gen Z Matters

Approximately 70 million Americans are members of Gen Z. That’s about 20% of America’s entire population. With more and more Gen Z members joining the workforce every day—and with Baby Boomers and Gen X nearing the end of their careers—businesses simply can’t afford to overlook Gen Z’s unique priorities.

In addition to population size, turnover isn’t just a staffing issue—it’s a financial vulnerability. Losing employees once they’re onboarded is expensive. According to Gallup, replacing an employee can cost anywhere between half to two times the exiting employee’s salary! To put this in perspective, if the exiting employee is making $60,000 per year, replacing them could cost anywhere from $30,000 to $120,000 when you consider recruiting, onboarding, and productivity gaps.

But with Gen Z, turnover can be especially disruptive. As digital natives, Gen Z often holds key digital skills. (Think AI tools, social media, and modern collaboration platforms like Teams and Slack.) They also bring energetic shifts and new perspectives—critical as the current workforce ages and old ideas start to stagnate.

Investing in retention is not just about reducing costs—it’s about building a sustainable and competitive organization.

What Gen Z Values in the Workplace

Before diving into specific strategies, let’s explore some of Gen Z’s top priorities, as we hear them from our HR clients. Each of these areas plays a critical role in Gen Z retention.

Career Development and Growth: Build Clear Paths Forward

Gen Z is sometimes labeled “job hoppers.” In reality, they’re simply unwilling to stay where they see no future. They want to learn, grow, and see a path forward. Without that, they’ll move on quickly to an organization that can provide more clarity and direction.

How to Build Clear Paths That Keep Gen Z Engaged

Offer structured development programs. Whether it’s mentorship, leadership training, or even rotating assignments, make growth clear, visible, and accessible. (Pro Tip: Work with employees to map out their goals at regular “career check-in” meetings or 1:1s—and offer them guidance on how to achieve those goals.)
Promote internal mobility. Create pathways for lateral moves as well as promotion. Rotational assignments, mentioned above, can also be an avenue for intra-organizational exploration.
Be transparent about career paths. Show employees exactly what skills and performance metrics are required for the next career step.
Invest in training budgets. Encourage certifications, conferences, and online learning. (Pro Tip: Even better if you have the budget to either pay for this growth for them or defray some of the professional development cost.)

Compensation and Targeted Benefits: Offer More Than a Paycheck

Fair pay is obviously a cornerstone of all hiring conversations. But Gen Z looks at jobs are more than a paycheck. They tend to look closely at benefits and how well they align with their lives.

Designing Pay and Benefits That Actually Fit Their Lives

Set base pay ranges competitively and clearly. Transparency matters more than ever. (Pro Tip: With Gen Z, we’re seeing an increase in preference for more immediate, performance-linked pay. Think performance-based bonuses monthly/quarterly instead of just giving these at annual reviews.)
Offer flexible benefits, like stipends for wellness, technology, or professional development. (Pro Tip: “Pick Your Perk” flex benefit options can be especially enticing to Gen Z, allowing them to choose the benefits that most matter to them personally.)
Provide resources for financial wellness. Workshops or tools that help Gen Z budget, save, and invest can be an excellent differentiator.
Help with student loan repayment. Many Gen Z employees carry student debt, and support in this areas is highly valued.

Pro Tip: Use surveys or focus groups to better understand which benefits resonate most with your workforce. A blanket approach could waste resources, while targeted benefits can create real impact on your specific workforce.

DEI and Social Responsibility: Walk the Talk

For Gen Z, diversity, equity, inclusion (DEI) and corporate social responsibility aren’t optional—they’re expectations. Gen Z wants to work for companies whose values align with their own. Empty statements or “checkbox DEI” programs just won’t cut it for this generation.

How Can You Show Real Inclusion and Purpose?

Ensure diverse representation. Review hiring, promotion, and leadership pipelines to make sure they are equitable.
Provide DEI training that goes beyond compliance to also focus on inclusion and allyship.
Encourage employee resource groups to support communities around specific shared circumstances (for example, race, gender, neurodiversity, or caregiving). This can help foster belonging, improve peer mentorship, and help reduce employees’ mental and emotional load.
Support social causes authentically. Engage in initiatives that align with your company’s mission, vision, and values. (Pro Tip: Photos from volunteer days can also be a great social media opportunity and way to show Gen Z you put your money where your mouth is.)
Offer volunteer days for employees to support their own social causes. (Pro Tip: If offering VTO is not an option, consider matching donations!)
Apply ethical business practices across business operations, like sustainable sourcing of materials or community-inclusive business strategies.

Listening and Communication: Create a Two-Way Dialogue

As digital natives, Gen Z grew up in a hyper-connected world. They expect communication to be fast, transparent, regular, and two-way.

How Can You Turn Conversations Into Gen Z Retention Tools?

