Why Salary Negotiation Matters for Retaining Gen Z Talent

Welcome back to The Gen Z Guide for Employers! In this series, we will challenge some of the prevailing Gen Z workforce myths.  Our ultimate goal is to debunk these myths and create a level of understanding between Gen Z and the generations that came before us to make workplaces:

• More efficient

• More inclusive

• Better places to work

Each newsletter will be written from the perspective of an employer or a member of the Gen Z workforce. In this edition, Tameika Moore, Pollen’s Community and Marketing Manager, returns to unpick some common workplace misconceptions around Gen Z and showcase resolutions and steps that businesses can take to create more inclusive and meaningful workplaces.

In our latest issue, I explored the importance of salary transparency, and how it can positively impact a company’s brand while building a culture of trust and openness among employees.

In this issue, we’re continuing that conversation by diving into salary negotiation and why it's especially significant for retaining Gen Z talent. Once again, we’ll be featuring insights from Funmi Olufunwa, who has built a career in law and finance and champions financial education for all.

Why This Conversation Is Important

Let’s be real: talking about salary negotiation in today’s economic climate can feel tricky. Employers are being more cautious when it comes to hiring and budgeting (O’Dell, 2025), but that’s exactly why it’s more important than ever to open up a dialogue around it.

If you’ve been following along with our previous issues (thank you!), you’ll know that Gen Z deeply values fairness, transparency, and career growth in the workplace (Johnson, 2024). Whether businesses are ready or not, we’re driving a major shift in workplace dynamics; demanding clarity on expectations, growth and success. Salary naturally falls into this category.

But let’s be honest, talking about money is hard. Regardless of age or generation, many are just grateful to have landed a paying role in the first place. In general, only about 20% of people negotiate their salaries, while up to 40% never do, with the largest reason behind this barrier being fear– fear of appearing too demanding, of losing the offer, or of being seen as difficult (Riddle,n.d.)

This isn’t even taking into account systemic and cultural factors at play that will make it even harder for certain demographics to feel comfortable enough to negotiate pay. Studies show that less than 10% of women negotiate their salary, compared to nearly 60% of men (Johnson, 2024). Gen Z women in particular may lack experience or confidence in how to approach these conversations. As Funmi puts it, there's often a fear of “appearing boastful or standing out,” a hesitation that can be even stronger for people of color.

Nonetheless, Gen Z is also rewriting the rules.

At the end of 2024, 67% of hiring managers felt that Gen Z has become more demanding when it comes to salary expectations compared to last year. This is followed by millennials (64%), Gen X (37%) and baby boomers (22%) (“Gen Z: The Generation That Wants It All ”).   This highlights that our generation is ready to have the conversation. The real question is, is your business ready too?

Fostering a Culture Where Conversations Are Welcome

To make progress, companies need to build environments where salary conversations feel possible. As Funmi puts it: "You need to be working in an environment where you believe it is possible to ask for a raise — and that compounds your worth in a business."

If employees don’t feel like they can even bring up salaries, it may be because they don’t feel valued enough to start the conversation. A UK study found that, of the 55% who were unwilling to ask for a raise, 15% worried that asking for a raise would make them seem greedy (Campbell, 2023). It is crucial for companies to discern the difference between employees feeling unsure internally vs an employee feeling outrightly unwelcome to discuss salary. If it’s the latter, (whether it’s because there is an aggressive culture around salary secrecy or if those discussions are looked down upon/ignored/belittled), this can and will affect an employees perception of their value in a company. The result of this? Potential disengagement and high turnover rates.

Challenges in Larger Organisations

During our discussion, Funmi noted that larger organisations can present additional barriers to these conversations. In her experience, smaller companies often offer more direct access to leadership and clearer paths to salary discussions. In contrast, large companies tend to have complex processes and bureaucracy that make salary discussions feel out of reach.

This isn’t to say that large organisations don’t need processes — of course they do. But when those systems are hidden behind closed doors or poorly communicated, they can lead to disengagement and high turnover, especially among Gen Z. And as Funmi mentioned, it is the larger companies that are in need of an extra push. In the EU, just 7% of large companies reported having developed and implemented a strategy for pay transparency. That figure falls to only 1% in the UK, placing both well below the global average.

Despite growing awareness, there’s still a significant readiness gap. While many large employers acknowledge rising expectations around pay transparency, only 32% say they feel prepared to meet global transparency requirements(Consultancy.uk, 2024).

These figures highlight that there is an awareness of how important transparency around salary roadmaps are but a lack of prioritisation in implementation—which will only result in consequences for the business.

The Business Case for Transparency

Companies that ignore these issues fundamentally risk losing their best people. Gen Z employees care deeply about alignment with company values and they will leave if they feel like they're being left in the dark.

As we discuss time and time again in our Gen Z Guide, values and trust matter more than ever to our generation. We tend to be more observant, outspoken and more willing than ever to walk away from companies who do not match our expectations. 

It is important to note that these discussions may not result in an employee walking away with a 10% increase. Even if a salary increase isn't feasible, having the conversation still matters. I really want to highlight that transparency doesn’t mean agreeing to every request — it means helping employees understand the why behind the decision.

What Businesses Can Do

According to Funmi, employees need to know they can approach this topic without judgment. This doesn’t mean raises are guaranteed. it means there’s space for respectful, honest conversation.

Here’s how businesses can support that:

• Create psychological safety: Employees should feel comfortable raising compensation concerns without fear of backlash. As Adebayo Samson, founder and CEO of Academicful, puts it: "Assure your employees that the conversation is confidential and there will be no ramifications for any criticisms they may bring up.(Campbell, 2023)"

  
  

• Equip your managers: A staggering 73% of leaders don’t feel confident in their managers’ ability to have compensation conversations. Invest in training–it’ll only positively benefit your company! (Wickham, 2019)

  
  

• Share salary progression frameworks: Whether you pay above market average or not, explain how salaries are determined and how employees can move up.

  
  

• Commit to follow-up: If a raise isn’t possible right now, offer a timeline or concrete steps to revisit the conversation.

In conclusion, salary negotiation shouldn’t be a taboo topic, even in tough markets. In fact, it’s during challenging times that employees need openness the most. Transparent, honest conversations lead to more engaged and committed teams and that’s exactly what Gen Z wants!

When employees feel empowered to have honest conversations about their compensation, even if a raise isn’t immediately possible, it builds trust and loyalty. It shows that the business values transparency, fairness and growth and more importantly, the employees themselves.

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