As budgeting for 2001 approaches, and the hot labour market almost certain to remain hot, companies are busy figuring out how they’ll fight the war for talent in the new year.
Early salary forecasts for next year expect base salary increases in line with this year’s — likely in the 3.6 per cent range. However, employers are indicating there will be a greater use of variable pay and at lower levels of their organizations.
That’s an indication of how preoccupied employers are with attraction and retention issues, said Gail Evans, a managing principal with the management consulting firm Wynford Group.
Employers need flexibility, and relying more on variable pay to reward employees on performance gives employers that luxury. “Employers are treating employees more as individuals,” she said. There’s a message of: “We want you, we need you and we’re willing to give you more.”
More companies are using variable pay for support staff. But while in-demand employees may be clamouring for variable pay systems, it’s not always as well received at lower levels if it is perceived as a trade off for base pay increases, she said.
Employers must become creative in the ways they retain people. Aside from variable pay there are other tools that are relatively quick and easy to implement.
“There’s more creativity involved, not only in attracting workers, but keeping people there as well,” Evans said.
There are a greater number of businesses using health-care spending-account programs because they are simple and cost-effective, she said. A health-care spending account enables employees to pay for additional health costs from a pot of money — usually in the range of $200 to $500 per employee — not covered by medicare or a company health plan. It is also more cost-effective than other benefit plans because it’s funded through pre-tax dollars, she explained.
Simply put, companies are giving richer rewards to keep employees. According to the Wynford research, 42 per cent of employers now offer student loan subsidies, up from just 11 per cent last year. The use of in-house recreation facilities is way up, as are company-sponsored social events. There’s also a trend to giving employees cell phones — that can be a good thing or a bad thing depending on how you look at it, said Evans. And employers may have to start looking at starting employees with more holidays. “It’s not uncommon for people to start with three weeks of holidays any more.”
