What’s likely your biggest expense category — payroll — is suddenly at risk of becoming far more expensive. Wages are on an upward tear. And if your employees haven’t already, it’s only a matter of time before they start asking for more.
Average pay rates in the second quarter of 2007 jumped a startling 5.7% compared with the same period a year earlier, according to Statistics Canada. That’s a stunning change from a modest 1.5% rise in the 12 months ending in the second quarter of 2005. Wage hikes accelerated rapidly as the unemployment rate drifted down towards the 6% mark that economists consider full employment in Canada, the point at which competition for workers heats up dramatically. That competition stiffened in October as the rate slid to just 5.8%, the lowest since 1974.
“The labour market in Canada is very tight, particularly for highly skilled workers, but it’s trickling down the entire job spectrum,” says Craig Alexander, deputy chief economist at TD Bank Financial Group. Unemployment has fallen as a generally strong economy — especially in the West, and above all in Alberta — has pumped out 346,000 net new jobs since January, a five-year high. Even employers in slower-growing Central and Eastern Canada face pressure to boost wages or lose staff to the booming West. This pressure is escalating as the oldest baby boomers start to retire, reducing the labour force’s growth rate. “I think it’s going to be a competitive landscape for workers in the years ahead as far as the eye can see,” says Alexander.
But just because wages are flying high doesn’t mean you have no choice but to award massive pay hikes. If you can make your workplace appealing in other ways, you should be able to keep your employees happy with somewhat smaller increases.
It isn’t all about money — really. A 2006 survey of working Canadians by Toronto-based online recruitment firm Workopolis.com concluded that the top three drivers of job satisfaction, in order, are workplace culture, the ability to use your skills and opportunities to learn on the job. Compensation ranked ninth among the 11 factors measured. “People don’t leave for the money,” says Workopolis president Patrick Sullivan.
So, how do you create a workplace no one wants to leave? Sharing information about your firm and asking for — and acting on — staff input go a long way. Sullivan does so by holding quarterly town-hall meetings with employees at which he reveals confidential information such as sales, profit and Web-traffic figures, and his staff suggest changes they’d like to see. But this kind of give and take must be heartfelt. “If you’re going to retain employees by creating stronger relationships, you can’t be going through the motions,” warns Claude Balthazard, Toronto-based director of HR excellence at the Human Resources Professionals Association of Ontario. He has seen leaders motivate staff with everything from words of encouragement to gift certificates to stock options, but says none of these work unless they are thoughtful, sincere gestures.
Another key to retaining staff is to promote people keen for new challenges. Where that’s not possible, you can at least give them added responsibilities or a leadership role in interesting projects. And to give your team a chance to learn on the job, you can offer inexpensive workshops or lunch-and-learn seminars.
What’s more, you can turn in-house education into an employee benefit by covering non-workplace topics such as nutrition or personal finance. Some outside companies offer such programs free in return for the chance to speak to your staff in person. Royal Bank of Canada, for example, will send a representative to your office for lunch-and-learn sessions and one-on-one talks about personal banking, investing and mortgages. Another affordable way to offer employee benefits that go beyond the usual ones is to make your health-care package flexible by, for instance, allowing people without dependants to divert some of their premiums into gym memberships.
One approach widely recommended by HR consultants is to cater to the special needs of staff with families. “For some people, offering flexibility in their scheduling could offset some compensation,” says Graham Lowe, president of The Graham Lowe Group Inc., a workplace research and consulting firm in Kelowna, B.C. If possible, you should let people work flexible hours or from home, even if just occasionally. “But you need to be careful,” cautions Lowe. “You don’t want to play favourites.” He suggests setting general policies for letting people balance work and life, then negotiating the details case by case.
However you respond to the challenge of soaring wages, it’s one you’ll have to wrestle with for years to come. The good news is that with a little creativity — and spurred on by fear of losing staff — you can create a rich place to work without an equally rich wage bill.
Look for more than prospects. You should go to events also to meet two other types of people: potential referral allies and people representing products and services you can later refer to your alliances and clients. Introduce people. Whenever you identify someone whom you think should meet someone else, walk them over and make a thorough introduction. Doing so serves both parties and, eventually, you. Treat networking as a process. There is a cumulative effect that occurs when you go to several meetings of the same group. While it’s okay to have high expectations going into a meeting, it’s important to understand that the real results may come only after several.