Total Rewards for Gen Z: When “Mental Compensation” Becomes a New Competitive Advantage

I. Gen Z – The Generation Demanding a Completely Different Compensation Package

Generation Z (born from 1997 onwards) is rapidly becoming the dominant force in the global workforce, reshaping HR strategies and redefining workplace culture.

For Gen Z, a job is more than a paycheck — it’s an extension of their identity and lifestyle. They seek meaning, balance, and a sense of belonging in their professional journey.

If your organization still focuses solely on base salary and traditional benefits, you risk missing out on this new wave of talent. Gen Z values transparency, purpose, and holistic compensation, professionally known as Total Rewards.

The Total Rewards framework includes five key elements:

1. Compensation
2. Benefits
3. Performance & Recognition
4. Career Development
5. Work Environment / Work-Life Balance & Wellbeing

In this article, int-hragent.com explores the five essential components of Total Rewards — with a special focus on the three non-monetary factors Gen Z values most, collectively known as the “Mental Paycheck.”

II. The Foundation — Competitive and Transparent Salary

Let’s be clear: salary still matters. Gen Z is pragmatic and well-informed — they research market data, understand their value, and expect a compensation package aligned with their skills and market standards.

But the true differentiator is salary transparency.

• Fairness: Gen Z believes in open pay discussions and demands clarity on how salaries are determined — based on position, skills, and performance, not personal bias.
• HR Action Point: Establish clear salary grades and communicate them transparently (at least internally). Use reputable compensation surveys to benchmark accurately against the market.

A transparent salary system builds trust, reduces turnover, and strengthens your employer brand.

III. Stability — Financial Wellness Programs

In times of inflation and economic uncertainty, financial stability is a major concern for Gen Z. They don’t see financial wellness programs as perks — they see them as essential support systems.

Why it matters:
Financially confident employees experience lower stress levels, higher engagement, and stronger loyalty to the organization.

IV. The “Mental Paycheck” — Prioritizing Mental Health

This is where Gen Z draws the line. They are quick to leave a job that compromises their mental health or ignores their emotional well-being.

To build a mentally healthy workplace, companies should adopt proactive solutions:

1. Employee Assistance Programs (EAPs)

Provide confidential counseling for psychological, legal, or financial issues — often extended to family members. EAPs send a powerful message: “Your company genuinely cares.”

2. Mental Health Days

Allow 1–2 days off annually specifically for mental recovery — no explanations needed.
Encourage disconnection policies such as “no emails after 6 PM” or “no meetings on Friday afternoons.”

These small actions can significantly boost employee morale and retention.

V. Flexibility & Autonomy — Redefining How Work Gets Done

Gen Z grew up in the digital age. They measure productivity by results, not presence.

• Hybrid Work as a Standard: A balanced model between office and remote work is now a baseline expectation, not a perk. Design hybrid systems that ensure fairness for both remote and on-site employees.
• Output-Based Culture: Shift performance evaluation from hours worked to tangible results. This autonomy builds trust, responsibility, and motivation — three values deeply appreciated by Gen Z.

VI. Investing in Total Rewards = Investing in the Future

A Total Rewards strategy is more than a compensation model — it’s a business strategy that drives engagement, retention, and productivity.

By aligning salary, benefits, and the “mental paycheck,” companies can create a sustainable, purpose-driven workplace where Gen Z thrives.

Designing such a strategy — tailored to your company culture, budget, and the Vietnamese labor market — requires expertise and deep understanding.

Are You Ready to Reimagine Your Total Rewards Strategy?

Contact int-hragent.com today for expert consultation on:

• Total Rewards Strategy Design
• Comprehensive Compensation & Benefits Surveys
• Modern HR Policy Development

Let’s help your organization become an employer of choice for Vietnam’s next generation of professionals.