Canadian HR Reporter

4 www.hrreporter.com N E W S Variable pay trends When it comes to incentive payouts, the type of industry involved once again makes a difference, says Cowan. "What we're seeing for 2021 is organizations pretty much across the board are adjusting their targets downwards, with the biggest adjustments, in many cases, at the executive level. There are certain industries that tend to be more focused on incentives, and many of them still have higher targets, relatively speaking, but we are seeing a lot of downward adjustments." In the high-tech sector, for example, "the competition for hot skills is still very much alive and well so organizations that do have money are really looking to put it where it counts and make the biggest difference," she says. While many organizations have moved toward variable pay programs or pay for performance in recent years, they're now rethinking how those programs are designed, says Frost. "[They're asking] 'What are the measures in our plan? Are those the right measures for us going forward because maybe whatever they were in 2019 aren't relevant anymore?' So, I think a lot of organizations are rethinking their programs or taking the opportunity to recalibrate those to say, 'Are we really sure that our performance-based pay programs are motivating people to deliver the right performance for what we need for now?'" Many employers are going to "sprinkle" rewards more toward the high performers of their organizations and freeze employees that are just meeting expectations, says Parsan. "If you have limited funds, I think it will go to the high performers or high- potential employees," he says. "You're probably going to see, more than usual, organizations using discretion in terms of the bonus pools for this year, and how people get paid bonuses. I think it'll be more of a judgment call, as opposed to relying on the straight numbers and the formulas." Creative budgeting If you're an employer that was counting on base pay to be competitive and you're no longer able to do that, "it's time to dust off your skills" and get creative, says Cowan. "Make sure that you're offering recognition, formal and informal recognition, flexibility in the workplace development opportunities [and a] broad range of health and wellness offerings as well. This is a time when that's more important than ever, and employees do appreciate investments in this space." Regardless of how much money organizations might have to spend, she says, employees "have pretty good memories for how their employers handled this and what was on the table for them — whether it is cash in the form of base pay or incentives or whether it's non-monetary rewards. Across the board, this is a really good time for organizations to take stock of the rewards." A lot of organizations are not as concerned about retention, but they are concerned about engaging employees, says Frost, "making sure that people feel valued, making sure that people feel recognized for their hard work, especially... if they've got an incentive plan or an annual bonus plan and those programs may not get high payouts for 2020." Employers will try to be creative in how they use their budgets, so they may take some of the dollars and put that into other areas such as career development or increased vacation time or benefits, he says. "For instance, a lot of people will have flexible spending accounts. And [employers are] opening up the parameters of those," he says, such as allowing people to buy at-home gym equipment or an ergonomic chair so people "can work from home more effectively." CHRR SALARY FREEZES FOR 2021 INFLUENCED BY SECTOR "It really does depend on the circumstances that your organization is in and how severely you've been impacted by the pandemic." Gord Frost, Mercer Canada 42% Number of employers in arts, entertainment and recreation committed to freezing salaries 25% Number of employers in educational services committed to freezing salaries 58% Number of employers in real estate, rental and leasing not planning to freeze salaries 57% Number of employers in utilities not planning to freeze salaries 56% Number of employers in agriculture, forestry, fishing and hunting not planning to freeze salaries 51% Number of employers in finance and insurance not planning to freeze salaries Source: Morneau Shepell The compensation outlook for 2021 varies widely by sector, with certain industries, such as airlines, expected to see much lower increases and a higher number of freezes.

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