Compensation surveys forecast 2006 raises in 3.2-3.5 per cent range, in line with last few years
As the days begin to cool and the nights grow longer, HR staff know that salary survey season has started. This year’s surveys predict that raises will be in the 3.2-3.5 per cent range next year.
Canadian HR Reporter’s full salary survey coverage will appear on Oct. 10 in print and online.
To read the details of each survey, including other trends in compensation and benefits, click on the links below.
2006 Salary Surveys
Watson Wyatt Worldwide
Mercer Human Resource Consulting
WorldatWork
Morneau Sobeco
Hewitt Associates
Hay Group
Culpepper
The Wynford Group
Conference Board of Canada
Watson Wyatt Worldwide
Salary increases on the rise
Annual survey shows salary increases are higher than last year but companies still need to reward high-performers better
After three years of declining salary increases, the Canadian economy seems to be turning around, but salary increases are still lower than before Sept. 11, 2001.
This year, the average salary increase of 3.3 per cent was up slightly from last year’s 3.2 per cent increase, according to the Watson Wyatt 2005 Annual Canadian Salary Survey. The survey predicts that next year's average increase will remain constant at 3.3 per cent, still lower than the average increase in 2001 at 4.1 per cent.
“As the economy continues to improve and the competition for high-performing individuals intensifies, employers will face increasing pressure to raise salaries at a faster rate to attract and retain talented employees,” said Graham Dodd, national practice director for Watson Wyatt Canada’s Human Capital Group.
Watson Wyatt surveyed 422 organizations, representing more than one million employees in various industries across the country, earlier this year.
Calgary showed the greatest increase with 3.4 per cent and South Western Ontario had the smallest increase with 3.1 per cent. The finance and professional sectors had the greatest increases with 3.7 per cent each, while the utilities/communication industry had the smallest increase with only 2.9 per cent.
While 85 per cent of companies that participated in this year’s survey said merit increases are the leading factor in determining their annual salary increase budget, the difference in merit increases between average employees and top performers is minimal — at 2.9 per cent and 5.4 per cent respectively.
“Canadian companies are missing the mark by providing only a marginal difference in salary increases to top-performing employees,” said Dodd.
“Our recent Human Capital Index study shows that companies that meaningfully differentiate employee rewards based on performance financially outperform those that do not.”
Respondents indicated that leadership development was the number one HR issue that they expect to face over the next five years.
About Watson Wyatt
Watson Wyatt is a global consulting firm specializing in human capital and financial management. The firm offers services in three areas: employee benefits, human capital strategies and related technology solutions. Watson Wyatt has more than 6,000 associates in 88 offices in 30 countries. In Western Canada, the firm serves clients from Vancouver and Calgary; in Central Canada from Toronto and Kitchener-Waterloo; and in Eastern Canada from Montreal.
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Mercer Human Resource Consulting
Employers predict salary increases will remain steady
Canadian organizations are turning to pay-for-performance raises and non-monetary recognition to reward employees
Canadian companies foresee a healthy economy and are focusing on pay increases based on performance instead of cost saving measures for the next year, according to the results of Mercer Human Resource Consulting’s 2006 Compensation Planning Survey.
Employers predict an average salary increase of 3.4 per cent for 2006, which is in line with this year’s increases. Nearly half of respondents said they have increased pay differentiation based on performance and another 16.8 per cent say they’re considering it for next year.
“Employer optimism is also reflected in workforce planning. More than one-quarter of employers surveyed said they expect to add head count in 2006,” said Marc Chartrand, principal at Mercer.
“Companies are looking at the way they value performance, exploring pay-for-performance compensation and monetary and non-monetary recognition awards. This total rewards approach acknowledges the needs of both the organization its employees and offers greater flexibility when it comes to compensation planning.”
The oil and gas and pharmaceutical/biotechnology industries are expected to have the highest salary increases again in 2006 with increases of 4.6 per cent and 3.7 per cent each. All sectors are expected to have at least an increase of 3.0 per cent.
Employers predict that executives will get increases of about 3.6 per cent while raises for clerical and hourly staff are expected to be about 3.3 per cent. There is little difference in average increases across the country with the highest increases being predicted in Alberta and British Columbia at 3.5 per cent and the lowest increases expected in Montreal with 3.2 per cent.
