Canada didn’t experience the kind of “Great Resignation” that hit the United States during the pandemic, when some four million Americans quit their jobs in the month of January 2021 alone. Nonetheless, the Canadian labour market has still been affected by an historic rise in job vacancies: these days, more than half of business owners say that they are having trouble finding the staff they need.
While the pandemic may have exacerbated the problem, another factor has been fuelling this phenomenon as well: workers born between 1945 and 1965, i.e., the “baby boom” generation, have been retiring. Fortunately, some employers are finding ways of adapting to the situation.
Overview of some promising strategies.
Think beyond wages
The promise of a better salary is the reason most often cited by workers who decide to change jobs. However, statistics show that the labour shortage is also affecting sectors where pay rates have gone up significantly.
So a competitive salary seems like a necessity… but it’s not the whole story. That’s why companies are increasingly turning to total compensation strategies that cover all the different facets of their employees’ work experience: not just wages, but also indirect compensation (primarily employee benefits and expenses reimbursed by the employer) as well as non-monetary compensation, which includes the work environment, recognition of employee contributions, development opportunities and working conditions.
A number of new solutions have appeared in recent years in the area of indirect financial benefits. Here are three out of many:
Pension plans geared to company size
Retirement savings options have diversified a great deal in the past twenty-five years, especially in response to the needs of small and medium-sized businesses. In Quebec, for example, the Voluntary Retirement Savings Plan (VRSP) was introduced a few years ago and is actually mandatory for all companies with more than five employees. But there are also solutions for any Canadian company that would like to contribute to employee retirement savings without necessarily taking on a huge administrative burden. Options to consider include group registered retirement savings plans (RRSPs), pooled registered pension plans (PRPPs) and group tax-free savings accounts (TFSAs).
Custom incentive plans
There are also some interesting ways of aligning the financial interests of employees with those of the company. For one thing, a performance-related component could be integrated with the compensation package, with a focus on individual or corporate performance. As well, recent years have seen the development of a bonus to reward employees for making recommendations that result in new hires.
Deferred profit-sharing plans (DPSPs) are also popular with SMBs. These plans allow employers to share company profits with their employees. The employees don’t pay any tax on the employer contributions to their DPSPs, and the investment returns are tax-sheltered as they grow. For this reason, DPSPs are often seen as a complement to traditional pension plans.
Larger companies often turn to stock options as a component of compensation. Stock options allow the company to offer employees an opportunity to buy company shares for a set price at a future time, and they can provide certain tax benefits.
Finally, another possible solution is the long-term incentive plan (LTIP). An LTIP is an agreement under which the company rewards a key employee with an amount in shares or cash based on the achievement of specific results within a set period. The advantage for the employer is offering a strong performance incentive where the payment is conditional on achieving the desired objectives. The advantage for the employee is participating in the company’s growth in a more dynamic way than with a traditional equity plan.
More comprehensive coverage solutions
Increasingly, companies are offering their employees “wellness” solutions in the context of a comprehensive well-being and financial security package. These solutions generally draw on a wide range of tools: health insurance, prescription drug insurance, dental insurance, life insurance, disability insurance, travel insurance, and more. Coverage is now also available for employers who wish to support staff members who are undergoing a gender transition.
A growing number of companies are also exploring new solutions on the non-monetary side of things.
Flexible working hours and conditions
In the wake of the pandemic, the option for employees to have flexible conditions for working alternately from home and in the office has become both the norm and a headache for employers. However, there is now scheduling software that can accommodate the changing availability of staff while increasing the company’s productivity. This is a new challenge, but it is part of an issue that has been around for many years: work-life balance.
Similarly, the “workcation,” i.e. the possibility for an employee to combine a long stay in another country with remote work, is also growing in popularity. Workcations do raise certain issues, though, in terms of occupational health and safety and cyber security.
In-house career development
Training current employees so that they can take on greater responsibility is, for many businesses, an effective way of offsetting the lack of external applicants. Employees who are interested in career advancement can thus grow within the company, and this can be a major driver of retention.
Transparency and recognition
A company’s employees are likely to feel more motivated when they know exactly where the company is headed, and when their contributions are recognized. Maintaining transparent employee communications and establishing effective performance measurements can make it easier for an employer to retain staff.
Recruitment and orientation of immigrant employees
An increasing number of companies are offsetting the labour shortage on the local market by recruiting new arrivals from elsewhere. This may sometimes require new professional, social and personal orientation programs, but there could also be unexpected advantages for all staff: indeed, studies show that employees are happy when they share fundamental values with their employers, especially in terms of diversity and inclusion.
If you are an employer, many of the solutions included here could be implemented quickly, given the appropriate guidance. Don’t hesitate to discuss them with your advisor. He or she will be able to provide you with information and direct you to the resources best suited to your needs.
The following sources were used to prepare this article.
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