Navigating salary increases, pay transparency and people risks: Insights for small-medium enterprises (SMEs)

As a small or medium enterprise (SME) owner, you face unique challenges in managing your compensation planning and people risks. Rising health and benefit costs, along with the need for pay transparency, are top concerns for employers no matter the size of their workforce. Fortunately, the August 2024 Mercer QuickPulse™ Canada Compensation Planning Survey provides valuable insights into salary increases, industry-specific trends, and strategies for attracting and retaining top talent. 

Here are key findings and effective approaches for you to navigate these compensation challenges: 

• Compensation planning survey results¹: The survey projects a 3.0% merit increase and a 3.4% total increase budget for non-unionized workers in 2025. These projections align with the current economic climate and indicate a slight decrease from the previous year’s figures. It is crucial for you to remain competitive in attracting and retaining talent despite modest salary increases.

• Industry trends in compensation¹: Average total increase budgets are generally consistent across all industries in the survey, ranging from 3.1% for Mining & Metals to 3.6% for insurance/reinsurance. With more conservative salary increase budgets, organizations are exploring other ways they can enhance at their employee value proposition to attract and retain talent. 

• Pay transparency²: The survey highlights a lag in pay transparency adoption, with less than a third of companies openly communicating salary ranges. While some companies share this information upon request or where legally required, there is still hesitation in being fully transparent about salaries. Embracing pay transparency can foster trust, enhance employee engagement, and attract top talent. You can consider implementing transparent pay practices to remain competitive in the job market.

• Attracting and retaining talent: Beyond competitive salaries, you can attract and retain top talent by offering flexible work arrangements, professional development opportunities, and a positive company culture. Recognizing and rewarding employee achievements, fostering open communication, and providing growth opportunities are low-cost strategies that can significantly impact employee satisfaction and retention.

The future of compensation planning for SMEs will likely involve a greater emphasis on pay transparency and a focus on holistic employee well-being. As an employer, you should stay informed about industry trends, leverage technology for total rewards management, and prioritize employee engagement and satisfaction. By adopting these practices, you can navigate the evolving total rewards landscape and position yourself as an employer of choice.

As an SME in Canada, you must navigate modest salary increases, rising health and benefit costs, and the importance of pay transparency. By staying informed and proactive, you can position yourself for success in attracting and retaining top talent, while managing your compensation budgets effectively. Remember, your employees are your greatest asset, and investing in their well-being will contribute to the long-term success of your business.

Put your people first, let’s partner together with Simple select by Mercer Marsh Benefits^SM, our cost-effective employee benefits, tailored to your business needs.  

Sources:

1. August 2024 Mercer QuickPulse™ Canada Compensation Planning Survey

2. Mercer Canada 2024 Pay Transparency Survey results

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