Salary Increase Projections for 2020 are Here!
Every year, as the leaves start to fall and we get closer to Halloween, the salary increase forecasts for the upcoming year are released. But planning for increases – and how/when you administer them – need not be a scary undertaking. Solid benchmark information coupled with a clear philosophy and structured process is less daunting than you may think.
Let’s look at the numbers first.
Based on three of the largest annual/semi-annual compensation surveys, representing nearly 1,500 employers across Canada (Normandin Beaudry’s 2020 Salary Forecast; Conference Board of Canada’s Compensation Planning Survey; Mercer’s 2019/2020 Canadian Compensation Planning Survey), the average projected increase across all industries to Canadian salaries in 2020 is 2.6% (down just .1% from 2019). This number is substantially higher than the Bank of Canada’s projected inflation rate of 1.9%.
While each survey differs in scope, industries projecting higher than average increases include electronic gaming and visual effects (significantly higher at 4.4%), followed by IT services/consulting; computer/website design; software development; professional, scientific, technological and educational services (3.1 – 3.2%).
Industries forecasting the lowest increases include culture and entertainment (2.2%), followed by the municipal sector, as well as foundations; not for profit organizations; community support and health care (2.4%).
While this research provides a reasonable and effective baseline for what other organizations and industries are doing, it’s important to base salary increase decisions not only on the market, but on your overall compensation philosophy. In other words: clarify the guiding principles that drive compensation decisions and that spell out why you make the decisions that you do.
More specifically, before moving forward with a raise percentage that works for other organizations, clarify what works for yours:
- What’s driving the need for an increase? Is it competition, the industry, your stage of growth, your values, the need for retention or reward?
- What’s happening in the market? i.e. the competition, political environment, economy, clients
- Where do you want to target in the market? At, above, or below the median? Are your salaries currently below where you want to target? Are they internally equitable?
- Under what circumstances do you wish to provide increases? i.e. COLA, tenure, performance, promotions, and/or annual “just because”
- Where does your overall Total Compensation stand? i.e. benefits, vacation, incentives, perks, RRSP, etc.
- Can your organization afford it?
While it may seem like a lot to address, a solid compensation philosophy will support your decisions about increases going forward and provide you with a consistent and transparent platform to communicate to your employees.