Employers reluctant to share information about compensation and career opportunities, but employees are really craving that, says Mercer expert
As Canadian workers worry about their financial health, employers can use this time to build trust and transparency to improve the employee experience and increase retention rates, says Jeremy Woo, senior principal in Mercer’s career business. Speaking at Mercer Canada’s Reshaping the future: Agility amidst fragility webinar, he said that as we head into 2024, financial stressors, concerns over the economy, and the ability to retire are increasing concerns for employees.
“The many risks on the horizon for the Canadian economy most certainly have had an impact on both employer and employee expectations for the upcoming year. Fortunately, labour shortages have somewhat eased, and this has made workloads at least a bit more manageable.”
At the same time, “the ability to meet monthly expenses is the top concern for employees. [They] want to understand what they can expect to get for their efforts [at work],” said Woo. “Employees want an opportunity to build trust with their employers during these uncertain times.”
Salary increases expected to soften
Unfortunately for these struggling employees, alongside inflation, total salary increases are expected to soften in 2024, although they're still above pre COVID levels, said Woo.
“In 2019, the total average salary increase budget in Canada was sitting at around 2.9 percent and it was relatively stable for at least four or five years before that, ranging usually between 2.5 to three percent. Right before COVID, the increase was at about 2.6 percent. When COVID hit, the percentage decreased a little bit down to 2.3 percent.
“In 2021, we were still around that 2.3 percent. We saw, coming out of the pandemic, a pretty large rise in pay increases at around 3.4 percent. In 2023, with increased inflation, that really spiked at 4.1 percent. That was the highest we've seen since the 2008 financial crisis. For 2024, it will likely ease. We [Mercer Canada] see that softening to 3.6 percent as a forecast. But it is important to note that 3.6 percent is still far above the pre-pandemic norms.
Lower salary increases can be concerning to employees, as they deal with unmet needs during high inflation times. Mercer Canada’s research shows that the unmet needs of Canadian employees vary by age, but financial concerns top the list in every cohort.
“The impact of inflation has been critical for a lot of workers,” said Woo. “They’re worried about food, housing, and everyday expenses.”
Different age groups prioritize different concerns. For example, younger employees have highest concern over expenses and debt, but workload/life balance is in the top three concerns for all age groups.
“There has been a stereotype that younger workers only are concerned about work/life balance, when in fact, we see this as a worry across age cohorts and demographics across Canada. Workload and work/life balance are clearly top of mind for all employees.”
With many concerns in an uncertain world, employees seek transparency from their employers, but employers have been reluctant to share, says the research. Transparency about pay is one area that has been talked about recently with pay transparency laws either proposed or adopted in six provinces to date. Interestingly, 40 percent of Canadians say they are unlikely to apply for a job without compensation information in the posting. Additionally, pay ranges are still not openly communicated in the workplace. Only 28 percent of employers openly communicate pay ranges to employees, with another 16 percent willing to do so upon request, and 16 percent communicating only when required. This leaves 40 percent that do not communicate pay ranges. Sixty-nine percent of employees say they know their pay range, however, despite few employers openly communicating that information. Many (59 percent) have researched this information through employer job postings.
“Even though employers have been quite reluctant to share information about compensation and about career opportunities, employees are really craving that,” said Woo. “Employees really want to know what their pay opportunity is, what their earning potential is, and where they can really go in their current job.
Getting the storyline elsewhere
“Sixty-nine percent of employees say they know their pay range, but this is despite very few employers openly communicating that information. Employees are getting this information from somewhere, even if it's not from their employer. It's important to think about the fact that if they're not getting the storyline that they need out of their employer, they're finding it elsewhere, and that means someone else is controlling the storyline.
“It's an uncertain world out there. Employees want more information on what their earning potential is and what their opportunities are. Governments have responded with regulatory action and have demanded greater pay transparency out of employers.
“We don’t know where the economy is going to go or if niche talent will be in short supply. Currently, employees are concerned about inflation, and they want to know what their earning potential is and where they can go in their current job. As a result, they are seeking transparency and clarity during these uncertain and fragile times.
“Employers can’t fix everything. But they can help employees strategize so they can focus on their work and keep their focus away from financial concerns. They can offer programs that drive both short-term and long-term financial stability to develop a holistic financial wellbeing strategy. They can also use this time as an opportunity to build trust, build retention, and build transparency with their workforce so that they're comfortable in knowing their potential and their opportunity within the organization.”
