Getting the most out of salary survey data
It’s not as easy as it once was for HR professionals to come up with compensation numbers. The days of simply looking at what others across the country are doing and following suit are long gone.
Compensation professionals are now required to develop strategies that may vary widely by geography, role, sector and employee demographic. Moreover, because competition for certain positions is fierce, these strategies have to be more closely tied to attracting, retaining and engaging those whom the company needs in order to meet business objectives.
Does that mean annual salary increase surveys, traditionally used only for benchmarking purposes, are no longer useful to compensation practitioners? On the contrary, a survey that includes a range of data can be particularly useful in helping create effective compensation strategies.
Salary surveys highlight a number of factors affecting Canada’s compensation landscape.
An economy that varies greatly between East and West: Demand for employees, and thus salaries, are at their highest in Fort McMurray, Alta., near the oil sands. Salaries in Western Canada have been rising at a rate higher than those in Eastern Canada for the last several years. In addition, Ontario’s economy is starting to feel the effects of economic problems in the United States.
Changing demographics: Data from Hewitt’s Best Employers in Canada study has shown various generational groups are motivated differently and money is not as important to some age groups as it is to others. While receiving a good salary is of utmost importance to young workers, it drops in significance as employees age — it isn’t even in the top five reasons to join or stay for those over 60.
Increased diversity: Just as the workforce is changing to include workers from four generations, it is becoming increasingly diverse in terms of race, gender, ethnic background and religion as Canadian employers struggle to fill a shortage of skilled labour. Again, salary may not be as important to some groups as it is to others. Health-care benefits are much more important to workers with a disability than salary.
Shortages of skilled labour in certain key roles: Jobs that are hardest to fill fall into two categories: Roles that require education and experience and are only required in certain industries (such as a geologist or geophysicist) or relatively new roles with skills that are extremely portable, used in many industries and where expertise can be established fairly quickly (such as a call centre representative).
Evaluating salary surveys
To make the most of these surveys, HR needs to know how to read them properly. Here’s a checklist of items to look for when evaluating various salary surveys:
• Are the results broken down by region? It’s important to know what the average salary increases will be in the locations where your company operates.
• Are the results broken down by sector and industry? Employers that are not in the oil and gas industry may not need to offer similarly high increases, unless they’re competing for the same talent.
• Are the results broken down by role? It may be very important to know the salary increases administrative assistants are expected to receive, as well as those in professional roles.
• Do the results highlight differences in compensation design, communication and administration for skilled labour and employee demographics? It may be very important for you to know the range of compensation arrangements for a particular position (such as salary increases and stay awards for seasoned IT professionals with mainframe knowledge and experience).
Compensation professionals will want to be able to combine this data so they know what a front-line manager in the automotive industry in the Greater Toronto Area can expect to receive by way of a salary increase in 2009, as opposed to that slated for a senior executive in the hospitality industry in Vancouver.
Emphasis on variable compensation
To be more strategic, organizations are looking beyond base pay and incorporating more variable compensation arrangements.
Hewitt’s research has seen the prevalence of variable compensation arrangements explode over the last 15 years in Canada. In 1994, 43 per cent of Canadian organizations offered at least one variable compensation program — last year, that number was 80 per cent. These plans, also known as pay-for-performance programs, enable employers to tie compensation more closely to business objectives, with increased rewards for high performers. If employees perform in such a way that their actions have a positive impact on the bottom line, they’re able to share in the profits.
With this increased focus on variable compensation arrangements, having information about prevalence and types of variable pay plans, broken down by industry, region and role can be particularly useful for compensation planning purposes. While not even the most thorough salary increase report can tell you how to design an effective variable compensation plan (there are other, more specialized sources for that information), having high-level information can be especially helpful in the planning process.
Jeff Vathje and Manny Campione are senior consultants in Hewitt’s Talent and Organizational Consulting practice. Jeff is based in Calgary and can be reached at [email protected]. Manny is based in Toronto and can be reached at [email protected].