The 2006 Compensation Planning Survey is based on data from 384 organizations representing about 1.6 million unionized and non-unionized Canadian employees.
About Mercer
Mercer Human Resource Consulting helps employers create measurable business results through their people. With more than 13,000 employees serving clients from some 150 cities in 40 countries worldwide, the company is part of Mercer Inc., a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago, Pacific, and London stock exchanges.
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WorldatWork
Salary increases up from last year as majority of employers follow the market
The average employee enjoyed a salary increase higher than in 2004 but officers and executives saw their increases fall by 0.2 per cent
Nine out of 10 Canadian companies reported paying all employees either at or above the market rate as part of the organization’s compensation philosophy, according to the WorldatWork 2005 salary survey.
This year represented the first time that the survey looked at how organizations prefer to pay employees in relation to the market rate of pay.
The survey also found that employees across the country enjoyed an average salary increase of 3.5 per cent, up from 3.4 per cent last year. However, officers and executives saw their increases drop from 3.7 per cent last year to 3.5 per cent in 2005.
Employers predicted next year’s average salary increase will be at 3.4 per cent.
The majority of the 237 organizations, representing 530,000 employees across Canada, that participated in the survey reported that merit increases constituted the largest share of the budget increase at 3.1 per cent. General increases and cost-of-living-adjustment increases followed at 2.3 per cent.
The transportation/utility industry saw the largest increase from last year, with an increase of four tenths of a per cent (3.3 versus 3.7), while the wholesale industry saw the biggest drop from last year with a decrease of two per cent (5.5 versus 3.5).
About one quarter of organizations reported giving employees lump sum increases. These increases are given as a single cash payment and were most often used for non-management salaried (28 per cent) and management salaried employees (29 per cent).
Organizations reported giving a base salary increase to an average of 91 per cent of all employees in 2005, a significant increase over last year’s average of 86 per cent.
About WorldatWork
WorldatWork is a not-for-profit professional association dedicated to knowledge leadership in compensation, benefits and total rewards. Founded in 1955, WorldatWork focuses on human resources disciplines associated with attracting, retaining and motivating employees. Besides serving as the membership association of the professions, the WorldatWork family of organizations provides education, certification (Certified Compensation Professional – CCP, Certified Benefits Professional – CBP and Global Remuneration Professional – GRP), publications, knowledge resources, surveys, conferences, research and networking. WorldatWork Society of Certified Professionals and Alliance for Work-Life Progress (AWLP) are part of the WorldatWork family.
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Morneau Sobeco
Benefits go online
Employers embrace Internet for communication and interactive tools
The information age is gaining popularity among Canadian employers as a quickly increasing number of companies are turning to the Internet to communicate with workers, according to Morneau Sobeco’s 2006 Compensation Trends and Projection Survey.
“An interesting feature of this year’s survey shows the continuing trend for employers to embrace on-line approaches for the delivery of pension and benefits information to employees,” said Bill Morneau, president and CEO of Morneau Sobeco.
Over the last four years, employers’ use of the Internet has increased dramatically from 30 per cent in 2001 to 58 per cent in 2005. Company websites are also more interactive than before with 46 per cent of employers offering retirement and financial planning pension tools on-line, compared with only 19 per cent in 2001.
The survey predicts an average salary increase of 3.2 per cent next year, however, 54 per cent of the 300 organizations, which represent 800,000 Canadian employees, that participated in the survey made an average provision of 1.0 per cent for promotional increases and special adjustments.
The survey also shows that salary increases in 2006 will vary widely between industries. Some will be as high as 4.6 per cent (mining, oil and gas sector), while others will be as low as 2.6 per cent (paper or wood product manufacturing sector).
The average salary increase for unionized hourly employees is expected to be 2.7 per cent while the average increase for executives is expected to be 3.3 per cent.
According to the survey, the top three benefit issues for 2006 are health care costs, disability management and benefits plan design. Employers indicated that managing the cost of health care and disability programs will remain a priority.
Perhaps in an attempt to control these costs, Employee Assistance Programs and wellness programs are becoming more popular. The number of employers offering an EAP has increased from 72 per cent in 2001 to 85 per cent this year, while number of companies offering wellness programs increased from 24 per cent to 33 per cent.
