A few months ago, Canadian employers were planning to provideaverage salary increases of 2.8 per cent in 2010, but that number hasnow dropped to 2.6 per cent, according to a survey conducted by HewittAssociates, a global human resources consulting and outsourcingcompany. However, while more than a third of employers were consideringa salary freeze earlier this year-providing no increases in 2010-thatnumber has since decreased. Moreover, even though 81 per cent ofCanadian organizations will not provide a holiday gift or bonus, 79 percent will celebrate the season with employees at a holiday party.
While Hewitt's 31st annual Salary Increase Survey,conducted in the summer, saw employers projecting higher salaryincreases, as many as 39 per cent were considering salary freezes forthe coming year. That number has now decreased to 27 per cent,according to Hewitt's Salary Increase Update Survey of 641organizations from across Canada.
"The vast majority ofemployers-73 per cent as compared to 62 per cent earlier this year-areproviding raises in 2010, so that far more workers will get an increasenext year than originally projected," says Jeff Vathje, Hewitt'sCalgary-based national compensation leader. "2010 salary freezes arestill more prevalent than the one or two per cent of organizations thattypically opt not to provide raises each year. However, the thawsignifies increased confidence in the economy on the part ofemployers-and that's good news for employees."
The averageincrease has dipped a little in most parts of the country, other thanSaskatchewan, where employees can expect raises of 4.1 per cent, thesame figure that was projected earlier this year. Those companies thatare planning to decrease their original projections are doing so forthree main reasons: the organization is undergoing cost reductions (58per cent), has concerns about the economy (56 per cent), or is reactingto lower increases planned by its competitors (23 per cent).
Thosewho have decided to thaw their salary freezes or increase originalbudgets are responding to the economic recovery (58 per cent), higherincreases provided by their competitors (27 per cent), or the fact thattheir expectations for corporate performance are better than initiallyforecast (22 per cent).
Renewed Talent Challenges
Withthe end of the recession, the war for talent will begin to heat upagain as demand for skilled workers exceeds supply. "The focus is onboth attraction and retention," says Prashant Chadha, a compensationconsultant in Hewitt's Toronto office. "Employers are planning torecognize existing high performing employees and attract new talent byoffering higher salary increases, greater variable pay payouts, and/orcareer growth opportunities."
While a differentiated rewardsstructure that recognizes employees who excel is not unusual, theemphasis on formal career development opportunities is a new tactic,according to Chadha. "Some employers took advantage of the lull in thewar for talent during the recession to design detailed programs thatchart a course for high performers so that they understand wherethey're headed at the organization and the training and guidancethey'll be offered. If these employees see a clear future at theircurrent employer, they'll be less likely to look elsewhere for a newposition."
Employer attention can't be focused solely on highperformers, however, when it comes to communication about pay."Employers need to communicate to all employees their rationale forincreasing or freezing salaries," says Maureen Simons, a seniorcommunication consultant with Hewitt Associates in Vancouver. "It'sessential that they equip managers to have those conversations so thateveryone is sending and receiving the same message."
Simonsrecommends that employers consider expanding their communicationefforts to include personalized total rewards statements. "Thesestatements, whether online or on paper, provide a complete view of allthat the employer provides to the individual employee-salary, benefits,retirement programs, time off with pay, and so on," says Simons. "Withan understanding of the value of all that they receive, employees maynot be as concerned about little or no salary increase."
However,only 39 per cent of responding organizations currently provideemployees with total rewards statements. "If employers aren't makingemployees aware of the value of their total rewards, they run the riskof having them leave to join other companies that may offer moresalary, but a poorer overall package. That's a missed opportunity,"says Simons.
'Tis the Season
Only19 per cent of employers will provide their employees with a holidaygift or bonus at the end of this year, generally cash (38 per cent), agift card or certificate (32 per cent) or a gift chosen by the company(22 per cent). However, for most employees, not receiving a holidaygift or bonus will be nothing new. "Only eight per cent of employerswho do not currently offer a gift or bonus did so in the past and havediscontinued their program," says Chadha. "The primary reason is thecost of these programs."
That doesn't mean that employers won'tbe making merry with their staff this season: 79 per cent oforganizations will host a holiday party for employees. The most populartype of party is for employees and guests, entirely company funded by61 per cent of employers. Less common is a holiday celebration foremployees only (31 per cent), though 84 per cent of employers foot theentire bill for these festivities-on average less than $100 peremployee. "We're seeing a lot of holiday lunches, rather than parties,"states Chadha." Employers want to celebrate the season with theiremployees and show their appreciation, but need to keep costs down."
Witha history of exceptional client service since 1940, Hewitt has officesin more than 30 countries, including Canadian offices in Calgary,Montreal, Regina, Toronto and Vancouver, and employs approximately23,000 associates who are helping make the world a better place towork. For more information, please visit www.hewitt.com/canada.