Embrace radical transparency through regular town halls, crystal-clear policies, data-driven metrics, etc.
Provide frequent, real-time feedback. Annual reviews aren’t enough for Gen Z. Provide real-time coaching to improve relationships, retention, and performance.
Use surveys, pulse checks, and open forums to listen to employees and collect feedback.
Close the loop on that feedback. After gathering employee feedback, make sure to circle back with them, acknowledge it, and show them how it influenced company decisions.
Be accessible. Encourage leadership and direct supervisors to hold open office hours or Q&A sessions.

Pro Tip: Retention often boils down to whether employees feel heard!

Mental Health and Well-Being: Support the Whole Person

Gen Z is America’s most open generation when it comes to discussing mental health. They expect employers to recognize and support it the same way we treat physical health.

Making Well-Being a Core Part of Your Workplace Strategy

Provide comprehensive benefits that include mental health care. Mental health coverage should be on par with physical health coverage offerings.
Offer access to counseling, even through employee assistance programs or app-based therapy.
Provide well-being stipends, which can be used for physical health (e.g., gym memberships or fitness classes) or mental health (e.g., wellness retreats or meditation apps).
Upskill your management team, helping them normalize conversations about mental health.

Culture and Trust: Build Belonging and Connection

Trust is a cornerstone of retention. If Gen Z doesn’t trust your leadership—or if they don’t feel trusted by you—they won’t stay.

Building a Culture Gen Z Wants to Be Part Of

Be transparent with both challenges and wins for your business.
Empower decision-making by giving employees autonomy in their roles.
Like with feedback discussion above, recognize employee contributions. (Pro Tip: It’s easy to publicly celebrate the big wins, but remember to take some time to celebrate smaller achievements as well!)

These action steps can all help create a culture of appreciation and belonging, ultimately helping to make your team proud to stay.

Tech Integration: Meet Gen Z’s Digital Expectations

Gen Z is tech-savvy. This can also mean that they’re impatient with outdated tools, and struggling through clunky systems can be a dealbreaker. Fighting against aged platforms can quickly lead to disengagement.

It’s important to remember that, for Gen Z, modern, intuitive technology is not just a preference but a baseline expectation of a workplace that respects their time and values productivity.

How Can You Use Tech to Show You Understand How Gen Z Works?

Modernize HR and payroll systems. Gen Z expects self-service portals for pay, time off requests and balances, and benefits administration.
Invest in user-friendly collaboration platforms like Slack, Teams, or Asana.
Stay current with tech. Regularly assess your tech stack, and update digital tools as needed when they no longer serve your business’s—and employees’—needs.

Flexibility and Work-Life Balance: Offer Freedom

While the COVID-19 pandemic reshaped workplace expectations globally, Gen Z was especially affected. Nearly the entire generation was in school for the entirety of the pandemic. This means that the lockdown blurred school and home life during crucial developmental years. Flexibility and work-life balance are non-negotiable to Gen Z, as compared to older generations considering those perks.

Having adapted to remote learning and digital collaboration as the norm, Gen Z now expects workplaces that allow autonomy, hybrid or remote options, and a healthier integration of work and personal life.

Practical Ways to Offer Flexibility Without Losing Structure

Where possible by position and industry, provide remote and hybrid options. And allow employees to choose individually what works best for them.
Allow for flexible scheduling where possible. With Gen Z, focus on outcomes, not hours.
Provide generous (unlimited when possible!) PTO. Give your team clear KPIs and expectations—and then trust your employees to manage their time responsibly.
Offer tech stipends for home office setups or new devices.
When possible, offer childcare or eldercare support to help your employees manage their mental loads and home responsibilities.

So What’s the Best Strategy to Retain Gen Z Employees?

No single initiative will do the trick—it’s about creating a holistic ecosystem where employees feel valued, supported, trusted, and engaged.

As you build your own unique Gen Z retention strategy, start with these steps:

Listen first. Survey your workforce to understand their unique needs and values. (Pro Tip: Use the bulleted lists in each section above to get started on ideas that match your team’s specific priorities!)
Prioritize initiatives. Choose 2-3 high-impact areas (like professional development, flexibility, and mental health/well-being) to focus on improving now.
Communicate. Share your plan with your team, track progress—and don’t forget to celebrate those wins along the way!

Employee retention—for Gen Z and all other generations—is not a one-time project. It’s an ongoing journey! Don’t forget to check in with your team as you continue to develop your retention strategies. Your employees will give you better feedback on both what they need and what your business is providing better than we can!

Final Thoughts

Retaining Gen Z requires employers to rethink traditional workplace models. This generation values growth, authenticity, flexibility, and well-being in ways that benefit all employees. By embracing these priorities, you’ll not only reduce turnover—you’ll build a workplace that attracts and retains top talent across generations. (Pro Tip: For more actionable insights into employee retention check out our “11 Employee Retention Strategies for Reducing Turnover” article!)

Ready to build a workplace where Gen Z—and every generation before and after—can thrive? At Green Payroll, we’re here to help you create a people-first culture with modern payroll and HR solutions and expert support. If you’d like practical advice or want to explore how our team can help you retain Gen Z employees—or even just simplify your HR processes, let’s connect!

Contact us any time for a friendly conversation—no pressure, just honest guidance to help your business grow.