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2018 Compensation Best Practices Report: Canadian Edition

Topics: Comp Strategy

Today, we’ve released the 2nd annual Canadian edition of PayScale’s Compensation Best Practices Report. In this report, we share compensation practices in base pay, variable pay, benefits, strategy and setting pay grades and ranges. We also discuss the links among compensation, culture, performance and employee engagement.

The survey responses were collected between November and December 2017. There were 567 respondents from Canada and the majority of respondents (72 percent) held manager-level or more senior job titles. Respondents came from multiple industries. The top four industries represented were: Healthcare and social assistance, Manufacturing, Nonprofit and Technology.

Here are a few highlights in the Canadian data:

1. Organizations are Deviating From the Typical 3 Percent Increase Budget

In 2017, 79 percent of Canadian organizations gave pay increases.

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The idea of the budgeted three percent increase is still very pervasive: 16 percent of Canadian organizations budgeted three percent raises. That said, only 13 percent awarded three percent raises on average; 23 percent averaged higher than the typical three percent. Additionally, eight percent of organizations budgeted more than five percent raises; nine percent of orgs awarded more than five percent raises.

2. Performance and Retention Are the Top Reasons for Giving Raises

In 2017, performance was the number one reason that Canadian organizations gave raises, with 74 percent of Canadian organizations saying it was a top reason they gave raises. Performance jumped up pretty significantly from last year’s 63 percent in 2016, as did the other top three responses: retention, cost-of-living, and market adjustments.

3. How Organizations Are Using Variable Pay is Shifting

Sixty-six percent of Canadian organizations use variable pay to attract, retain, and/or motivate top talent. This is lower than in 2016, when nearly 80 percent of surveyed organizations used variable pay. While it’s still most common to give bonuses on an annual basis, companies are starting to give them more frequently: 12 percent of surveyed organizations give bonuses quarterly; four percent give bonuses monthly.

By far, the most typical form of variable pay is the individual incentive bonus (70 percent), followed by the employee referral bonus (32 percent), and then spot bonuses or other discretionary bonus programs (31 percent). One in five organizations offer profit-sharing to motivate workers to achieve results.

4. Corporate Chasm: Employees and Employers Have Different Perceptions of Pay

PayScale is in a very unique position of being able to survey both employees and employers. Through this data collection, we can compare perceptions on workplace engagement held by both groups and identify the gaps. We call this the Corporate Chasm and we plan to track this over time.

For Canadian organizations, the gap remains fairly substantial in the areas of fair pay and appreciation, with only 20 percent of employees reporting that they feel fairly paid and just 24 percent of employees saying that their company’s pay processes are transparent. Meanwhile, 46 percent of employers think their employees are fairly paid and 34 percent of employers agreed that their company’s pay processes are transparent.

New in 2017, we learned that workers are less likely than their employer to feel that interactions are positive and productive at work (54 percent of workers compared to 72 percent of employers). That said, managers don’t seem to be the cause of the problem, as 68 percent of workers reported that they have great relationships with their managers.

Want to learn more about how Canadian organizations are approaching compensation? Download the full report.

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