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Normandin Beaudry

Highlights of the Quebec specific survey on salary budget increase for 2011-2012

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There, in black and white

NB Bulletin Vol. 15 N. 13, November 2012

In the summer of 2012, the Ordre des conseillers en resources humaines agréés, in collaboration with Normandin Beaudry, invited Quebec organizations to participate in the second edition of the Enquête québécoise sur les augmentations salariales, a survey on salary budget projections.

Some 178 organizations representing close to 250 000 employees completed the survey, allowing us to build a reliable database that reflects the realities of Quebec. Data collected was analyzed by Normandin Beaudry’s compensation specialists so as to identify labour market trends and present salary budget projections projections for 2013 that reflect Quebec’s economic conditions.

Salary projections are more generous but remain cautious

Global economic outlooks continue to fluctuate.  With the debt crisis affecting Europe, the elections in the United States and the potential downturn in the Chinese economy, it has now become difficult to make accurate projections, even in the short term.  Closer to home, Quebec’s demographic profile indicates a declining workforce, which directly impacts its growth potential.  

Quebec organizations thus remain cautious in their salary projections while acknowledging the need to maintain employees purchasing power and to recognize individual performance, especially that of employees who meet expectations. 

The average total salary increase budget is estimated at 2.9% for 2013.  This is slightly higher than what was projected last year (2.7%) and equal what was actually granted in 2012 (2.9%).

    

    

Significant differences based on reference market

Economic outlooks and organizations’ level of confidence vary considerably from industry to industry and from region to region, and impacts concerning salary budget increases are now more significant.

According to Philip Longpré, CHRP and Senior Consultant, Compensation and performance at Normandin Beaudry:

[Translation]

“Given the heavily segmented market in our province landscape, it is essential for Quebec’s decision makers to compare their salary increase budgets with those of organizations from their reference market to obtain a clear picture and maintain their ability to attract and retain employees.  Differences may vary by half of a percentage point based on industry, region or organization size.  Such differences are significant given the caution exercised by decision makers once again this year.” 

 

The entertainment, knowledge and transportation sectors have momentum!

Average salary budget increase for the leisure, arts and entertainment, professional, scientific and technical services and transportation/warehousing sectors are generally above 3.1% for 2013.  The need for these organizations to brand themselves as ‘‘best employers’’ is evident and determinative of their economic driver.  Unlike in previous years, it appears that their ability to pay is not in question.

The trade (retail and wholesale) and manufacturing (excluding high technology) sectors are more sensitive to the current economic outlook.  Organizations in these sectors are forecasting average salary budget increase generally lower than 2.6%. 

 

Important regional differences

Salary budget increase for some regions are considerably higher than the Quebec average for both the increase budget granted in 2012 and the projected budget for 2013.  With average budgets hovering around 3.2%, the following regions are more generous than the Quebec average: 

  • Abitibi-Témiscamingue, Côte-Nord and Outaouais;
  • Saguenay-Lac St-Jean;
  • Beauce; and
  • Centre-du-Québec and Estrie.

Employers from the Montérégie region will see more limited salary budget increase as compared to Quebec as a whole, with average budgets generally lower than 2.5%.  

 

Quebec City continues to set itself apart!

For a second consecutive year, organizations from Quebec’s capital are forecasting salary increases that are 0.4% higher than those for Montreal organizations for technical, professional and management (excluding senior management) jobs.

These differences can be explained in part by Quebec City’s low unemployment rate versus that of Montreal’s.  There is intense competition for talent among employers in Quebec City and, as such, these employers need to stand out in order to attract qualified employees.  

                    

 

Quebec SMEs measure up well

Long viewed as employers having limited means for attracting and retaining qualified employees, it is clear that Quebec SMEs are currently armed with the salary increase budgets needed to hold their own in the war for talent.  They are no doubt capable of playing in the big leagues! 

Their projected salary budget increases are in fact comparable or equal to those projected by large Quebec organizations for all job categories.  This is a trend that has continued from last year.   

Small organizations remain more limited in their salary budget projections, likely favouring other aspects of their total reward package to attract and retain employees. 

                          

Performance management

Although compensation is not the sole engagement driver, Quebec employers are aware of the importance of linking employee salary increases to individual performance. 

According to Geneviève Cloutier, M.Sc., CHRP and Partner, Compensation and performance at Normandin Beaudry:

[Translation]

“Managing individual performance is a major challenge for organizations and especially for managers.  Because the economic environment in recent years paved the way for an increase in productivity and an “eradication” of underperformers, today’s organizations have a critical mass of “excellent employees who meet expectations.”   And this is reflected in this year’s salary increase results.” 

Consequently, we are observing a movement in projected salary increase away from employees who exceed expectations and toward employees who meet expectations.  This is a shift from the practice observed last year. 

 

Recognize expected performance first

Last year, Quebec employers established salary increases in which individual percentages varied considerably based on individual performance.  This year, they are more reluctant to grant these same increases to their high performers.  In 2011, employees who exceeded expectations could expect to receive a salary increase of around 5.7%, which was 2.8% more than that of their coworkers whose performance simply met expectations.  

This year’s salary increases leave room to further recognize employees who meet expectations.  Employees who exceed expectations can expect to receive a salary increase of around 4.5%, which is only 0.7% more than that of their coworkers whose performance meet expectations.

                                        

This change is a major shift in the performance management approach.  It also illustrates the importance of promoting an environment that favours cooperation, sharing and the pooling of strengths to achieve expected contribution levels and objectives.  The notion of “performing solo” no longer seems possible and Quebec organizations clearly understand this.

 

Distinct performance management practices

Organizations have distinct ways of managing and documenting their salary budget increases.  Very few organizations provide a clear picture of each the components used to establish a salary budget (i.e., budget for economic/general increases and budget for performance-based increases).   

Two findings have emerged through the observed differences:     

  • Organizations who establish a budget for economic increases and a budget for performance-based increases have slightly higher (0.5%) total salary budgets with projected increases of 3.4% for 2013 compared with 2.9% for all of Quebec.  This suggests that these organizations align their budget for economic increases with their budget for adjusting salary scales, and give themselves a budget of around 1.5% to recognize individual performance. 
  • Budgets for other organizations (the majority) are considerably lower at around 2.7%, regardless of whether or not they manage pay within their budget for economic increases or their budget for performance-based increases.  

It is therefore clear that organizations wishing to emphasize performance recognition in their salary increase practices would benefit from budgets consisting of three components. Normandin Beaudry experts believe that this would be a first step toward a true “culture of performance.”

 

Please feel free to contact us for additional information.

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Montreal, Quebec, H3B 1S6