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Focus on employee experience

Wednesday September 10, 2014 Written by 
Canadian employers are not differentiating pay based on performance and may be underestimating how much employees value non-monetary factors.

According to the Towers Watson 2014 General Industry Salary Budget Survey, average Canadian employers are budgeting three per cent toward salary increases for their non-management employees. Executives can expect a 3.1 per cent increase.

These figures are consistent with the increases across all ranks in each of the past two years. However, non-management employees who received the highest performance ratings in 2014 were granted an average salary increase of 4.7 per cent this year. That's about 74 per cent greater than the 2.7 per cent increase given to those workers receiving an average rating. Workers with the lowest performance ratings received an average increase of 0.7 per cent.

“Many organizations feel pressure to allocate more dollars to their compensation budgets or risk losing talent to other companies,” said Sandra McLellan, leader of Towers Watson’s Rewards, Talent and Communication practice in Toronto. “But we still see companies providing across-the-board increases. Does it make sense to give below-average performers an annual increase when it leaves less for your top performers? It’s time to think differently about how pay and bonus programs work together, and about how you can craft specific solutions for unique employee profiles.”

Organizations also tend to forget that they can suffer a hit when they don’t understand or don’t focus on the things employees value beyond pay. Survey findings from Towers Watson’s 2014 Global Workforce Study hint at expectations ahead for a more fluid labour market, with one-quarter of Canadian employees (25 per cent) saying they are likely to leave their employer within the next two years.

“Employers need to understand the full scope of what drives employees to join and stay with a company,” said McLellan. “According to our research, while employers recognize the importance of salary to employees, they are not placing enough importance on the entire employment deal which includes non-monetary aspects like career advancement, confidence in senior leadership, and job security – all top drivers of attraction and retention.”

According to the global workforce survey only 36 per cent of Canadian employees believe that their organization provides opportunities for career advancement. Two in five employees feel they must join another organization to advance their career. Employee views of their leaders are not much better. Only 45 per cent of workers agree that their leaders inspire them to give their best.

“For employees to remain with an organization they must have confidence in the ability of their top leaders to motivate and guide them,” said McLellan. “Yet organizations underestimate the role of senior leaders in helping to retain employees. And while companies cannot guarantee job security, they can focus on creating a stable work environment through leaders and managers setting clear expectations of business strategy, goals and results.”

Ultimately, as attraction and retention challenges loom for employers, developing an employment deal that’s tailored to different workforce segments, and that is effectively differentiated in terms of both pay and employee experience, will be crucial for finding and keeping talent – and for setting top employers apart from the competition.

The Towers Watson 2014 General Industry Salary Budget Survey - Canada was conducted from May through mid-July. The complete results are based on the responses of 411 organizations.

The Towers Watson Global Workforce Study covers more than 32,000 employees, including 1,011 in Canada, that represent the populations of full-time employees working in large and midsize organizations across a range of industries in 26 markets around the world. It was fielded online during April and May.

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