Concerns with retention, attraction causing employers to invest in talent
Driven by competition for top talent, corporate Canada is considering strategic pay rises, according to Mercer’s 2017/18 Compensation Planning Survey.
Improving economic conditions, adjustments for salary freezes in previous years and a change in base salary strategy or competitive positioning to market are all driving the trend.
The annual survey includes data from over 660 organizations across Canada.
Results revealed that in terms of the factors influencing employers’ budget decisions, employee retention concerns topped the list at 69 per cent, followed by talent attraction concerns at 59 per cent — up 10 per cent from last year.
When organizations who have implemented a salary freeze are taken into account, Mercer projects that Canadian salaries will rise by an average of 2.4 per cent in 2018 — up slightly from 2.3 per cent in 2017. When organizations implementing a salary freeze are excluded, the projection is 2.5 per cent.
Although salary increases are holding steady for average performers, they are higher 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.
“As economic conditions improve across much of Canada, employers are looking to make strategic investments in top talent,” says Allison Griffiths, principal and leader of workforce rewards at Mercer. “But it’s important to get the investment right. This means looking at compensation in a holistic way, and with an eye towards the trends transforming the global workplace.”
Although there are few regional differences between employers’ salary increase plans, the data is highly variable. The decision to increase or decrease budgets comes in response to changing economic conditions; employee gains will be largely dependent upon employer perceptions.
The mining and metals sector is considering the highest salary increases, with a planned increase of three per cent, followed by high tech and life sciences at 2.8 per cent.
Importantly, 21 per cent of those organizations planning to increase their compensation budgets said that this decision was to account for salary freezes, delayed, or lower than normal increases in previous years.
