The new compensation priorities have moved ahead of internal equity issues and come at a time when human resource professionals across Canada are reassessing their HR priorities. In fact, Canadian HR professional now see the need to control health care costs and to enhance employees’ appreciation of benefits as their overall top human resource priorities in 2004, surpassing recruiting and retention concerns, according to Morneau Sobeco’s 2004 Compensation Trends and Projections survey.

The shift in compensation priorities comes at a time when Canadian employers have less to work with in the way of salary budgets. Average salary increases expected for 2004 vary from 3% for non-unionized hourly staff to 3.3% for executives. Across the country, participants in Ontario and Alberta reported the highest expected increases – average rates of 3.2% for technical and administrative staff and 3.3% for management and professionals – compared to the lowest budgets being reported by those in British Columbia – rates of 2.9% and 3%, respectively, for the same job categories.

Examining different industries, Morneau Sobeco found pharmaceutical companies reporting the largest expected salary increases where technical, administrative and non-unionized hourly employees can expect average salary increases of 4.1%. Conversely, the lowest increases are reported by fabricated metal product manufacturers where professional and technical staff can expect average increases of 2.7%.

Philosophical Shift

With the shift in compensation priorities comes a continued shift in compensation philosophies, evidenced by the prevalence of bonus programs. Four out of 10 (41%) of large organizations now extended bonus programs to non-unionized hourly employees, up from 24% only two years ago. Additionally, the target bonus for these employees increased from 3% to 4% of pay over the same period.

Examining retirement arrangements, Canadian HR professionals listed their key concerns as investment performance and pension costs, due to the expected protracted recovery of pension plans from the dismal market performance from March 2000 to March 2003. The survey also reaffirmed the trend towards outsourcing pension and group benefit administration. More than 65% of participants with defined benefit pension plans are now outsourcing all or part of their pension administration, and 45% outsource employee benefits administration.

Survey results are based on data collected between June and August of this year from 285 organizations representing 460,000 employees across Canada.