New Gen Z data brings businesses a critical question: what's your Plan Z?

EY research uncovers five distinct Gen Z segments that employers and business leaders need to know

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Jan 29, 2020, 13:17 ET

NEW YORK, Jan. 29, 2020 /PRNewswire/ -- Employers and business leaders take note: a one-size-fits-all approach to defining a generation will cost talent and customers. As Gen Z, the generation of those born between 1997 and 2007, begins to enter the workforce and flex its newfound spending power, connecting with them is critical. To do so, it is important to identify and acknowledge the differences within the generation — something many employers and business leaders failed to do with millennials, to their own detriment.

Today, Ernst & Young LLP released the Gen Z Segmentation Study, which confirms bucketing the most diverse generation to date into one simple type, despite their individual characteristics, goals and values, would be a costly mistake.

Don't assume anything — Gen Z contradicts many expectations

Gen Z is a walking contradiction to society and past youth when it comes to social media usage, core values and politics. Employers and business leaders should get to know the generation before basing plans on stereotypes.

Social media: Today's youth are perceived to be obsessed with their social media activities, and while 84% of Gen Z say they have a social media account, they use it more for communication than for public sharing like past generations. When asked to choose their top reasons for using social media, EY research found:

80% of Gen Z use social media to connect with family and friends
72% use it to satisfy boredom
41% use it to stay up to date on news
22% share opinions through social sites

Values: Today's youth are driven and future-thinking, with 79% saying doing well in school is very or extremely important and 72% spending time on activities that will help them in the future.
Politics: The assumption is that Gen Z is liberal, but the research shows that these young people represent the diversity of the political spectrum. The majority view themselves as moderate (39%), with an almost-even split between liberal (28%) and conservative (25%), and the smallest percentage falling into the "other" column (8%).

These identities provide the foundation for the five key Gen Z segments.

The power of five

The EY Gen Z Segmentation Study identifies the five segments of the Gen Z population and shows how much of the population each segment represents:

Stressed Strivers (35%): high achievers, driven by a fear of not being good enough
Big Plans, Low Energy (18%): expect to do well and make money, but aren't necessarily willing to put in the effort
Carefree Constituents (16%): the definition of "go with the flow"; may not drive change, but will be the ones who adopt it into the mainstream
Authentic Activists (16%): motivated by the obligation to save the world — and the fear of what will happen if they don't
Secluded Perfectionists (15%): focused on being the best, not for money or accolades, but for the love of what they do

"Companies need a Plan Z and to recognize the power of five — or that each Gen Z segment brings unique value," says Marcie Merriman, EY Americas Cultural Insights & Customer Strategy Leader. "Combining their strengths can accelerate innovation and transformation throughout an organization. The research shows us that while, as a whole, Gen Z are the true digital natives who grew up with technology and unparalleled access to information, their individual attitudes are proving to be diverse and varied. Understanding the drivers of each Gen Z segment is critical to providing them with the products, services and experiences they desire as consumers and the jobs they seek as employees."

Societal changes impact how Gen Z is being raised

There are many components influencing the diversity we are seeing among Gen Z, such as technological innovations, medical advances and changing social norms. Gen Z is the first US generation born of three generations, meaning their parents can be baby boomers, Gen X or millennials. The research shows that diversity also exists among the parents of Gen Z:

Free-Range (ish) (38%): care about their children's well-being and will help them when they're struggling, but overall, encourage their kids to be independent
Controlling Critics (33%): dictate what their children do and make their decisions for them, rather than raise them to be independent
Helicopter Parents (16%): worry about their children and want to have control to ensure they are on the right path for success, a holdover from the millennial era
Hands-Off (13%): detached from their kids' lives, providing limited emotional support

The study found a correlation between parenting styles and the Gen Z segments they foster. The more involved parents are, the more likely their child is to be a Stressed Striver or Authentic Activist, while the more detached parents are likely to raise a Carefree Constituent or Secluded Perfectionist. The following chart further details these relationships:

Companies should embrace transparency to address Gen Z's trust concerns

As an extremely diverse, independent and proactive generation, Gen Z have strong personalities and values, making it hard to gain their loyalty — 67% of Gen Z say that people cannot be trusted. With the disposable nature of the current society, loyalty may seem like a lower priority to Gen Z, causing a greater challenge for companies. Transparency will help companies gain Gen Z's trust and provide them with a platform to remain authentic, connected and fulfilled, and therefore, more aligned with their values.

Are companies ready with a Plan Z?

To maintain relevancy in our fast-changing world, businesses need to adopt a Plan Z. Today's youth are markedly different from past generations. They are more tech-savvy and globally aware, and have unprecedented access to information and opportunities to educate themselves — these truths have previously defined Gen Z. However, as they come of age, the contradictions and individuality within the generation are becoming clear. To take advantage of this endlessly empowered generation, companies need to understand the diversity within and the unique drivers in each segment, rather than viewing them as one.

Gen Z's influence in the workplace, economy and society will be increasingly felt in the coming years, and understanding how they see and approach the world will remain important for employers, marketers, technologists, business leaders and more. Additional Gen Z insights are available here.

Gen Z Segmentation Study methodology

EY professionals surveyed a representative sample of 2,054 US teens and young adults from 12 to 22. The survey questionnaire was completed online in English from July 12, 2019, through August 7, 2019. Statistical weights were calculated and used to ensure the sample resembled the US population. Parental consent was obtained prior to interviewing young adults from 12 to 17.

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