Compensation professionals are now required to develop strategies that may vary widely by geography, role, sector and employee demographic. Moreover, because competition for certain positions is fierce, these strategies have to be more closely tied to attracting, retaining and engaging those whom the company needs in order to meet business objectives.
Does that mean annual salary increase surveys, traditionally used only for benchmarking purposes, are no longer useful to compensation practitioners? On the contrary, a survey that includes a range of data can be particularly useful in helping create effective compensation strategies.
Salary surveys highlight a number of factors affecting Canada’s compensation landscape.
An economy that varies greatly between East and West: Demand for employees, and thus salaries, are at their highest in Fort McMurray, Alta., near the oil sands. Salaries in Western Canada have been rising at a rate higher than those in Eastern Canada for the last several years. In addition, Ontario’s economy is starting to feel the effects of economic problems in the United States.
Changing demographics: Data from Hewitt’s Best Employers in Canada study has shown various generational groups are motivated differently and money is not as important to some age groups as it is to others. While receiving a good salary is of utmost importance to young workers, it drops in significance as employees age — it isn’t even in the top five reasons to join or stay for those over 60.
Increased diversity: Just as the workforce is changing to include workers from four generations, it is becoming increasingly diverse in terms of race, gender, ethnic background and religion as Canadian employers struggle to fill a shortage of skilled labour. Again, salary may not be as important to some groups as it is to others. Health-care benefits are much more important to workers with a disability than salary.
Shortages of skilled labour in certain key roles: Jobs that are hardest to fill fall into two categories: Roles that require education and experience and are only required in certain industries (such as a geologist or geophysicist) or relatively new roles with skills that are extremely portable, used in many industries and where expertise can be established fairly quickly (such as a call centre representative).
Evaluating salary surveys
To make the most of these surveys, HR needs to know how to read them properly. Here’s a checklist of items to look for when evaluating various salary surveys:
• Are the results broken down by region? It’s important to know what the average salary increases will be in the locations where your company operates.
• Are the results broken down by sector and industry? Employers that are not in the oil and gas industry may not need to offer similarly high increases, unless they’re competing for the same talent.
• Are the results broken down by role? It may be very important to know the salary increases administrative assistants are expected to receive, as well as those in professional roles.
• Do the results highlight differences in compensation design, communication and administration for skilled labour and employee demographics? It may be very important for you to know the range of compensation arrangements for a particular position (such as salary increases and stay awards for seasoned IT professionals with mainframe knowledge and experience).
Compensation professionals will want to be able to combine this data so they know what a front-line manager in the automotive industry in the Greater Toronto Area can expect to receive by way of a salary increase in 2009, as opposed to that slated for a senior executive in the hospitality industry in Vancouver.
Emphasis on variable compensation
To be more strategic, organizations are looking beyond base pay and incorporating more variable compensation arrangements.
Hewitt’s research has seen the prevalence of variable compensation arrangements explode over the last 15 years in Canada. In 1994, 43 per cent of Canadian organizations offered at least one variable compensation program — last year, that number was 80 per cent. These plans, also known as pay-for-performance programs, enable employers to tie compensation more closely to business objectives, with increased rewards for high performers. If employees perform in such a way that their actions have a positive impact on the bottom line, they’re able to share in the profits.
With this increased focus on variable compensation arrangements, having information about prevalence and types of variable pay plans, broken down by industry, region and role can be particularly useful for compensation planning purposes. While not even the most thorough salary increase report can tell you how to design an effective variable compensation plan (there are other, more specialized sources for that information), having high-level information can be especially helpful in the planning process.
Jeff Vathje and Manny Campione are senior consultants in Hewitt’s Talent and Organizational Consulting practice. Jeff is based in Calgary and can be reached at [email protected]. Manny is based in Toronto and can be reached at [email protected].