About Morneau Sobeco
Morneau Sobeco is a human resource consulting firm focusing on the design and delivery of compensation, retirement, and employee benefits programs. With 950 professionals working in 13 cities across North America, it serves more than 3,000 clients.
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Hewitt Associates
Variable pay programs gain popularity
Salary increases have remained steady and are predicted to do so as organizations turn to other methods to attract and retain workers
Employers are focusing on variable pay to motivate employees as salary increases were up slightly from last year and organizations predict that next year’s increases will remain the same, according to Hewitt Associates’ 27th annual Salary Increase Survey.
The average salary increase was 3.4 per cent this year, up from last year’s prediction of 3.3 per cent, but many employers are still focused on cost-saving measures so there’s little upward movement in salaries across the country, said a Hewitt spokesperson.
“Instead, employers are using variable pay as part of their overall strategy for attracting and retaining employees who can help the organization achieve strong business results,” said Keri Humber, a senior compensation consultant with Hewitt.
Attraction and retention is becoming an issue for a growing number of organizations. This year 53 per cent of employers reported that attraction was an issue for them compared to 37 per cent last year. Similarly 34 per cent of employers stated they were facing retention pressures, up from 27 per cent last year.
More employers see variable pay plans as way to motivate, rather than simply reward, their employees. This year, 72 per cent of organizations said they used such plans to reward employees, down from 76 per cent in 2004.
The most popular type of variable pay program is the business incentive plan where organizations award employees for a combination of financial and operation measures for company, business unit, department, plant and/or individual performance. This kind of plan was offered by 69 per cent of the 400 responding organizations.
Other programs include acknowledging outstanding individual or group achievements; rewarding an employee based on specific performance criteria; and stock options for professionals who meet specific goals.
In order for these programs to best benefit the organization, employers must design them to focus employees on achieving goals that are aligned with business objectives. An organization must then measure the outcome of these programs to ensure they’re helping to attract and retain employees as well helping the organization meet its goals.
Unfortunately, fewer organizations are doing these kinds of analyses — only 37 per cent of organizations reported doing so this year, down from 42 per cent in 2004.
“Organizations that take the time to track the success of their plans are better able to align employee and business objectives,” said Humber. “Monitoring also helps determine whether pay for performance programs are actually motivating employees.”
Regionally, Calgary reported the highest salary increase at 4.3 per cent, while Toronto reported the smallest increase at 3.1 per cent. Calgary’s increase is expected to stay high next year as well, buoyed by activity in the oil patch.
About Hewitt Associates
Hewitt Associates is a global human resources outsourcing and consulting firm. It provides services from offices in 38 countries, including Canadian offices in Calgary, Montréal, Regina, Toronto and Vancouver.
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Hay Group
More companies planning raises
Projected salary increases up from last year across the country but Atlantic Canada and Saskatchewan fall below national average
More organizations are planning to provide salary increases in 2006 than they have over the past few years, according to the Hay Group’s Compensation Planning Update for 2006.
Of the 482 organizations from the public and private sectors that responded, 88 per cent are planning base salary increases for next year. The average salary increase is expected to be at 3.3 per cent, up from both last year’s projection of 3.1 per cent and 2005's actual increase of 2.8 per cent.
“Over the past year, we’ve been witness to many different turn of events,” said Karl Aboud, the Hay Group’s national director, reward management, “but on balance there is enough optimism that the forecasted salary increases are showing stronger growth than they have in the recent past.”
The highest salary increases are projected to be in the oil and gas sector at 4.3 per cent, while the survey projects that bank employees will receive the lowest increases at just 2.6 per cent.
The increases also vary geographically across Canada. The survey predicts Alberta will once again have the highest increases with 3.8 per cent (last year’s projection was 3.6 per cent). Atlantic Canada and Saskatchewan are the two regions that are significantly below the national average at 2.4 per cent and 2.8 per cent respectively.
According to Hay Group, more employers are also using annual bonuses as a key part of their compensation packages. This year, bonus targets (as a percentage of base pay) were at 6 per cent for trades, 15 per cent for middle management and 36 per cent for executives.
About Hay Group
Hay Group is a consultant that helps clients improve business results through people-focused solutions.
