Three-quarters (75 per cent) of Canadian employers and two-thirds (66 per cent) of U.S. employers say they plan to link compensation directly to performance outcomes, according to a new report by Hub International Ltd.
The survey, which polled more than 900 business leaders across Canada and the U.S., found many employers are shifting total rewards strategies toward human-centric workplace models. Many companies reported measuring productivity through metrics like revenue, client growth, production volume and performance ratings. While compensation remains a baseline for retention, companies said they’re building workplace cultures focused on well-being, flexibility, recognition and social connection to drive engagement.
Reducing benefits costs was also a priority for many respondents. Two-thirds (67 per cent) of employers said they plan to lower medical benefit costs in 2025. Among Canadian employers, 40 per cent said they’ll make major plan changes, while 41 per cent of U.S. companies said they’re pursuing HR policy adjustments, such as increasing smoker premiums or limiting spousal coverage. In total, 61 per cent of all organizations said they’re reducing operational costs to maintain benefits.
The report noted prescription drug costs are rising at nearly twice the rate of overall health benefit costs, driven by specialty medications, gene therapies and weight-loss drugs. In response, two-fifths (39 per cent) of U.S. employers said they’re re-evaluating broker and consultant relationships.
Artificial intelligence is shaping human resources strategies, too. More than a third (36 per cent) of employers said AI is a top issue for 2025. Among those who prioritized AI, 55 per cent of U.S. firms and 54 per cent of Canadian firms said they’re revising HR policies to address compliance and automation concerns.
The report also pointed to the growing cost of employee financial stress. Respondents said workers are losing more than seven hours of productivity each week due to money worries, amounting to an estimated US$183 billion in lost productivity for U.S. employers. In response, 78 per cent of middle-market firms and 74 per cent of upper middle market firms said they’re considering offering personal insurance options, such as auto, home and tenant coverage. Currently, 22 per cent of employers offer these benefits.
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Retirement readiness is also on the radar. In Canada, 39 per cent of employers said they’re offering financial counselling to help staff navigate their retirement options, while 38 per cent said they’re seeking additional support from plan providers.