While Canadian employers are planning to continue to reward top performers with more generous raises, they also expect increases to remain steady for average employees, according to a new survey by Mercer.

The survey projects Canadian salaries will rise by an average of 2.4 per cent in 2018 (up from 2.3 per cent in 2017), but top performers are expected to receive salary increases that are 1.8 times higher than raises for average employees in the coming year.

Employers need to be strategic when it comes to administering salary increases, noted Allison Griffiths, a principal at Mercer, speaking at a presentation of the survey’s findings in Toronto on Thursday. “In today’s workforce, how you pay employees relative to each other is really important.”

Read: Companies emphasizing variable pay as salaries projected to rise by 2.8% in 2018: survey

The survey found that employee retention (cited by 69 per cent of respondents) is the No. 1 concern influencing Canadian employers’ compensation decisions for the coming year, followed closely by the overall economic climate (61 per cent).

“[Employers] are paying top performers and they’re paying people who are in hot jobs or [have] skill sets that they need to keep,” said Griffiths. “They need to pay them differently to keep them, because the competition is just so fierce.”

Griffiths added that while giving higher increases to some employees and no raises to others is one of the options for retaining talent, there are other considerations as well. Alternatives include rewarding employees with extra vacation days, investing in employees’ education and skill development and implementing a variety of short- and long-term incentives.

“Retention is key,” said Griffiths. “More and more, organizations are thinking outside the box . . . around some of the innovative ways you can actually reward employees while getting the biggest bang for their buck.” 

Read: Alberta eliminates bonuses, caps pay for public sector execs

Copyright © 2017 Transcontinental Media G.P. Originally published on benefitscanada.com

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