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Culpepper
Workers to receive higher salary increases in India, Philippines
Israel and Switzerland ranked at the bottom of projected salary increases for global technology sector
Technology workers in India and the Philippines are gearing up for astronomical salary increases in 2006, while Canadian workers in the same sector are at the lower end of the salary increase range, according to a recent survey.
In August Culpepper conducted a global survey of projected base salary increases for 2006 in technology companies.
The average salary increase ranges from three to six per cent. However, average projected increases in India and the Philippines, ranging from 9.2 per cent to 11.2 per cent, are two to three times higher than most other countries.
While there weren’t enough Israeli companies with executives to include them in that measure, Israel had the lowest salary increases for operations, sales and technical workers with a 2.3 per cent average increase across the three sectors. Switzerland was only slightly higher at 2.9 per cent across all four occupational groups.
With about 30 Canadian companies responding to the survey, Canada consistently had the lowest predicted salary increases in the Americas across all job types with an average increase of 3.5 per cent.
Overall, base salary projections ran higher for executives and lower for sales employees and companies were more likely to freeze the base salaries of sales employees and least likely to do so for technical employees.
About Culpepper
Culpepper and Associates, founded in 1979, conducts worldwide salary surveys and provides benchmark data for compensation and employee benefit programs. Its data spans a full-range of jobs in technology and life science companies, from board members down through every area, function and level.
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The Wynford Group
Alberta’s booming economy drives up salary increases
More companies developing attraction and retention programs to compete
Salary increases rose this year and the majority of employers are using special attraction or retention programs to stay competitive in an increasingly tight labour market, according to The Wynford Group's IAT Surveys 2005.
The survey, which focuses on Western Canada but reports on compensation trends across the country, found that this year’s average base salary increase was 3.56 per cent, up from last year. While the projection for next year at 3.4 per cent is lower than this year’s actual increase, it’s higher than last year’s projection for 2005.
“The impact of the mega oil and gas projects in Alberta are causing a significant attraction and retention ripple across many other industries,” said Gail Evans, president of The Wynford Group. “The dynamic Alberta oil and gas sector is forcing up salaries for many other technical sectors.”
In order to compete, Attraction and retention programs are becoming increasingly important, especially in industries such as contact centres that reported a 20 per cent turnover.
More than half of the 140 organizations surveyed by The Wynford Group reported using an attraction or retention program. The most popular program is an educational subsidy with 82.5 per cent of organizations reporting such a program, up from 61.8 per cent in 2004.
Signing bonuses also increased to 29.2 per cent up from 20.5 per cent and about half of organizations now provide a lounge/lunch/TV room for employees up from about a quarter in 2004.
Alberta employees are expected to receive the highest salary increases in the country for the fourth straight year in 2006. British Columbia and Ontario are ranked second and third behind Alberta.
About The Wynford Group
Based in Calgary, The Wyndord Group provides a unique Western perspective while collecting compensation data for national customers. The Wynford Group also conducts The Canadian Human Capital Benchmarking Survey providing lead indicators that can predict future success and the opportunity for organizational performance enhancements.
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Conference Board of Canada
Oil and gas workers strike largest wage increases
Two-thirds of organizations are finding it hard to recruit and retain skilled workers
Wages for non-union Canadian employees are expected to rise by 3.4 per cent in 2006, according to the Conference Board of Canada’s Compensation Planning Outlook survey.
Oil and gas workers can expect to receive an average pay increase of 4.3 per cent, the highest among all industries.
“The intense competition for labour in Alberta’s energy sector is the sharpest example of growing pressure in the labour market,” said Prem Benimadhu, vice-president, organizational performance. “After easing in recent years, recruitment and retention have re-emerged as priorities for organizations. This pressure will continue to build as the Canadian labour market tightens."
Among the 347 mostly medium and large-sized Canadian organizations surveyed, two out of three respondents reported challenges with recruiting and/or retaining employees with specific skills — particularly in the areas of accounting and finance, engineering, and specialized information technology.
Non-unionized employees in the broader public sector can anticipate average pay increases of 3.6 per cent in 2006, compared to 3.4 per cent for private sector workers. Unionized employees in both the public and private sectors can expect average wage increases of 2.5 per cent in 2006.
