Performance Pay Increases in Canada

The survey reveals an increasing trend towards offering pay-for-performance to all levels of employees.

Second and third-generation programs, designed to increase the awareness of employees to their company’s performance, are also becoming more evident.

The survey notes a 10% increase in the number of organizations using variable pay programs, which involve a combination of quantifiable and subjective objectives to measure and reward employee contribution.

Plan Type

Results show that:

• the number of organizations providing annual incentives increased to 83%, up 7.8% from the previous year
• the number providing long-term incentives increased by 10% to 33% of the sample
• the use of stock option plans remains at 26% of organizations providing incentives
• the use of stock purchase plans increased by 14% over last year.

Other findings show that the average salary increase for all employees in the past year was 4.1%, an increase of 0.3% on the previous year’s growth rate.

Executives’ pay grew by 4.7%, an increase of 0.4% over the previous year’s increase. A further 7% of respondents did not provide salary increases last year.

Crystal Ball

While fewer organizations were willing to forecast rates for next year, compared to previous surveys, 71% of respondents did provide forecasts.

They revealed that average salary increases for next year are expected to be 3.7% overall and 3.8% for executives.

When the numbers are broken down by region, the survey reveals that for the coming year:

• respondents in Ontario and British Colombia forecast 3.9% increases
• those in Manitoba, Saskatchewan and the Atlantic provinces forecast 3.3% hikes
• Quebec respondents forecast an overall increase of 3.7%.

British Columbia, Saskatchewan, and Quebec experienced the largest salary increases over the respective CPI rates for the past year.

Sector Increases

Breaking the data down by economic sectors:

• public-sector companies forecast increases of 3% for the coming year and provided increases of 3.3% last year
• private-sector organizations forecast increases of 3.8% for the coming year and provided increases of 4.3% last year
• within the communications, electronics, and software sectors, forecasts are 4.6%, while increases for the previous year were 5.9%.

The survey, now in its thirty-third year, included the responses of 425 organizations of varying size, industry sectors, and location participating, representing 830,000 employees.