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As the economy returns to full capacity, salary budget increases for Canadian employees are remaining steady. New survey results reveal the average raise in base pay is expected to be 3.1 per cent in 2014. This is a small decrease from the average actual salary increase reported for 2013 and 2012 of 3.2 per cent. These results are indicative of a flat lining trend (Figure 1).
Mercer’s results shows similar trends in the United States with the average increase in base pay expected to be 2.9 per cent, modestly rising from 2.8 per cent in 2013 and 2.7 per cent in 2012 and 2011.
Mercer’s 2013/2014 Canada Compensation Planning Survey, which has been conducted annually for more than 20 years, includes responses from 719 employers across Canada and reflects pay practices for approximately two million non-union workers. The survey results are captured for five categories of employees: executive, management, professional (sales and non-sales), office/clerical/technician, and trades/production/service.
“While we are seeing a flattening in salary increases across the country, competitive industries and markets continue to recognize that in order to attract and retain top-performing employees they’re going to have to reward them,” said Iain Morris, leader of Mercer's Talent consulting business for Central Canada. “This includes higher pay increases along with other non-cash rewards such as training opportunities and career development.”
A deeper look at the findings
Executives and Management have the highest salary increases in 2013 with 3.4 per cent and 3.3 per cent respectively (Figure 2).
The Oil and Gas industry continues to have the highest salary increases in both 2013 (4.3 per cent) and projected for 2014 (4.2 per cent). The Pharmaceutical and Biotech, and Wholesale/Retail industries are projected to see the smallest salary increases at 3.0 per cent and 2.7 per cent respectively.
Not surprisingly, Alberta has the highest projected average salary increases in the country (3.2 per cent), followed by Saskatchewan at 3.1 per cent. Comparatively, the lowest projected salary increase is in Quebec, Manitoba and Greater Vancouver each at 2.8 per cent.
Canadian organizations are striving to balance the need to retain key talent with their financial budgets and in doing so are segmenting their workforce and focusing on identifying and recognizing high-performing employees. Organizations are rewarding high performing employees with greater than average salary increases. Using five performance categories, survey respondents rewarded the highest performers (6.0 per cent of the workforce) with a 5.1 per cent salary increase in 2013, compared to 2.8 per cent for middle performers (60.0 per cent of the workforce) and 0.1 per cent for the weakest performers (2.0 per cent of the workforce).
In addition to workforce segmentation, organizations are studying the key drivers of employee engagement and targeting certain groups, such as high-potentials or those with critical skills, with enhanced reward programs. Moreover, they are investing in a variety of practices to strengthen employee engagement and help improve work-life balance overall for employees. According to Mercer’s survey, some of the more prevalent practices include non-monetary awards, job sharing/flexible hours, formal career planning and sabbaticals. Interestingly, while the prevalence of job sharing/flexible has increased more than 40.0 per cent since 2008, the prevalence of career planning has dropped by more than 35.0 per cent over the same period.
“Employers are clearly starting to see the value of assessing and addressing their workforce needs systematically,” said Iain Morris. “They recognize that engaged employees are less likely to seek job opportunities outside the company, and therefore, have a more positive influence on both team and business performance.”
For more information about Mercer’s 2013/2014 Canadian Compensation Planning Survey, visit www.imercer.ca/cps
Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s 20,000 employees are based in more than 40 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 52,000 employees worldwide and annual revenue exceeding $10 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting.
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