Quebec survey on salary increasesLinkedIn
There, in black and white
NB Bulletin Vol. 16 N. 15, November 2013
In the summer of 2013, Normandin Beaudry invited Quebec organizations to participate in the third edition of its salary increase survey.
A total of 123 organizations representing more than 280 000 employees completed the survey, allowing us to build a reliable, information-rich 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 forecasts for 2014 that reflect the economic conditions specific to Quebec.
We are confident that the results of this survey will provide decision makers from Quebec organizations with accurate data that reflects the realities of their specific reference market, whether it is sector-based, geographic or linked to organizational size. This year, special attention was given to the management approach adopted by Quebec organizations as regards to total compensation.
The average total salary increase budget is estimated at 2.9% for 2014. This is equal to what was projected for 2013 but slightly higher than what was actually granted in 2013 (2.8%). Salary structure increases remain stable at 2.0%.
Relatively stable economic outlook for 2014
According to economists and financial experts, the economic outlook for 2014 is positive, although moderate. Household debt, which continues to rise, combined with the labour costs, which is high in comparison with international competition, are real risks that Quebec and Canada will be facing in the coming years.
However, we observe that organizations remain confident and that salary increase budgets remain stable compared to what we have observed in recent years. This stability is also reflected among the different job categories and among unionized employees.
Shift toward more uniform salary increases
Industry sectors becoming less and less differentiated
Salary increase budgets for 2014 are relatively similar across the various industry sectors.
However, some sectors, including the manufacturing, public services, finance and insurance sectors, continue to set themselves apart with forecasts higher than the provincial average.
Public administration, pharmaceutical and biotechnology and retail and wholesale trade sectors appear to be more conservative with forecast below the provincial average.
We also measured participating organizations’ level of optimisim. This level is determined using the positive difference between the salary projection for last year and the projection for this year. Organizations projecting the largest increase in their budget compared to last year are considered to be the most optimistic.
The information, cultural and entertainment, manufacturing and pharmaceutical and biotechnology sectors are among the sectors with the highest positive differences. The pharmaceutical and biotechnology sector, although one of the most conservative sectors, is also one of the most optimistic sectors.
Professional, scientific and technological services and the public administration sectors appear to be more pessimistic with respect to economic outlook and forecast a decrease in their average total salary increase budget compared to previous years.
Regional differences persist in Quebec
Salary increase budgets for certain regions in Quebec are considerably higher than the Quebec average for both the budget granted in 2013 and the budget projected for 2014:
For a third consecutive year, organizations from Quebec City are forecasting salary increases that are 0.5% higher than those for Montreal organizations. This difference is especially true for executives, managers and professionals. Salary increase budgets are comparable in the two cities for technical, administrative and operations personnel.
In spite of a declining unemployment rate in Montreal, a gap continues to exist between these two cities. Given the strong economy verging on full employment, employers in Quebec City must continue to stand out to attract talent.
As was the case last year, employers from the Montérégie region will have limited salary increase budgets as compared to Quebec as a whole, with an average total budget of 2.7%, followed closely by the Montreal region, with an average total budget of 2.8%.
Overall, we find the general/economic budget (1) to be systematically higher than the performance-based budget (2). However, the Quebec City region is the only region for which this situation is reversed, and more weight is given to performance.
This is the case for both the budget granted in 2013 and the budget projected for 2014.
Standardization of salary increases… a balance between caution and confidence
Last year, we observed that SMEs compared favourably to large organizations, forecasting large salary increase budgets. The budgets granted in 2013 and the projections for 2014 confirm these observations.
This year, it’s time for small businesses to set themselves apart from the market by forecasting salary increase budgets that are well above the provincial average.
A phenomenon of caution is generally observed among SMEs who are projecting salary increase budgets for 2014 that are lower than the budgets granted in 2013. Conversely, large organizations continue to maintain their confidence level by announcing for 2014 salary increase budgets that are higher than those granted in 2013.
Is it time to rethink performance management?
Recognizing individual performance continues to be more popular. In fact, 83% of participating organizations confirmed that the salary increases granted in 2013 took into account individual performance.
On average, over the last three years, the monetary recognition provided by organizations for performance that exceeded expectations was 1.48 times those that met expectations. Organizations also monetarily penalized performance that did not meet expectations by granting underperformers a salary increase that was 0.22 times those who met expectations.
Monetary recognition of high performers is losing steam
We observe a downward trend in the salary increase budget allocated to high performers. The budget decreased from 5.7% in 2011 to 3.5% in 2013. In 2011, the salary increase budget granted for employees who exceeded expectations was double that granted for employees who met expectations. In 2013, the budget for high performers was only 1.35 times that for employees who met expectations.
Budgets allocated for employees who meet expectations were reduced the most in 2013, by about 1.2% from the previous year. It should be noted that the budget granted for this category (2.6%) is below the average total budget (2.9%). This means that a balance was not achieved between the budget for high performers and the budget for employees who do not meet expectations. Consequently, the budget for employees who meet expectations is decreased.
Underperformers: what type of strategy should be adopted?
Even if we often observe a consensus regarding the recognition of high performers, this is not necessarily the cost for employees who fail to meet expectations. Organizations hesitate between sanctions and positive reinforcement.
More than one third of respondents do not grant a salary increase to underperformers, clearly deciding to monetarily penalize poor individual performance.
However, more than half of respondents adopt a less extreme position, granting an average budget of 1.3% for employees who do not meet expectations. In doing so, in a context where salary increase budgets are limited, organizations are reducing their ability to differentiate performance.
Click here to access full report (PDF, 1 MB) Available in French only.
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