What You Need to Know
About the Wage Market
in 2013
Bonni Titgemeyer CEBS, SPHR, CHRP,
CMS
Managing Director
The Employers’ Choice Inc.
Brampton, ON
Topics
• Compensation Issues in
2013
• Building a Compensation
Plan
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–
–
–
The market
Popularity of styles
Compliance issues
Changing an existing plan
• Challenges and tips
X
Employment Market
• Unemployment rate 7.1% (National, August
2013)
• Improving in Ontario - second quarter 2013 –
7.5% (Employment and Social Dev. Canada)
• Biggest employment gains among those over 55
• Student employment rate this summer was very
low 48.6%
• Annual inflation 1.3%
3
Demographics: Hamilton
• Population (2012 Census): 756,600
• Unemployment Rate 2013: 6.9% (for the
period of October 13, 2013 to November 9,
2013 - HRSDC)
4
Hamilton-Niagara’s Top
Employers - 2013
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•
•
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Brant Community Healthcare System
FirstOntario Credit Union
Horizon Utilities Corporation
IKEA Canada Limited Partnership
L-3 WESCAM
Niagara Casinos
Siemens Canada Limited
Sodexo Canada Ltd.
St. Joseph's Healthcare Hamilton
Stryker Canada Inc
5
Canadian Compensation
Market 2013
• Materially-significant regional differentials
• Out west, northern Alberta
• Down east
• Upward pressure on wages
• There was little recession in Canada, no mortgage
crisis
• Return to a candidates market
• Renewed focus on compliance
6
Regional Differentials
+9%
-10%
+6%
+7%
-5%
-3%
+2%
7
Quarter Over Previous
Year, Last 2 years
• 2013
• Q2 2.4%
• Q1 2.8%
• 2012
•
•
•
•
Q4 2.5%
Q3 2.4%
Q2 1.5%
Q1 .8%
Source: Payscale
8
Hamilton – How’s Your
Market?
• Here is what we searched in your market:
• Customer Service Rep
• 3-5 years experience
• Bachelor’s degree
• Then compared same position to Toronto market
Hamilton –
Market Trends CSR
Toronto –
Market Trends CSR
Market Trend CSR
Comparison
• Hamilton –
• Decreased approximately $1500 over last year
• Started at approximately $2000 less than Toronto
• Fall ends at approximately $2500 less than Toronto
• Toronto continued to lead employment growth in
Ontario
• Why the decrease in Hamilton?
• Harder return from an employer’s market
• Supply and demand (less businesses in Hamilton to
spread around candidates)
• Job losses hit most of Ontario
Hamilton – Salary Market
Trends
Hamilton – Hourly Market
Trends
Canada: Hottest Jobs in
2013
•
Financial Managers &
Accountants
•
Medical Technologists or
Technicians
•
Skilled Tradespeople
•
HR Specialists or Managers
•
Software and Mobile
Developers
•
Pharmacists
•
Audiologists, Speech
Therapists and
Physiotherapists
•
Construction Managers
•
Registered Nurses
•
Psychologists, Social
Workers and Counsellors
Source: Canadian
Living
15
HR Job Market
• It was saturated between 2009-2012; starting to
see new opportunities
• Compensation/total rewards roles are the “hottest”
HR jobs
• Those with a CHRP designation are paid
significantly better than those who do not have it.
