Mercer Canada | 2017/2018 Compensation Planning Survey

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Salary increases hold steady, but employers beginning to make targeted investments in talent: Mercer

  • September 7, 2017
  • Canada, Toronto

Leading global talent consultancy finds that corporate Canada, driven by competition for top talent, is considering strategic pay rises.

Improving economic conditions, adjustments for salary freezes in previous years and a change in base salary strategy or competitive positioning to market are all driving some Canadian employers to consider making strategic investments in top talent, according to Mercer’s 2017/2018 Compensation Planning Survey.

When organizations who have implemented a salary freeze are taken into account, Mercer projects that Canadian salaries will rise by an average of 2.4 per cent in 2018 – up slightly from 2.3 per cent in 2017. When organizations implementing a salary freeze are excluded, the projection is 2.5 per cent.

Although salary increases are holding steady for average performers, they are higher for top performers. According to Mercer’s data, top performers are slated to receive a salary increase 1.8 times higher than average performers in the coming year.

“As economic conditions improve across much of Canada, employers are looking to make strategic investments in top talent,” says Allison Griffiths, Principal and Leader of Workforce Rewards at Mercer Canada. “But it’s important to get the investment right. This means looking at compensation in a holistic way, and with an eye towards the trends transforming the global workplace.”

Although increases remain steady relative to 2017, employers are investing in high-demand talent, where they are concerned with retention or attraction.

Improving employee retention requires a comprehensive view of what those employees want, and the greater forces affecting the workplace. These trends, which promise to transform the very nature of what it means to be ‘a worker’, include digitization, business model changes, automation and AI. As a result, talent strategies must prepare organizations to succeed in an increasingly digital future across all industries.

Mercer’s 2017 Global Talent Trends study found that across Canada, organizations are preparing for digitization and digital disruption, and that this crosses over into their talent and rewards strategy. Employees are demanding customized experiences and employers are working to meet those demands, and leveraging the data to gain greater insight into their workforce.

“Although the conversation around disruption and transformation often focuses around automation and AI, organizations must not forget to consider the human element,” says Ilana Hechter, Partner and Leader of Talent Strategy and Transformation at Mercer Canada. “The most important asset at any company is its people. Organizations looking to transform and succeed must consider their people first.”

VARIABLE SALARY INCREASES ACROSS CANADA
Although there are few regional differences between employers’ salary increase plans, the data is highly variable, with some organizations increasing their compensation budgets, and other organizations decreasing their budgets.

These decisions by employers seem to be a response to changing economic conditions. 30 per cent of organizations decreasing their budgets credited economic uncertainty for their decision, whereas 32 per cent of those organizations increasing their budgets said they made that decision in response to economic improvement. Employee gains will be largely dependent upon employer perceptions: those employers who are confident in their sector’s economic prospects will be likelier to invest.

This is reflected in the sector breakdown of the data. The Mining & Metals sector is considering the highest salary increases, with a planned increase of 3 per cent, followed by High Tech and Life Sciences at 2.8 per cent.

Importantly, 21 per cent of those organizations planning to increase their compensation budgets said that this decision was to account for salary freezes, delayed, or lower than normal increases, in previous years.

COMPETITION FOR TALENT
Despite economic concerns driving variability, the economy was only second in the list of concerns Canadian organizations reported as influencing their compensation budget decisions.

When Mercer polled Canadian employers about factors influencing their budget decisions, employee retention concerns (69 per cent) topped the list, followed closely by the overall economic climate (61 per cent).

Talent attraction concerns (59 per cent) followed closely afterwards – markedly, up over 10 per cent from last year.

These results reveal that, coming off a climate of economic uncertainty, corporate Canada is beginning to think about shifting their pay strategies.

THE NEW PEOPLE EQUATION
As corporate Canada begins to look towards attracting the talent they need to realize strong growth, they must not consider their talent strategies separate from their compensation strategies.

Rather, armed with the latest analytics, data on employee preferences, and a holistic approach to employee rewards, employers can build a talent plan that retains top talent, attracts future talent, and prepares Canadian organizations to succeed in a flexible, digital future.

ABOUT THE SURVEY
Mercer’s Canada Compensation Planning Survey has been conducted annually for more than 20 years. The 2017/2018 survey included responses from over 660 organizations across Canada. The survey results are captured for six categories of employees: executive, management, professional (sales), professional (non-sales), office/clerical/technical, and trades/production/service.

To purchase the survey results, visit: https://www.imercer.com/products/canadian-compensation-planning.aspx

To learn more about Mercer’s 2017 Global Talent Trends study, visit: https://www.mercer.ca/en/our-thinking/global-talent-hr-trends.html

ABOUT MERCER 
Mercer is a global consulting leader in health, wealth and careers. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s more than 20,000 employees are based in more than 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With annual revenue of $13 billion and 60,000 employees worldwide, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting. For more information, visit www.mercer.ca. Follow Mercer on Twitter @MercerCanada.

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