Employers expected to opt for conservative approach to business in 2017: Hays Salary Guide

Canadian employers are heading into 2017 with considerable economic optimism, however, their buoyancy is muted by the country’s declining oil market and worries that mid-level staff turnover is on the rise. 

The seventh annual Hays Salary Guide has revealed a 19 per cent spike in confidence for a strengthening Canadian economy next year and nearly two-thirds of respondents expect their business activity will increase. Nevertheless, employers are heavily focused on stability and risk-avoidance and will opt for a conservative approach to business in 2017.

The Hays Salary Guide gathers insights from more than 4,000 employers and employees across Canada and offers a snapshot of factors that impact Canadian employer strategy and sentiment. For the past two years, employers have reported business gains but this growth did not translate into typical signs of advancement such as hiring and pay raises. Heading into 2017, business growth expectations are ten points higher than what was reported in 2015 but employers are still not making any big operational shifts.

More than half (55 per cent) of employers surveyed said salaries will increase by a nominal three per cent or less, one-third plan to increase headcount and half plan to stick with their current staff numbers. Employers are also anxious about losing existing talent. Twenty-six per cent have noted a management-level turnover rate between six and 10 per cent per year and according to Hays, employers have turned their attention to preserving their mid- to senior executive ranks. 

“The past year was punctuated by stories about global economic upheaval but, here in Canada, the mood is one of pragmatic optimism,” said Rowan O’Grady, President, Hays Canada. “Hays’ national data shows employers are acutely aware of what’s happening around them and have chosen to put business stability ahead of risk. They’re treading water with confidence and we think that’s a good thing. Canada takes the occasional knock for always playing it safe and I have to say this desire for stability makes more sense now than ever before.” 

Alberta’s pain worsens, crosses provincial borders but hope persists

Employers in Alberta did not catch the break they were hoping for in 2016 and many continue to struggle against the low price of oil. Half of employers in the province said they were forced to cut staff last year and, looking ahead, 28 per cent believe the market will continue to flounder, which is a sentiment echoed by oil industry experts and world leaders. Further complicating the oil and gas business reality in Alberta are fears over skilled workers leaving not just the industry but the province altogether. Forty-one per cent of Alberta employers said that their biggest competition for talent is British Columbia, which led the country in increased business activity last year, and Ontario where 57 per cent of employers saw growth.

The importance of oil to the Canadian economy is indisputable and the effects of the industry’s collapse is not just contained within Alberta’s borders. Overall, 38 per cent of Salary Guide respondents in Alberta and beyond said the downturn impacted their activities. One-in-five said they have delayed projects and 17 per cent plan to do the same in 2017.    

“The challenges in Alberta are obviously severe, however, we’re seeing the same smart push for stability as in other sectors,” added O’Grady. “Employers are fixated on business-critical activities and most hiring in oil and gas has been for contract and temporary positions, which is all about flexibility. Rather encouragingly, 41 per cent of oil and gas employers believe business will rise in 2017 and I don’t know if there’s another sector that’s as ready to respond to the market as they are.” 

Employers admit weakness in the face of skills shortages

Employers may be insulating themselves against potential risks however, some have left themselves vulnerable in areas such as compensation packages, career path opportunities for employees and a lack of knowledge and expertise when it comes to hiring.          

Job-seekers say the top benefit they want from an employer is career progression. Employers in contrast said they push salary as a top enticement, however, once a candidate is hired, a different story emerges. When asked about how existing employees are compensated, just half of respondents (52 per cent) are certain their people are being fairly-paid. Simultaneously, half of employee respondents said they don’t believe their salary reflects industry standard rates.

When employers successfully get candidates through the door, only a relatively small proportion of hiring managers have the skills required to assess them for the position. Only one-third of (32 per cent) of employers rate themselves as experts in the most recent interview techniques and most spend just one day or less reviewing resumes and assessing a candidate’s overall fit.

“We’re seeing an unfortunately high proportion of employers who believe Canada’s skills shortage has made hiring very difficult and simultaneously admit they could be underpaying existing staff,” said O’Grady. “Couple this with the fact that employers are ill-equipped to effectively recruit people and the potential for serious problems emerges. We highly recommend closing these gaps by zeroing-in on salary expectations and embracing the career development opportunities employees crave. It’s also time for employers to build their recruitment strategies to insulate themselves against risk in 2017 and beyond.” 

Additional findings from the 2017 Hays Salary Guide
  • Forty-one per cent of Canadian employers are actively hiring new graduates, which is up six points from last year
  • Employers believe that lack of training is to blame for the country’s skills shortage yet only two per cent of employers have added training to their employee offering
  • At 40 per cent, British Columbia leads the country in employers who believe Canada’s economy will strengthen in 2017. This is followed by Quebec (39 per cent) and Ontario (33 per cent)
  • Nearly half (48 per cent) of Alberta employers made staff cuts in 2016 but 57 per cent said that their headcount will remain stable in 2017
  • Employers are most concerned with mid-level and executive staff turnover. To that end, one-third are considering performance bonuses and a quarter may adjust base salaries for executives.

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