Canadian employers' compensation and hiring plans could lead to workforce crisis in 2018

After a year of business growth, Hays poll shows nominal raises, soft hiring plans and growing discontent, signaling the potential for major employee churn

TORONTO, Nov. 30, 2017 /CNW/ - According to data from the eighth annual Hays Canada Salary Guide, employers across the country should brace themselves for staff churn as business success in 2017 was not matched with permanent hiring or pay raises. The survey results showed employers appear to instead have an increasing appetite for hiring temporary and contract help while offering teams salary increases of less than three per cent. Hays' labour market experts maintain that employers' intentions overlook growing discontent among existing staff. In fact, the company also found that 90 per cent of employees would consider leaving their current role for one that met their expectations – a sentiment Hays believes may trigger considerable business-threatening employee departures in 2018.

Conducted this fall, the 2018 Hays Canada Salary Guide survey revealed employer confidence is back to pre-recession levels and nearly three quarters (70%) say their growth prospects look good for the year to come. Even employers in the parts of Canada hardest hit by the recent oil and gas slump expressed optimism about the strengthening economy. Encouragingly, more than a third of respondents across the country plan to add permanent headcount in 2018, which is on par with numbers seen four years ago.   

Though positivity is high, Hays poll data uncovered concerning trends that could threaten business plans for the year ahead. For example, temporary staffing levels were double the rate employers anticipated in 2017 and 26 per cent said they plan to boost their reliance on contingent workers again next year. This suggests poor forecasting and a reluctance to commit to permanent staff that, in turn, contributes to eroded morale and increased workplace stress. Additionally, more than half of respondents said raises for staff will be less than three per cent even though they're aware of increasing competition from companies that pay more.

"The dark days of the downturn are a fading memory for most of Canada's employers, but our research shows they're staring down the barrel of extreme retention challenges," said Rowan O'Grady, President, Hays Canada. "When the economy and job markets are strong, employee tolerance for not getting what they expect drops considerably. Frankly, employees have already told us they are ready to be lured away. All the warning signs are there and those who refuse to acknowledge this reality are taking their biggest risk in at least five years."

Are employers pushing people out the door?

While the country's employers are optimistic about the economy and confident their business will grow again in 2018, Hays Salary Guide data shows they are simultaneously aware that their staff feel overworked and possibly, underpaid. Nearly three quarters of respondents feel that Canada suffers from a skills shortage, and as a result, their staff is stressed (71%), morale is impacted (43%), inefficiencies are up (42%) and errors/accidents are also on the rise (28%). Adding to workplace stress and morale issues, is the fact that a majority of employees would quit their current job if a better offer came their way and many (58%) are heading into the new year unsure if their salary is competitive with the market average.

Employers also seem to have backed themselves into a corner with an inability to hire the talent they need and have used recruitment tactics that could be demotivating to their existing teams. For example, nearly a third of employer respondents admitted their company lacks a network of candidates and 40 per cent admit that they have increased salary offers in an effort to secure specific candidates.

"Employers would be wise to think about the message they're sending to staff," added O'Grady. "When overworked teams get little in the way of raises but see their employer inflate salary offers to incoming candidates, they tend to look for the exit sign. We expect this is already happening and 'churn' will be the big word in 2018."

It's not all bad news

This year's Hays Salary Guide may serve as a stark warning but there are signs that the nation's employers aren't simply doing business with blinders on, as many are demonstrating a willingness to meet the changing needs of employees. Many have begun to familiarize themselves with what people expect in their role and have started making changes to their workplace. In 2018, more than half of employers are emphasizing the ability to work from home, 29 per cent say more training, and 65 per cent have started to focus on company culture as a competitive differentiator.

"We've been doing this for a long time in Canada and while salary is definitely important, it's not the only thing that motivates people," said O'Grady. "On-the-job training tops the list of what people want and employers who make this type of investment build smart, stable teams while potentially inspiring loyalty."

Additional highlights from the 2018 Hays Canada Salary Guide

• Economic outlook is highest in Quebec where 50 per cent of employers believe it will strengthen in 2018. British Columbia follows at 46 per cent while Alberta and Ontario sit at 44 per cent
• Number of employers who will increase salaries in 2018 by less than three per cent = 52%
• Number of employers who will increase salaries in 2018 by more than five per cent = 7%
• What's the biggest recruitment challenge facing employers? Total salary/compensation (54%)

About Hays Canada:
Hays Specialist Recruitment Canada is a wholly owned subsidiary of Hays plc, which has been at the forefront of the global recruitment industry for over thirty-five years. With annual revenues of over £2.1 billion, Hays Specialist Recruitment is the largest specialist recruitment consultancy in the world. Hays operates across the private and public sectors, dealing in permanent positions, contract roles and temporary assignments.

SOURCE Hays Canada