Allison Cowan, director, Workplace Health, Total Rewards and
Labour Relations Research at The Conference Board of Canada.
“This does have an impact on pay.”
There is a hint of growth on the horizon, but it’s modest.
“For 2018, employers indicate that they will be back in the sal-ary
raise game, which is interesting because in 2016 and 2017,
we had quite a number of employers projecting, and following
through, on a plan for no adjustments, right across the board,” said
Leslie Lemenager, regional president, International, Benefits and
HR Consulting at Gallagher. “Still, employers are indicating that
their salary adjustments are going to be in the 3 per cent or lower
range with a lot of employers coming in at 2.5 per cent, so it’s still
not a great story but it’s an improved story over where Canadian
employers have been in recent years.”
ADJUSTMENTS, BY SECTORS
By industry, Morneau Shepell’s Trends in Human Resources for
2018 found employers are relatively optimistic about the coming
year. Those expecting better financial performance in the coming
year outnumber those expecting weaker performance by four to
one. Despite the optimism, employers are still cautious about sal-ary
increases, likely reflecting a concern that rising interest rates
could dampen economic growth.
The Morneau Shepell survey identified industry sectors expect-ing
higher than average salary increases in 2018: utilities at 2.9 per
cent and manufacturing and wholesale trade at 2.7 per cent. These
industries may be catching up after lower than average increases
over the past few years. Expected salary increases in sectors such
as finance and insurance are expected to remain strong at 2.7 per
cent next year.
Other industries are anticipating increases lower than the na-tional
average. Mining and oil and gas, for instance, expect salary
increases to average 0.8 per cent. Salary increases for workers in
public administration, health care and social assistance are ex-pected
to average 1.7 per cent next year, with educational services
slightly higher at 1.9 per cent.
CONTINGENT WORKERS, THICKENING THE PLOT
For HR professionals, one emerging piece of the compensation
puzzle is the growing number of contingent and non-traditional
workers within many organizations.
“We’ve seen signs that the contingent workforce is growing,”
said Cowan. “I’ve seen estimates that it could be as high as 40 per
cent of all workers in just a few years.”
That presents a challenge to the traditional policies and struc-tures
around compensation and benefits.
“I do think that organizations will need to continue to have a
stable core workforce, but HR is really going to need to be ready
and able to handle these new employment relationships in great-er
numbers,” she said.
Beyond salary, employers need to consider how the total com-pensation
package might include those contingent workers.
“While I do think it’s true that some workers prefer to be in
control of their own pay and benefits and retirement planning, not
everybody is ready for this responsibility or ready for the unex-pected
situations when they come up,” said Cowan.
Offering a total compensation package to every employee –
one that addresses the challenges contingent workers may face
– is an investment in the health, wellbeing and productivity of the
ALTERNATIVE BENEFIT AND
In response to that challenge, “portable benefits” are cropping up
on the radar for a growing number of employers.
“These are benefit plans that are portable from one employer to
the next to support that contingent workforce,” said Cowan. “We
might also see employers offering access to group insurance plans
for better purchasing power for employees, but without being the
plan sponsor – kind of a DIY model.”
Similar approaches could become popular for retirement plan-ning
as well, says Cowan.
“With any plan like this, it means employers would be riding
that fine line between providing simple access to these things and
not managing them in a hands-on way, but also putting supports
in place to make sure people have all the information they need to
make decisions,” she said.
DIFFERENTIATING PAY FOR TOP PERFORMERS
Whether workers are contingent or permanent, there are top per-formers
among them. How organizations reward that cream of
the crop is changing, too, given today’s leaner direct compensa-tion
budgets. In the past, many organizations doled out incentive
or bonus pay (sometimes called variable pay) to their highest per-forming
workers. While that’s still happening, it’s been a muted,
more modest affair for several years now.
“In our report, we’re seeing that organizations are finding it
hard to differentiate top performers because of limited budgets,”
said Marvin Reyes, principal at Mercer Canada. But in many
cases, they’re still managing to do it. The Mercer 2017/2018
Compensation Planning Survey found that while salary increases
are holding steady for average performers, they are creeping high-er
for top performers. According to Mercer’s data, top performers
are slated to receive a salary increase 1.8 times higher than average
performers in the coming year.
The Conference Board of Canada’s survey Compensation
Planning Outlook 2018 found that in 2017, top performers re-ceived
an average salary increase of 3.7 per cent, satisfactory
employees were at 2.3 per cent and poor performers had just a
very minor increase.
“As economic conditions improve across much of Canada, em-ployers
are looking to make strategic investments in top talent,”
said Reyes. “But it’s important to get the investment right. This
means looking at compensation holistically, from a total rewards
point of view.”
“That right mix of rewards for all workers is something more
and more organizations are working toward implementing,” said
Michel Dubé, principal with Morneau Shepell’s compensation
consulting practice. “In my view, money is not a strong motivator.
The work environment needs to be very well suited to the culture
of the people who work there to foster a sense of belonging that
goes well beyond the value of direct compensation.”
20 ❚ FEBRUARY 2018 ❚ HR PROFESSIONAL