Early salary forecasts for 2001 predict increases comparable to those awarded this year.
It’s fair to say there will be similar increases in the new year with the possibility of slight growth, though executive pay will continue to outstrip that given to non-executives, said Martin Harts, director of reward management for Hay Management Consultants Ltd.
Nationally, executives and senior management can expect hikes in the range of 3.5 per cent. Albertans are likely to enjoy larger increases of 3.9 per cent, while raises in Vancouver will be under three per cent (see chart). Increases at all levels will likely be about 3.2 per cent. Harts cautioned that forecasts are typically on the low side by about half a percentage point during expansionary times.
Not surprisingly, it is a different picture when it comes to paying information technology employees, though by no means is it time to panic. “There has been a lot of hype about runaway salaries” in the dotcom sector, said Harts. But there is good news for employers because it is not nearly as high as anecdotal evidence suggests. Most of the huge increases that have received so much attention are for people with skill sets in exceptionally high demand working for dotcom companies. However, for regular companies hiring people to work in their technology departments it will still be necessary to pay technology people a premium.
If there are 10 pay levels at an organization, a technology person at level five should be paid about 10 per cent more than other people in the organization at that level.
Michael Thompson, Hay’s national director of reward consulting, said that while some of the shine has come off the dotcoms in recent months, all businesses have to be very vigilant about what they are paying IT staff. Those employees, more than others, are keenly aware of their worth in the market, which changes rapidly. If the employer doesn’t meet the market value they will leave and the cost to keep them is still much less than the cost of trying to fill an IT vacancy, he said.
Other IT findings:
•24 per cent of participants in the Hay survey pay an average of 10 per cent of base salary as a “hot skills” premium;
•average IT employee turnover rate is about nine per cent;
•average time to fill a mid-level IT vacancy is two months, at the managerial level it’s 3.5 months; and
•26 per cent of respondents offer long-term incentives, typically options, to IT positions above the entry level.
By the same token, employers should be more selective in how they spend their salary budget. “It’s easier to give a three-per-cent increase across the board, but it’s not always the most effective,” said Harts. Those people who contribute most to the organization may deserve a five-per-cent increase, while others may only get one per cent.
While most employees in the private sector can expect real wage gains next year, the same cannot be said for employees in the public sector where increases will barely keep pace with inflation, circumstances almost certain to make recruitment and retention in the public sector more difficult.
Harts also said that although real wage increases are likely for next year, Canadian pay levels aren’t increasing enough to stop people from being lured south of the border.
There has been a lot of pressure from the U.S. to increase pay levels in Canada, said Harts. In publicly held companies, base pay has been increasing by about six per cent for the past few years while “incentives have been increasing astronomically,” he said. But that is only because of the stagnation of wages in the early part of the decade. What’s more, Canada still pays very poorly compared to the U.S. “We’re still poor cousins,” he said. However, quality of life is much better in Canada and offsets higher salaries. “You never read about that,” said Harts, who himself lived in the U.S. for several years and saw first-hand how much of a disincentive it can be to remain there. “Until you live in that environment you don’t realize what those offsets are,” he said.
It’s fair to say there will be similar increases in the new year with the possibility of slight growth, though executive pay will continue to outstrip that given to non-executives, said Martin Harts, director of reward management for Hay Management Consultants Ltd.
Nationally, executives and senior management can expect hikes in the range of 3.5 per cent. Albertans are likely to enjoy larger increases of 3.9 per cent, while raises in Vancouver will be under three per cent (see chart). Increases at all levels will likely be about 3.2 per cent. Harts cautioned that forecasts are typically on the low side by about half a percentage point during expansionary times.
Not surprisingly, it is a different picture when it comes to paying information technology employees, though by no means is it time to panic. “There has been a lot of hype about runaway salaries” in the dotcom sector, said Harts. But there is good news for employers because it is not nearly as high as anecdotal evidence suggests. Most of the huge increases that have received so much attention are for people with skill sets in exceptionally high demand working for dotcom companies. However, for regular companies hiring people to work in their technology departments it will still be necessary to pay technology people a premium.
If there are 10 pay levels at an organization, a technology person at level five should be paid about 10 per cent more than other people in the organization at that level.
Michael Thompson, Hay’s national director of reward consulting, said that while some of the shine has come off the dotcoms in recent months, all businesses have to be very vigilant about what they are paying IT staff. Those employees, more than others, are keenly aware of their worth in the market, which changes rapidly. If the employer doesn’t meet the market value they will leave and the cost to keep them is still much less than the cost of trying to fill an IT vacancy, he said.
Other IT findings:
•24 per cent of participants in the Hay survey pay an average of 10 per cent of base salary as a “hot skills” premium;
•average IT employee turnover rate is about nine per cent;
•average time to fill a mid-level IT vacancy is two months, at the managerial level it’s 3.5 months; and
•26 per cent of respondents offer long-term incentives, typically options, to IT positions above the entry level.
By the same token, employers should be more selective in how they spend their salary budget. “It’s easier to give a three-per-cent increase across the board, but it’s not always the most effective,” said Harts. Those people who contribute most to the organization may deserve a five-per-cent increase, while others may only get one per cent.
While most employees in the private sector can expect real wage gains next year, the same cannot be said for employees in the public sector where increases will barely keep pace with inflation, circumstances almost certain to make recruitment and retention in the public sector more difficult.
Harts also said that although real wage increases are likely for next year, Canadian pay levels aren’t increasing enough to stop people from being lured south of the border.
There has been a lot of pressure from the U.S. to increase pay levels in Canada, said Harts. In publicly held companies, base pay has been increasing by about six per cent for the past few years while “incentives have been increasing astronomically,” he said. But that is only because of the stagnation of wages in the early part of the decade. What’s more, Canada still pays very poorly compared to the U.S. “We’re still poor cousins,” he said. However, quality of life is much better in Canada and offsets higher salaries. “You never read about that,” said Harts, who himself lived in the U.S. for several years and saw first-hand how much of a disincentive it can be to remain there. “Until you live in that environment you don’t realize what those offsets are,” he said.
