 A few months ago, Canadian employers were planning to provide
average salary increases of 2.8 per cent in 2010, but that number has
now dropped to 2.6 per cent, according to a survey conducted by Hewitt
Associates, a global human resources consulting and outsourcing
company. However, while more than a third of employers were considering
a salary freeze earlier this year—providing no increases in 2010—that
number has since decreased. Moreover, even though 81 per cent of
Canadian organizations will not provide a holiday gift or bonus, 79 per
cent will celebrate the season with employees at a holiday party.
While Hewitt's 31st annual Salary Increase Survey,
conducted in the summer, saw employers projecting higher salary
increases, as many as 39 per cent were considering salary freezes for
the coming year. That number has now decreased to 27 per cent,
according to Hewitt's Salary Increase Update Survey of 641
organizations from across Canada.
"The vast majority of
employers—73 per cent as compared to 62 per cent earlier this year—are
providing raises in 2010, so that far more workers will get an increase
next year than originally projected," says Jeff Vathje, Hewitt's
Calgary-based national compensation leader. "2010 salary freezes are
still more prevalent than the one or two per cent of organizations that
typically opt not to provide raises each year. However, the thaw
signifies increased confidence in the economy on the part of
employers—and that's good news for employees."
The average
increase has dipped a little in most parts of the country, other than
Saskatchewan, where employees can expect raises of 4.1 per cent, the
same figure that was projected earlier this year. Those companies that
are planning to decrease their original projections are doing so for
three main reasons: the organization is undergoing cost reductions (58
per cent), has concerns about the economy (56 per cent), or is reacting
to lower increases planned by its competitors (23 per cent).
Those
who have decided to thaw their salary freezes or increase original
budgets are responding to the economic recovery (58 per cent), higher
increases provided by their competitors (27 per cent), or the fact that
their expectations for corporate performance are better than initially
forecast (22 per cent).
Renewed Talent Challenges
With
the end of the recession, the war for talent will begin to heat up
again as demand for skilled workers exceeds supply. "The focus is on
both attraction and retention," says Prashant Chadha, a compensation
consultant in Hewitt's Toronto office. "Employers are planning to
recognize existing high performing employees and attract new talent by
offering higher salary increases, greater variable pay payouts, and/or
career growth opportunities."
While a differentiated rewards
structure that recognizes employees who excel is not unusual, the
emphasis on formal career development opportunities is a new tactic,
according to Chadha. "Some employers took advantage of the lull in the
war for talent during the recession to design detailed programs that
chart a course for high performers so that they understand where
they're headed at the organization and the training and guidance
they'll be offered. If these employees see a clear future at their
current employer, they'll be less likely to look elsewhere for a new
position."
Employer attention can't be focused solely on high
performers, however, when it comes to communication about pay.
"Employers need to communicate to all employees their rationale for
increasing or freezing salaries," says Maureen Simons, a senior
communication consultant with Hewitt Associates in Vancouver. "It's
essential that they equip managers to have those conversations so that
everyone is sending and receiving the same message."
Simons
recommends that employers consider expanding their communication
efforts to include personalized total rewards statements. "These
statements, whether online or on paper, provide a complete view of all
that the employer provides to the individual employee—salary, benefits,
retirement programs, time off with pay, and so on," says Simons. "With
an understanding of the value of all that they receive, employees may
not be as concerned about little or no salary increase."
However,
only 39 per cent of responding organizations currently provide
employees with total rewards statements. "If employers aren't making
employees aware of the value of their total rewards, they run the risk
of having them leave to join other companies that may offer more
salary, but a poorer overall package. That's a missed opportunity,"
says Simons.
'Tis the Season
Only
19 per cent of employers will provide their employees with a holiday
gift or bonus at the end of this year, generally cash (38 per cent), a
gift card or certificate (32 per cent) or a gift chosen by the company
(22 per cent). However, for most employees, not receiving a holiday
gift or bonus will be nothing new. "Only eight per cent of employers
who do not currently offer a gift or bonus did so in the past and have
discontinued their program," says Chadha. "The primary reason is the
cost of these programs."
That doesn't mean that employers won't
be making merry with their staff this season: 79 per cent of
organizations will host a holiday party for employees. The most popular
type of party is for employees and guests, entirely company funded by
61 per cent of employers. Less common is a holiday celebration for
employees only (31 per cent), though 84 per cent of employers foot the
entire bill for these festivities—on average less than $100 per
employee. "We're seeing a lot of holiday lunches, rather than parties,"
states Chadha." Employers want to celebrate the season with their
employees and show their appreciation, but need to keep costs down."
With
a history of exceptional client service since 1940, Hewitt has offices
in more than 30 countries, including Canadian offices in Calgary,
Montreal, Regina, Toronto and Vancouver, and employs approximately
23,000 associates who are helping make the world a better place to
work. For more information, please visit www.hewitt.com/canada.
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