The 24th annual Compensation Planning Outlook survey was conducted in July and August 2005.
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Canadian HR Reporter’s full salary survey coverage will appear on Oct. 10 in print and online.
To read the details of each survey, including other trends in compensation and benefits, click on the links below.
2006 Salary Surveys
Watson Wyatt Worldwide
Mercer Human Resource Consulting
WorldatWork
Morneau Sobeco
Hewitt Associates
Hay Group
Culpepper
The Wynford Group
Conference Board of Canada
Watson Wyatt Worldwide
Salary increases on the rise
Annual survey shows salary increases are higher than last year but companies still need to reward high-performers better
After three years of declining salary increases, the Canadian economy seems to be turning around, but salary increases are still lower than before Sept. 11, 2001.
This year, the average salary increase of 3.3 per cent was up slightly from last year’s 3.2 per cent increase, according to the Watson Wyatt 2005 Annual Canadian Salary Survey. The survey predicts that next year's average increase will remain constant at 3.3 per cent, still lower than the average increase in 2001 at 4.1 per cent.
“As the economy continues to improve and the competition for high-performing individuals intensifies, employers will face increasing pressure to raise salaries at a faster rate to attract and retain talented employees,” said Graham Dodd, national practice director for Watson Wyatt Canada’s Human Capital Group.
Watson Wyatt surveyed 422 organizations, representing more than one million employees in various industries across the country, earlier this year.
Calgary showed the greatest increase with 3.4 per cent and South Western Ontario had the smallest increase with 3.1 per cent. The finance and professional sectors had the greatest increases with 3.7 per cent each, while the utilities/communication industry had the smallest increase with only 2.9 per cent.
While 85 per cent of companies that participated in this year’s survey said merit increases are the leading factor in determining their annual salary increase budget, the difference in merit increases between average employees and top performers is minimal — at 2.9 per cent and 5.4 per cent respectively.
“Canadian companies are missing the mark by providing only a marginal difference in salary increases to top-performing employees,” said Dodd.
“Our recent Human Capital Index study shows that companies that meaningfully differentiate employee rewards based on performance financially outperform those that do not.”
Respondents indicated that leadership development was the number one HR issue that they expect to face over the next five years.
About Watson Wyatt
Watson Wyatt is a global consulting firm specializing in human capital and financial management. The firm offers services in three areas: employee benefits, human capital strategies and related technology solutions. Watson Wyatt has more than 6,000 associates in 88 offices in 30 countries. In Western Canada, the firm serves clients from Vancouver and Calgary; in Central Canada from Toronto and Kitchener-Waterloo; and in Eastern Canada from Montreal.
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Mercer Human Resource Consulting
Employers predict salary increases will remain steady
Canadian organizations are turning to pay-for-performance raises and non-monetary recognition to reward employees
Canadian companies foresee a healthy economy and are focusing on pay increases based on performance instead of cost saving measures for the next year, according to the results of Mercer Human Resource Consulting’s 2006 Compensation Planning Survey.
Employers predict an average salary increase of 3.4 per cent for 2006, which is in line with this year’s increases. Nearly half of respondents said they have increased pay differentiation based on performance and another 16.8 per cent say they’re considering it for next year.
“Employer optimism is also reflected in workforce planning. More than one-quarter of employers surveyed said they expect to add head count in 2006,” said Marc Chartrand, principal at Mercer.
“Companies are looking at the way they value performance, exploring pay-for-performance compensation and monetary and non-monetary recognition awards. This total rewards approach acknowledges the needs of both the organization its employees and offers greater flexibility when it comes to compensation planning.”
The oil and gas and pharmaceutical/biotechnology industries are expected to have the highest salary increases again in 2006 with increases of 4.6 per cent and 3.7 per cent each. All sectors are expected to have at least an increase of 3.0 per cent.
Employers predict that executives will get increases of about 3.6 per cent while raises for clerical and hourly staff are expected to be about 3.3 per cent. There is little difference in average increases across the country with the highest increases being predicted in Alberta and British Columbia at 3.5 per cent and the lowest increases expected in Montreal with 3.2 per cent.
The 2006 Compensation Planning Survey is based on data from 384 organizations representing about 1.6 million unionized and non-unionized Canadian employees.
