Firms struggle to attract and keep Generation Y talent, and Toronto pay raises to be slightly below average
Andrew Burton / GETTY IMAGES
Oil industry workers can expect the biggest raises in 2014, a comensation survey suggests.
Private sector employees can expect to see average raises of 3.1 per cent next year with top performers getting about 60 per cent more, a study by a compensation consultant suggests.
These results are a small decrease from the average actual increases this year and last of 3.2 per cent, Mercer Consulting found. Executives and management had the largest average increases in 2013 of 3.4 per cent and 3.3 per cent respectively.
The oil and gas industry saw the biggest raises this year — 4.3 per cent and projected for next year — 4.2 per cent. The pharmaceutical and biotech, and wholesale/retail industries are expected to see the smallest pay boosts with increases at 3 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. Average 2014 salary increases projected for Toronto are 2.9 per cent on average and 2.8 per cent for the rest of the province.
“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,” says Mercer compensation partner Iain Morris.
Companies rewarded the highest performers with a 5.1 per cent salary increase in 2013, compared to 2.8 per cent for middle performers. The weakest performers got .1 per cent.
Morris acknowledges that even a 5.1 per cent raise may seem modest to “high fliers,” but he says raises at this level would compound quickly for a long-term top achiever.
He also notes that private companies typically have incentive plans which give top achievers an opportunity to earn additional income, based on their performance. “Incentive plans are where the best performers can really be recognized and compensated for exceeding specific target objectives,” Morris says.
Furthermore, he says some companies are investing in a variety of practices to strengthen employee engagement and help improve work-life balance for all employees. Survey results reveal that some of the more prevalent practices include non-monetary awards, job sharing/flexible hours, formal career planning and sabbaticals.
While the prevalence of job sharing/flexible hours has increased more than 40 per cent since 2008, the prevalence of career planning has dropped by more than 35 per cent over the same period. Morris attributes this in part, to economic fallout over the last several years.
He also recognizes that work place culture and career opportunities are important to new hires, but believes “cash is still king.”
“Part of the reason is when a person joins an organization, cash compensation is clear. You don’t really know who you will be working for and how the organization’s culture or training opportunities will actually play out,” he says.
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.
To some extent, all organizations are struggling with how to attract and retain talented Generation Y employees (born 1981-2000). As a result, global or multinational organizations are starting to think about how they can offer younger employees opportunities for international experience and training. “If you do not take the executive approach to mobility, you can make it much more affordable,” says Morris.
Mercer’s 2013-2014 Compensation Planning Survey 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 works.
Recently-released salary surveys conducted by Hay Group and Morneau Shepell peg average salary increases for 2014 at 2.6 per cent as opposed to the 3.1 per cent increases projected by Mercer. Morris says this can be largely attributed to differences in the universe of employers polled.
For example, the Mercer database is heavily weighted to western Canada which tends to bring up the national average. In contrast, Hay Company’s database includes both public and private sector employers.