Being too conservative a dangerous game

In giving smaller raises, employers may be sidelined with staff retention problems
By Rowan O’Grady
|Canadian HR Reporter|Last Updated: 03/29/2018

I recently met a friend for lunch who mentioned that, despite stellar performance reviews and exceptional work, she hasn’t had a salary increase in over three years. 

She’s been with the company for a long time and is no longer willing to accept a lack of salary consideration. She knows that the market is strong and questions her loyalty to a company that seems uninterested in keeping her happy.

I had to tell her that her situation is not unique and, unfortunately, it’s a story being told across the country.  Employers in many sectors have seen big gains over the past couple of years, but employee compensation has stalled — a majority of employers said they were planning to offer raises of less than three per cent in 2018, according to a Hays Canada survey of more than 3,500 Canadian employers.

They are opting to be conservative with compensation which, given the economic uncertainty of recent years, is understandable — they don’t want to overextend their businesses or make themselves vulnerable should the economy suddenly shift. 

But as salaries continue to stagnate and the cost of living rises, Canadian employees are essentially taking a pay cut every year due to inflation. Being overly conservative is a hazardous game — employers expecting growth in 2018 may instead be sidelined with major staff retention problems.

When the country’s economy is weaker, employers should take a targeted approach to staff retention — determine who the star players are and worry about keeping them happy. This made sense particularly after the oil and gas collapse. “The grass is greener” mindset wasn’t common with workers because people felt lucky to have any grass at all.

Fast forward to today. The unemployment rate is low, stock markets are up, and 89 per cent of workers are willing to leave their current job if a better offer comes along, according to a separate Hays Canada survey of more than 4,000 Canadians in 2017. In 2014, that number was 78 per cent.

The rise in this number should be a signal to employers that during a strong economy, lack of a robust compensation strategy is almost assured to spark a staffing storm.

In a booming economy, employers need to seriously consider whether the “have-your-cake-and-eat-it-too” philosophy around compensation will pay off when it comes to retaining staff and meeting business objectives.

Bending the rules

Perhaps one of the more concerning revelations about employers heading into 2018 is the willingness to bend salary rules to attract a sought-after candidate. This is dangerous territory. Successfully recruiting a star player isn’t much to celebrate if the rest of an organization’s team feels overworked and undervalued.

Consider the repercussions when employees find out the new star was won over with money that people were told wasn’t available for raises. With unemployment near an all-time low, employees who previously grumbled yet did their jobs are going to be far more likely to take their skills to a competitor.

A strong market like the one now calls for a broader compensation strategy. Offering staff raises that are, at the very least, in line with inflation — rather than focusing on inflated salaries for recruits — can be the first step in a company’s insurance plan to keep a stable team.

Money and millennials

Much has been said about millennials. They’re ambitious, highly educated and some employers feel they tend to “job hop” more than other demographic groups. But the notion that they do so simply for larger paycheques may be overblown. Yes, raises are a factor in many people’s decision to switch jobs, but conversations with younger workers yields deeper insights.

Certainly, there is an expectation for a competitive salary but younger workers also want the full package. They are in search of a rewarding role with an employer that has a strong workplace culture and a career path in mind for them.

Meaningful performance feedback and access to training rank very high on the checklist of considerations when searching for a new job.

And what about pay raises? They’re as important to this age group as they are any other. Inflation-driven raises are adequate but any time that amount can be exceeded, it speaks volumes about an employer’s commitment to keeping people happy.

Talent asset protection

Employers need to consider that compensation is not a one-size-fits-all proposition, and moving in lock-step with inflation is only part of the picture. Younger workers might job hop but that’s usually driven by more than dollars and cents.

Companies that recognize this and take a more tailored approach to compensation will find improved retention among all demographic groups is the result. 

Employers that excel during boom times are those that recognize and act on shifts in employee attitudes. They, just like their teams, read the job market headlines and are assertive in their approach to making people happy.

Rowan O’Grady is president of Hays Canada in Toronto. For more information, visit

Add Comment

  • *
  • *
  • *
  • *