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Talent is centre stage

2013 Top five global employer rewards priorities survey, Canadian edition

Static salaries and ways to motivate staff are among employers’ top concerns in 2013 Top five global employer rewards priorities survey, Canadian edition.

Even though global unemployment levels remain distressingly high, Deloitte’s recent Top Five Global Employer Rewards Priorities Survey revealed that employers around the world — including Canada — consistently struggle to attract and retain the technical and skilled talent their organizations need. Both the aggregate global community — approximately one in four respondents — and the 54 Canadian firms surveyed rated “the ability of our reward programs to attract, motivate and retain the talented employees we need” as their number one Total Rewards challenge.

Top five Canadian Total Rewards challenges

  1. The ability of our reward programs to attract, motivate and retain the talented employees we need to effectively run our organization.
  2. The cost of providing pension/retirement benefits to employees. 
  3. Clear alignment of our Total Rewards strategy with our business strategy and brand.
  4. Motivating staff when pay increases are flat/non-existent.
  5. Pension funding and risk management.

Top five Global Total Rewards challenges

  1. The ability of our reward programs to attract, motivate and retain the talented employees we need to effectively run our organization.
  2. Clear alignment of our Total Rewards strategy with our business strategy and brand.
  3. Motivating staff when pay increases are flat/non-existent.
  4. The cost of providing healthcare benefits to active employees.
  5. Demonstrating appropriate return on investment for our reward expenditures.

As employment opportunities in global markets continue to increase, the competition to attract and retain leading talent around the world is becoming more intense. Canada, with its own highly competitive markets and rising talent crisis, is no exception. Indeed, when surveyed, Canadian employers were in sync with the rest of the world on several of the top five challenges. For example, aligning the rewards strategy with business strategy and motivating staff in the face of static salaries were top five concerns for both groups.

Despite these common echoes, however, two concerns involving pension-related issues — which came in at numbers two and five in Canada — were not rated as highly by global respondents. Of course, different economies and geographies create unique challenges. With this in mind, this report takes a closer look at where Canada fits when it comes to global trends and considers how our economic situation and traditional rewards priorities may differentiate us from many of our global counterparts. We also highlight some ways Canadian employers can respond to key survey results and examine what the HR landscape may hold going forward.

Attracting, motivating and retaining talent
It’s not surprising that Canada shares this top concern with our global counterparts. Moreover, respondents don’t just believe it’s the biggest concern overall, they also feel it’s the one that will have the most imminent impact. In a related survey question, the number one answer to “what are Canada’s top challenges over the next three years?” was “shortage, motivation and retention of qualified talent.”

Canada is certainly feeling a shortage of skilled labour, particularly in core Canadian industries such as manufacturing and energy. Like many other nations, Canada’s baby boom bubble has popped, leaving younger generations whose population simply can’t match the size of the outgoing workforce. If this labour demand remains the same or close and supply continues to dwindle, competition for talent will only increase. In anticipation, Canada has begun to open its borders further to attract foreign talent, but challenges around credential recognition and language competency remain.

To stay competitive as this situation plays out, individual companies need to have clear compensation strategy and they should also undertake frequent market reviews to determine how their compensation practices compare to those of their industry — from both a cash and a Total Rewards perspective. A clear strategy and frequent market reviews will allow them to formulate a plan for positioning themselves positively in the market.

Ensuring your entire performance-based Total Rewards system is fair, appropriate and executed with the highest integrity is critical. If your basic salary advancement scale is good but overall performance measurement and management practices are poor, employees will not see your reward program as a particular asset, and your ability to properly motivate and retain talent may suffer.

Pensions are a particularly Canadian concern
Concerns around pensions and retirement benefits occupied two of Canada’s top five Total Rewards challenge spots, but neither was in the top five globally. While this Canadian departure seems curious at first, there are a few reasons that may account for it.

Of course it may be the obvious answer, that — as defined benefit pensions slowly disappear and some experienced declines in their defined contribution and/or RRSP balances — the general population is wondering how they’ll fund their retirement, and this concern has naturally migrated to become an HR issue.