About Mercer
Mercer Human Resource Consulting helps employers create measurable business results through their people. With more than 13,000 employees serving clients from some 150 cities in 40 countries worldwide, the company is part of Mercer Inc., a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago, Pacific, and London stock exchanges.
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WorldatWork
Salary increases up from last year as majority of employers follow the market
The average employee enjoyed a salary increase higher than in 2004 but officers and executives saw their increases fall by 0.2 per cent
Nine out of 10 Canadian companies reported paying all employees either at or above the market rate as part of the organization’s compensation philosophy, according to the WorldatWork 2005 salary survey.
This year represented the first time that the survey looked at how organizations prefer to pay employees in relation to the market rate of pay.
The survey also found that employees across the country enjoyed an average salary increase of 3.5 per cent, up from 3.4 per cent last year. However, officers and executives saw their increases drop from 3.7 per cent last year to 3.5 per cent in 2005.
Employers predicted next year’s average salary increase will be at 3.4 per cent.
The majority of the 237 organizations, representing 530,000 employees across Canada, that participated in the survey reported that merit increases constituted the largest share of the budget increase at 3.1 per cent. General increases and cost-of-living-adjustment increases followed at 2.3 per cent.
The transportation/utility industry saw the largest increase from last year, with an increase of four tenths of a per cent (3.3 versus 3.7), while the wholesale industry saw the biggest drop from last year with a decrease of two per cent (5.5 versus 3.5).
About one quarter of organizations reported giving employees lump sum increases. These increases are given as a single cash payment and were most often used for non-management salaried (28 per cent) and management salaried employees (29 per cent).
Organizations reported giving a base salary increase to an average of 91 per cent of all employees in 2005, a significant increase over last year’s average of 86 per cent.
About WorldatWork
WorldatWork is a not-for-profit professional association dedicated to knowledge leadership in compensation, benefits and total rewards. Founded in 1955, WorldatWork focuses on human resources disciplines associated with attracting, retaining and motivating employees. Besides serving as the membership association of the professions, the WorldatWork family of organizations provides education, certification (Certified Compensation Professional – CCP, Certified Benefits Professional – CBP and Global Remuneration Professional – GRP), publications, knowledge resources, surveys, conferences, research and networking. WorldatWork Society of Certified Professionals and Alliance for Work-Life Progress (AWLP) are part of the WorldatWork family.
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Morneau Sobeco
Benefits go online
Employers embrace Internet for communication and interactive tools
The information age is gaining popularity among Canadian employers as a quickly increasing number of companies are turning to the Internet to communicate with workers, according to Morneau Sobeco’s 2006 Compensation Trends and Projection Survey.
“An interesting feature of this year’s survey shows the continuing trend for employers to embrace on-line approaches for the delivery of pension and benefits information to employees,” said Bill Morneau, president and CEO of Morneau Sobeco.
Over the last four years, employers’ use of the Internet has increased dramatically from 30 per cent in 2001 to 58 per cent in 2005. Company websites are also more interactive than before with 46 per cent of employers offering retirement and financial planning pension tools on-line, compared with only 19 per cent in 2001.
The survey predicts an average salary increase of 3.2 per cent next year, however, 54 per cent of the 300 organizations, which represent 800,000 Canadian employees, that participated in the survey made an average provision of 1.0 per cent for promotional increases and special adjustments.
The survey also shows that salary increases in 2006 will vary widely between industries. Some will be as high as 4.6 per cent (mining, oil and gas sector), while others will be as low as 2.6 per cent (paper or wood product manufacturing sector).
The average salary increase for unionized hourly employees is expected to be 2.7 per cent while the average increase for executives is expected to be 3.3 per cent.
According to the survey, the top three benefit issues for 2006 are health care costs, disability management and benefits plan design. Employers indicated that managing the cost of health care and disability programs will remain a priority.
Perhaps in an attempt to control these costs, Employee Assistance Programs and wellness programs are becoming more popular. The number of employers offering an EAP has increased from 72 per cent in 2001 to 85 per cent this year, while number of companies offering wellness programs increased from 24 per cent to 33 per cent.