16
Locating Labour Market
Wage Info
• Regionally—look to Boards of Trades/Chambers
of Commerce
• Many industry associations run surveys
• Smaller regional/local providers
17
Compensation
• Canada has one of the highest percentages of base pay
in total compensation among G8 countries
• 73% of employers combine the concepts of cost-of-living
increases and merit pay as part of their strategy. (Hay
Group – Bridging the Performance Gap)
• High performers expect competitive base pay and more
• Canadians have less interest in variable compensation
than other groups, but this is changing
Popular Pay Strategies
• Base pay
• Organizational-wide incentives and team incentives
• Profit sharing
• Formal bonus plans
The Base Pay Trap
• Canada has one of the highest percentages of
base pay in total compensation among G8
countries
• Ontario/Quebec have equity laws which put an
emphasis on base pay structures
• 73% of employers combine the concepts of costof-living increases and merit pay as part of their
strategy
• We link performance reviews to base pay, even
though study after study shows that changing
base pay does little to change performance
Examples of
Short-Term Plans
• Bonus Plans
• Profit Sharing Plans
• Gainsharing Plans
• Goal Sharing Plans
• Commission Structures
• Piecework Plans
• Production Incentives
Categories of Long-Term
Plans
• Equity-based
• Simpler to create in public companies because most of
the mechanisms are already in place.
• Challenges include disclosure, share valuation, avoiding
dilution of equity, setting the right amount to reward &
over the right time horizons.
• Forms include stock purchase, stock bonus, and stock
option plans.
• Non-equity
• Designed to mimic without the challenges of giving
equity.
• Forms include share appreciation and phantom stock
plans
• Deferred through registered vehicles and SERPS.
Incentive Pay Trends
• More employers adding programs
• Organizations that are making changes tend to be
doing so to align their bonus programs with a changed
business strategy or model, although increasing
employee motivation and decreasing cost were also
significant factors
• Bonuses and incentives are moving to all levels of
organizations
• More team-oriented programs
• Broader use of recognition programs as added
incentives (e.g., gift cards, reward programs, etc.)
Total Compensation
Design Challenges
• Wage levels are eating into a higher portion of total
compensation
• Incentives (short term and long term) are needed for
motivation, but Canadian workforce is resistant
• Employers expect greater value within the group benefits
plans. Employees can have widely different views on the
value of benefits
• Pressures to compete with “Best” employers
• Changing corporate objectives/strategy
Compliance
Areas Impacting
Compensation Design
• The Basics:
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•
•
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Choosing salary or hourly
Vacation, overtime, paid public holidays
Minimum wage laws
Contract employment
• Equity
• Equal pay for equal work
• Equal pay for work of equal value
What Is Pay Equity?
• Equal pay for work of equal value
• Comparison of jobs that are very different
• Aims to address sex-based discrimination
in pay practices
• Requires companies to have job evaluation
systems
Pay Equity Impact
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•
•
•
•
The risks with informal pay practices
The risks of a job market only approach to compensation
Challenges with balancing internal and external equity
Greater complexity in dealing with “hot” jobs
Demonstrating gender neutrality in pay practices including
bonus systems
• Hidden issues in broad-banding
• Job evaluation maintenance
Pay Equity Compliance
Elements
• Identify job classes, gender, and job rate
• Similar duties, responsibilities
• Same job rate
• Defined as highest wage rate for a job class
• Includes all wages and benefits
• Determine gender by its predominance
• (60/70 rule)
• Gather information about job classes
Pay Equity Compliance
Elements (cont.)
• Evaluate based upon skill, effort, responsibility
and working conditions (job evaluation)
• Make comparisons and determine pay
adjustments
• Job-to-job
• Proportional value
Pay Equity Compliance
Elements (cont.)
• Determine retroactivity
• Statute of limitations is 23 years in Ontario for pay
equity; 5 years in Quebec
• Strongly advised to get advice as to retroactive
compliance obligations
• Pay equity plan
• Make adjustments
Don’t Forget—
Compensation Policies
• Need to define clear policies and procedures for
handling all compensation program components,
e.g.:
•
•
•
•
•
Red-circles and green circles
Promotions
Special Assignments
Annual Merit Process
Annual Bonus Process
• Policies published to all employees
• Procedures for HR and management group
Importance of
Communication
• Many employees do not understand their existing
compensation program
• 2009 “Best Employers”—only 63% of employees felt
they received sufficient information to understand
how pay works at their company
• Spend time developing detailed communication
plans when rolling out any new or changed
compensation or benefit components
THANK YOU
Questions?