Survey on compensation and trends in human resources

To support employers in their annual planning for Human Resources, Morneau Shepell conducts an annual Trends in Human Resources Survey to canvass Canadian employers on their priorities for the coming year, and to ask HR leaders about the opportunities and challenges they face. In addition, the survey looks at expected changes in compensation and emerging issues that have the potential to impact the Canadian workplace in 2019. Some highlights of the results are provided here, and more information can be found in the summary report.

Salaries expected to increase by 2.6 per cent in 2019

Employers in Canada are expecting salaries to rise by an average of 2.6% in 2019. This is unchanged from a 2.6% average increase in salaries for 2018. The national forecast for salary budget increases for 2019 includes expected salary freezes, with 4.6 per cent of respondents expecting a zero salary increase budget for 2019.

The survey identified some industry sectors that are expecting higher than average salary increases in 2019. They include real estate, rental and leasing at 3.8 per cent, professional, scientific and technical services at 3.0 per cent, educational services at 3.0 per cent and public administration at 2.8 per cent.

Lower than average salary increases are expected in certain industry groups. Information and cultural industries salary increases are among the lowest at 1.5 per cent. Health care and social assistance employers are expected to average 1.7 per cent next year, with arts, entertainment and recreation slightly higher at 2.1 per cent.

The survey highlighted some provinces that are expecting higher than average salary increases in 2019, including British Columbia at 2.8 per cent and Alberta at 2.7 per cent. Quebec and Ontario are expecting salary increases of 2.6 and 2.5 per cent respectively, while salary increases in other provinces ranged from 2.3 to 2.6 per cent.

The expected 2.6 per cent salary increase in 2019 is consistent with the current rate of inflation. In July, the Bank of Canada noted that consumer price index inflation is expected to rise to about 2.5 per cent, before settling back to 2.0 per cent by the second half of 2019.

Top HR Priorities for 2019

Improving employee engagement continues to be a priority

Looking to 2019, more than two thirds of HR leaders (67 per cent) said that improving employee engagement was a top priority, while 59 per cent identified attracting and retaining employees with the right skills as the top priority. This remains unchanged from the previous year.

Improving mental health of employees increased in importance

Improving the mental health of employees (48 per cent) inched above the physical health/wellness of employees (47 per cent) as one of the top five priorities in the coming year. This movement is not surprising given the increase in awareness of the relationship between employee mental health and business objectives.

Employee turnover is also a top concern

When looking at tactics to reduce organizational costs and improve efficiency, close to half (43 per cent) of HR leaders said that reducing employee turnover was a top priority for 2019.

The focus on engagement, attracting and retaining employees and reducing turnover is linked to a tight labour market. It is important that organizations determine the factors that are keeping employees engaged and committed to their organizations.

Four Emerging Issues for HR leaders

The impact of the legalization of cannabis

The legalization of recreational cannabis has brought to the forefront the need to address some foundational issues in workplace policy and practice. This is in addition to the need to review and update existing policies and practices to ensure they specifically address any issues pertaining to cannabis. Organizations need to address impairment, safety, employee health, and substance dependency, in addition to accommodation for medical use.

Regarding the legalization of cannabis in October, 52 per cent of HR leaders indicated they plan to update substance abuse policies to manage cannabis in the workplace at some point over the next 12 to 18 months. Thirty-four per cent of respondents said they already have these policies in place.

Dealing with increasing health costs

The high cost of specialty drugs continues to be a major cost risk for health plans. Biologics and even biosimilars (which are similar, but not entirely identical copies of reference or original biologics) drive significant and increasing cost. Biologic and biosimilar use is escalating rapidly and is expected to account for a quarter of the pharmaceutical market by 2020.

With the high cost of specialty drugs, more people are reaching limits, such as lifetime maximums. As well, the cost curve for medications overall is likely to increase in step with increased use of biologics and biosimilars, and the increasing number of conditions treated by them.

Responding to the #MeToo movement

Another issue that has emerged is the growing #MeToo movement and navigating issues around sexual misconduct in the workplace. The majority of employers have existing processes in place to address these concerns. Almost all HR leaders (84 per cent) said they currently have zero tolerance policies implemented to address workplace harassment. Sixty per cent of employers effectively provided managers with tools and resources to address negative behaviours in the workplace and one-quarter (25 per cent) are planning to implement processes in the next 12 to 18 months.

Optimizing retirement plans

Consistent with the results of the 2018 survey, HR leaders continue to cite concerns about their employees’ financial preparedness in retirement (73 per cent) and nearly one-third (32 per cent) are concerned with their employees’ level of understanding of the decumulation process in retirement and how they will manage it.


Comment

Participants in the Trends in Human Resources Survey receive a complimentary report with detailed survey findings and benchmarks for their organizations, and further insights on major HR trends. If you would like to participate in the HR Trends survey next year, please email hrtrends@morneaushepell.com.


News & Views - October 2018 (PDF)