About Morneau Sobeco
Morneau Sobeco is a human resource consulting firm focusing on the design and delivery of compensation, retirement, and employee benefits programs. With 950 professionals working in 13 cities across North America, it serves more than 3,000 clients.
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Hewitt Associates
Variable pay programs gain popularity
Salary increases have remained steady and are predicted to do so as organizations turn to other methods to attract and retain workers
Employers are focusing on variable pay to motivate employees as salary increases were up slightly from last year and organizations predict that next year’s increases will remain the same, according to Hewitt Associates’ 27th annual Salary Increase Survey.
The average salary increase was 3.4 per cent this year, up from last year’s prediction of 3.3 per cent, but many employers are still focused on cost-saving measures so there’s little upward movement in salaries across the country, said a Hewitt spokesperson.
“Instead, employers are using variable pay as part of their overall strategy for attracting and retaining employees who can help the organization achieve strong business results,” said Keri Humber, a senior compensation consultant with Hewitt.
Attraction and retention is becoming an issue for a growing number of organizations. This year 53 per cent of employers reported that attraction was an issue for them compared to 37 per cent last year. Similarly 34 per cent of employers stated they were facing retention pressures, up from 27 per cent last year.
More employers see variable pay plans as way to motivate, rather than simply reward, their employees. This year, 72 per cent of organizations said they used such plans to reward employees, down from 76 per cent in 2004.
The most popular type of variable pay program is the business incentive plan where organizations award employees for a combination of financial and operation measures for company, business unit, department, plant and/or individual performance. This kind of plan was offered by 69 per cent of the 400 responding organizations.
Other programs include acknowledging outstanding individual or group achievements; rewarding an employee based on specific performance criteria; and stock options for professionals who meet specific goals.
In order for these programs to best benefit the organization, employers must design them to focus employees on achieving goals that are aligned with business objectives. An organization must then measure the outcome of these programs to ensure they’re helping to attract and retain employees as well helping the organization meet its goals.
Unfortunately, fewer organizations are doing these kinds of analyses — only 37 per cent of organizations reported doing so this year, down from 42 per cent in 2004.
“Organizations that take the time to track the success of their plans are better able to align employee and business objectives,” said Humber. “Monitoring also helps determine whether pay for performance programs are actually motivating employees.”
Regionally, Calgary reported the highest salary increase at 4.3 per cent, while Toronto reported the smallest increase at 3.1 per cent. Calgary’s increase is expected to stay high next year as well, buoyed by activity in the oil patch.
About Hewitt Associates
Hewitt Associates is a global human resources outsourcing and consulting firm. It provides services from offices in 38 countries, including Canadian offices in Calgary, Montréal, Regina, Toronto and Vancouver.
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Hay Group
More companies planning raises
Projected salary increases up from last year across the country but Atlantic Canada and Saskatchewan fall below national average
More organizations are planning to provide salary increases in 2006 than they have over the past few years, according to the Hay Group’s Compensation Planning Update for 2006.
Of the 482 organizations from the public and private sectors that responded, 88 per cent are planning base salary increases for next year. The average salary increase is expected to be at 3.3 per cent, up from both last year’s projection of 3.1 per cent and 2005's actual increase of 2.8 per cent.
“Over the past year, we’ve been witness to many different turn of events,” said Karl Aboud, the Hay Group’s national director, reward management, “but on balance there is enough optimism that the forecasted salary increases are showing stronger growth than they have in the recent past.”
The highest salary increases are projected to be in the oil and gas sector at 4.3 per cent, while the survey projects that bank employees will receive the lowest increases at just 2.6 per cent.
The increases also vary geographically across Canada. The survey predicts Alberta will once again have the highest increases with 3.8 per cent (last year’s projection was 3.6 per cent). Atlantic Canada and Saskatchewan are the two regions that are significantly below the national average at 2.4 per cent and 2.8 per cent respectively.
According to Hay Group, more employers are also using annual bonuses as a key part of their compensation packages. This year, bonus targets (as a percentage of base pay) were at 6 per cent for trades, 15 per cent for middle management and 36 per cent for executives.
About Hay Group
Hay Group is a consultant that helps clients improve business results through people-focused solutions.