On the financial side, pensions are a complicated area. They often involve a large pool of assets and liabilities that may be difficult for employers to fully understand. Pensions can be a risky corner of the balance sheet and companies should look at how pension plans fit in with their overall corporate risk profile. To assist in understanding their plans, companies should undertake projections of the future costs associated with their plans along with market scans to understand what benefits are being offered by their peer group. A review like this will assist in planning and alternative plan design. Ensuring costs and risks align with the value of the benefits to employees is critical to remain competitive.

Aligning rewards strategy with business strategy
The number three concern, assuring strategic alignment of the total rewards program with business goals, may seem obvious, but there is room to go astray.

Ensuring your Total Rewards program provides ROI by attracting employees and rewarding behaviours that contribute to strategy execution should always be a priority. But to make this happen, you must clearly understand the workforce implications of your business strategy. What are the employee skill sets and behaviours you must acquire to best execute the strategy, and are your Total Rewards program and strategy designed specifically to attract and retain those types of employees? Does your incentive plan encourage and reward the right behaviour?

Strategic alignment is not just a matter of following a legislative mandate or paying competitively — employers must also structure their program to motivate behaviours that consistently drive strategy.

Overcoming static wages
If cost of living rises while pay remains flat, relative earnings actually decrease. And if your paycheque is shrinking, other jobs in other industries or government sectors may become very appealing. This is difficult for employers to overcome, making it easy to see why this was a top five concern.

The best course for employers is to take a more holistic view of their Total Rewards program, and look instead at the total value proposition they offer employees. Salary is not enough since potential employees increasingly recognize it may not go up rapidly. Companies must provide an attractive Total Rewards offering to stay relevant to today’s top talent. Are we ensuring a good overall employment experience — beyond compensation, pension and benefits — that incorporates elements like health and wellness, education and development, work-life balance, employee recognition programs, leadership training and workplace flexibility? If so, how can we build out those dimensions to make our company even more talent-competitive?

Make your Total Reward package a competitive advantage
Here are five steps employers can take to help set and realize their employee rewards priorities:

  1. Consider which elements of your workforce are the most critical to achieving your strategic business goals.
  2. Assess whether your current compensation strategy and programs can attract and retain the critical talent you need, as well as motivate value enhancing behaviour. If not, what changes need to occur?
  3. Assess your existing workplace environment and total value proposition. Identify any gaps and consider how to resolve them to ensure an attractive holistic Total Rewards offering.
  4. Implement necessary changes, including effective employee communications.
  5. Ensure ongoing evaluation takes place to ensure your Total Rewards strategy remains current and competitive.

The 2013 Top Five Global Employer Rewards Priorities Survey clearly identifies talent as the number one issue for both global and Canadian companies. It will be an ongoing challenge for employers to stay abreast of talent and industry trends and apply them to effectively drive company objectives. Those who adapt quickly and are always on the lookout for more effective and flexible rewards strategies will be well positioned for success in the competition for talent.

About the report
Canada has participated annually in the Top Five Employer Rewards Priorities Survey since it began in 1994. This year’s global survey was jointly sponsored by Deloitte and the International Society of Certified Employee Benefit Specialists (ISCEBS). For the purposes of this survey, the phrase “Total Rewards” is defined as all compensation, benefits, perquisites and any other direct or indirect payments to employees. Conducted between October and December 2012, the survey was completed by 415 responses online and represents employers in 27 different countries across the Americas, EMEA and Asia-Pacific, including 54 Canadian participants. 

The 2013 Top Five Employer Rewards Priorities Survey contains a wealth of information on rewards trends and employer opinions around the world. Read the full report.

Contacts

Heather Stockton
416-601-6483
hstockton@deloitte.ca

Richard Lee
416-874-3248
richlee@deloitte.ca

Sandra Haydon
416-643-8928
shaydon@deloitte.ca

Kelly Cruise
416-643-8335
kecruise@deloitte.ca

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