Canadian Employers Favor Variable Pay Programs

September 16, 2005 ( - Hewitt Associate's "Salary Increase Survey" found that Canadian employers expect to hold steady salary increases for 2006 and continue to use variable pay programs to reward and retain employees.

In its press release, Hewitt said that salary increase budgets were 3.4% in 2005 and the survey respondents said that will remain unchanged in 2006. Eighty one percent of organizations said they plan to continue offering variable pay programs to reward employees.

The types of programs being offered by Canadian employers, according to the release, are:

  • Business Incentives – Awards employees for a combination of financial and operational measures for company, business unit, department, plant and/or individual performance (the most popular form of variable pay plan, offered by 69% of survey respondents);
  • Special Recognition – Acknowledges outstanding individual or group achievements with small cash awards or merchandise (e.g., gift certificates);
  • Individual Performance – Rewards based on specific employee performance criteria; and
  • Stock Options/Ownership – Awards stock to professionals who meet specific goals.

Keri Humber, a senior compensation consultant with Hewitt, said in the release that the variable pay programs will also help with attraction and retention concerns the employers have. Fifty three percent of respondents reported attraction issues, compared to 37% last year, and 34% of organizations reported retention issues, compared to 27% in 2004.

Humber noted in the release that more organizations need to monitor the success of their variable pay programs in order to maximize their success. According to the release, the number of organizations that reported monitoring the success of their programs fell from 42% last year to 37% this year.

A free report on highlights of the survey can be found here , along with an order form for the full survey.