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Culpepper
Workers to receive higher salary increases in India, Philippines
Israel and Switzerland ranked at the bottom of projected salary increases for global technology sector
Technology workers in India and the Philippines are gearing up for astronomical salary increases in 2006, while Canadian workers in the same sector are at the lower end of the salary increase range, according to a recent survey.
In August Culpepper conducted a global survey of projected base salary increases for 2006 in technology companies.
The average salary increase ranges from three to six per cent. However, average projected increases in India and the Philippines, ranging from 9.2 per cent to 11.2 per cent, are two to three times higher than most other countries.
While there weren’t enough Israeli companies with executives to include them in that measure, Israel had the lowest salary increases for operations, sales and technical workers with a 2.3 per cent average increase across the three sectors. Switzerland was only slightly higher at 2.9 per cent across all four occupational groups.
With about 30 Canadian companies responding to the survey, Canada consistently had the lowest predicted salary increases in the Americas across all job types with an average increase of 3.5 per cent.
Overall, base salary projections ran higher for executives and lower for sales employees and companies were more likely to freeze the base salaries of sales employees and least likely to do so for technical employees.
About Culpepper
Culpepper and Associates, founded in 1979, conducts worldwide salary surveys and provides benchmark data for compensation and employee benefit programs. Its data spans a full-range of jobs in technology and life science companies, from board members down through every area, function and level.
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The Wynford Group
Alberta’s booming economy drives up salary increases
More companies developing attraction and retention programs to compete
Salary increases rose this year and the majority of employers are using special attraction or retention programs to stay competitive in an increasingly tight labour market, according to The Wynford Group's IAT Surveys 2005.
The survey, which focuses on Western Canada but reports on compensation trends across the country, found that this year’s average base salary increase was 3.56 per cent, up from last year. While the projection for next year at 3.4 per cent is lower than this year’s actual increase, it’s higher than last year’s projection for 2005.
“The impact of the mega oil and gas projects in Alberta are causing a significant attraction and retention ripple across many other industries,” said Gail Evans, president of The Wynford Group. “The dynamic Alberta oil and gas sector is forcing up salaries for many other technical sectors.”
In order to compete, Attraction and retention programs are becoming increasingly important, especially in industries such as contact centres that reported a 20 per cent turnover.
More than half of the 140 organizations surveyed by The Wynford Group reported using an attraction or retention program. The most popular program is an educational subsidy with 82.5 per cent of organizations reporting such a program, up from 61.8 per cent in 2004.
Signing bonuses also increased to 29.2 per cent up from 20.5 per cent and about half of organizations now provide a lounge/lunch/TV room for employees up from about a quarter in 2004.
Alberta employees are expected to receive the highest salary increases in the country for the fourth straight year in 2006. British Columbia and Ontario are ranked second and third behind Alberta.
About The Wynford Group
Based in Calgary, The Wyndord Group provides a unique Western perspective while collecting compensation data for national customers. The Wynford Group also conducts The Canadian Human Capital Benchmarking Survey providing lead indicators that can predict future success and the opportunity for organizational performance enhancements.
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Conference Board of Canada
Oil and gas workers strike largest wage increases
Two-thirds of organizations are finding it hard to recruit and retain skilled workers
Wages for non-union Canadian employees are expected to rise by 3.4 per cent in 2006, according to the Conference Board of Canada’s Compensation Planning Outlook survey.
Oil and gas workers can expect to receive an average pay increase of 4.3 per cent, the highest among all industries.
“The intense competition for labour in Alberta’s energy sector is the sharpest example of growing pressure in the labour market,” said Prem Benimadhu, vice-president, organizational performance. “After easing in recent years, recruitment and retention have re-emerged as priorities for organizations. This pressure will continue to build as the Canadian labour market tightens."
Among the 347 mostly medium and large-sized Canadian organizations surveyed, two out of three respondents reported challenges with recruiting and/or retaining employees with specific skills — particularly in the areas of accounting and finance, engineering, and specialized information technology.
Non-unionized employees in the broader public sector can anticipate average pay increases of 3.6 per cent in 2006, compared to 3.4 per cent for private sector workers. Unionized employees in both the public and private sectors can expect average wage increases of 2.5 per cent in 2006.
The 24th annual Compensation Planning Outlook survey was conducted in July and August 2005.
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