2024 Compensation Planning with Luc Lapalme | E111

What Mercer's 2024 Compensation Report can tell business owners.

In today’s episode of the FPCBO Jason talks to Luc Lapalme, Senior Principal at Mercer. It is a very large consulting company that consults on various aspects of business. Today he will be discussing about their compensation planning survey, and this is a survey about employers and what they are looking to accomplish or what they are looking to do when it comes to salaries for staff in the coming year.

Episode Highlights:

  • 01.15: Luc explains that he specializes in compensation management and advises clients on various aspects of compensation programs, including salary structures and incentive design for both executives and salaried employees.

  • 02.23: Mercer is a large HR consulting firm and operate worldwide and offer a wide range of consulting services for organizations. They help businesses with health benefits, managing money like pension plans, and HR matters like employee engagement and compensation.

  • 03.25: Market cooling and increasing transparency are the two main findings from the Compensation Planning Survey. These findings indicate that organisations are adjusting their compensation strategies in response to changing market conditions and a desire for greater transparency in their compensation practices.

  • 04.30: Jason mentions that in recent years, there has been a realization among many that simply matching salary increases to inflation may not be sufficient, especially when inflation rates are high.

  • 05.24: Jason raises the question of whether factors beyond inflation, such as labour market dynamics, are influencing compensation decisions currently. 

  • 07.18: Luc underscores that organizations are not solely relying on salary increases to attract and retain talent. Instead, they are looking at ways to allocate their compensation budgets strategically.

  • 08.02: Jason seeks Luc's perspective on whether the survey captures any evidence of impact of expected inflation on compensation decisions and whether it has contributed to the ongoing inflationary pressures.

  • 10.03: Luc mentions that organizations are increasingly providing off-cycle adjustments to their employees, which are not officially included in the budget forecasts. These off-cycle adjustments are often provided to employees at higher risk or those due for promotions.

  • 12.06: Luc notes that certain organizations are targeting the 75th percentile of the market to ensure they are highly competitive with specific roles. This highlights the efforts being made by organizations to attract and retain talent in a rapidly evolving work environment.

  • 17.05: Luc highlights that the implementation of pay transparency should be considered in the context of an organization's maturity in terms of HR and compensation practices.

  • 18.02: Jason anticipates that national organizations may choose to implement HR policies related to listing salary bands in multiple states or provinces to maintain consistency, rather than having different policies for different regions.

  • 20.40: Luc's comments underscore that the survey data is a piece of the puzzle, and the final budget decisions should align with an organization's unique circumstances and financial considerations.

  • 21.48: By focusing on employee engagement and the employee experience, HR managers can enhance job satisfaction and retention, even in situations with tighter budgets, says Luc. 

3 Key Points:

  1. Luc highlights the impact of the great resignation during the pandemic, which led to increased employee turnover and job changes. However, he notes that attrition rates have decreased, with one study showing a drop from 21% to 18%, indicating more stable employment.

  2. Luc provides an example of how changes in minimum wage, such as the increase in Ontario's minimum wage, can create ripple effects and competitive pressures in the labour market for more competitive pay.

  3. Jason shares an example from the accounting field in the US, where large accounting firms in cities like New York and Washington, DC, began recruiting talent from across the country. This resulted in some smaller to mid-sized cities experiencing reduced operations or becoming less attractive for talent acquisition due to the significantly higher salaries offered in larger cities.

Tweetable Quotes:

  • “The Compensation survey is conducted annually to gather information from participating organizations. Its primary purpose is to understand the organizations' intentions regarding salary adjustments, particularly for the year 2024” - Luc.

  • “The differing salary forecasts between Canada and the United States can be attributed to various socioeconomic factors.” - Luc

  • “While organizations are becoming more transparent about salary bands, they are generally not disclosing specific employee salary details or bonus information due to privacy concerns.” - Luc

Resources Mentioned:

FPCBOJason PereiraFinancial Planning