Effective compensation programs are designed to support the organization in attracting and retaining high-calibre talent. Effective compensation strategies balance internal equity, external market, and ease of administration. It thinks about ‘total compensation’ and considers factors beyond salary to reward and retain employees. These may include benefits such as health coverage, paid time off, and/or retirement benefits; as well as non-quantifiable factors such as culture, recognition, flexible work arrangements and/or development opportunities. Research consistently indicates that non-salary compensation is extremely vital to the engagement and satisfaction of employees.
The following section provides guidelines on what to consider when developing your organization’s compensation strategy.
If you have additional questions or concerns, please consult your Engagement Partner.
COMPENSATION STRATEGY
Must:
- Articulate a compensation strategy and framework that ensures employees get paid for their services. A good compensation strategy balances internal equity, external market, as well as ease of administration and ensures transparency and equity within the workplace.
Best Practice:
- As they grow in size and complexity, organizations will often hire an external consultant to conduct a compensation review. A compensation review considers how similar positions are compensated in the marketplace and helps guide the senior leadership in developing a compensation strategy that reflects organizational values and resource availability.
- Organizations will conduct regular reviews and update of their compensation strategy to reflect changes in the market to ensure they maintain their competitive edge.
SALARY
SALARY DETERMINATION
Must:
- Establish practices and/or policies that ensure pay equity and transparency.
Best Practice:
- Compare market rates for similar roles to determine a basic salary range for roles.
- When conducting your market comparison, select other not-for-profit organizations to compare salaries. Roles in the health authorities have larger budgets and are often compensated at a higher rate than like roles in not-for-profit organizations.
Consider:
- When determining a starting salary for an employee, consider the years of experience and training they bring to the role.
- Reviewing the salaries of other positions in your organization to ensure that there are justifiable differences in starting salaries that relate to differences in the roles. The differences in salaries should reflect differences in the level of skill, effort, responsibility, and risk required.
- Some organizations start with a lower salary and offer a 5% salary increase upon successful completion of the probation period.
SALARY PROGRESSION
Must:
- Establish practices and/or policies that outline the mechanisms for salary progression.
Best Practice:
- More and more workplaces are moving away from cost-of-living increases and are attaching salary increases to performance on the job. Based on the size of the potential salary increase on an effective evaluation of an employee’s competence, capacity and meritorious performance in the workplace.
- Create a policy that outlines your organization’s practices regarding salary progression. For instance, the policy could state that salary increases are based on performance in the position and budget availability.
- Indicate that funding for pay increases is reviewed annually by the organization’s board of directors and is approved based on the organization’s ability to pay for increases.
Consider:
- At minimum, allow for a cost-of-living increase (COLA) to be applied every year.
HEALTH BENEFITS
Must:
- Consider options for supporting the health and wellness of your staff.
Best Practice:
- In organizations that can afford it, and whose size of staff team allows, they will invest in a group health benefits plan for their employees.
- In lieu of a group health benefits plan, other organizations offer health and wellness pay. Health and wellness pay may be an additional 5 to 10% of their salary or an annual amount intended to be used to support employees seeking the health supports they need. With this additional funding, employees could pay for prescriptions, glasses, physiotherapy appointments and other health benefits traditionally covered under a group health benefits plan. Employees may be required to apply for this funding by submitting receipts for services used, and/or these entitlements are added to their regular pay cheque.
Consider:
- Prioritizing the health of your employees and identifying ways to support their well-being.
PENSION PLAN
Consider:
- A group pension plan or RRSP contributions are benefits that larger organizations usually include in their total compensation plan for employees.
- Small organizations may not be able to afford nor have the size of staff to make a group pension plan feasible.
- An RRSP contribution for the most senior manager(s) of an organization may be part of their total compensation package.
PAID TIME OFF
Must:
- At minimum, organizations must align their internal policies and practices to the Employment Standards Act.
- Vacation Time:
- The Employment Standards Act states that full-time employees are eligible for a minimum of two (2) weeks of paid vacation every year.
- Statutory Holidays:
- In addition, employees are eligible for paid time off on statutory holidays, or overtime when required to work during a statutory holiday.
Best Practice:
- Vacation Time:
- Most workplaces create a paid time off policy that incentivizes long-term engagement by increasing paid vacation entitlements for continuous years of service.
- For example, some workplaces have a policy that states that every full-time employee gains an extra week of holiday every five (5) years, up to a maximum of five (5) weeks of vacation.
- Most workplaces create a paid time off policy that incentivizes long-term engagement by increasing paid vacation entitlements for continuous years of service.
- Statutory Holidays:
- While commonly recognized, Easter Monday and Boxing Day are not statutory holidays. Many workplaces treat these two days like statutory holidays and give employees the time off.
- Similarly, the National Day for the Truth and Reconciliation currently only applies to federally regulated public and private sectors. While employers that are governed by BC’s Employment Standards Act are not required to observe the National Day for Truth and Reconciliation, employers have the choice to honour the new statutory holiday.
EDI Best Practices:
- In accordance with the Employment Standards Act, employees may substitute another day off for a statutory holiday if the employer and employee agree to the substitution. Employees affected by the substitution have the same rights and their employer has the same duties (e.g., statutory holiday pay) as if the other day were a statutory holiday. Employers are required to retain records of any such agreements with employees for at least 4 years.
- Some workplaces, to recognize the diversity of their staff, allow their employees to replace Easter Monday and Boxing Day with another day to celebrate an ethno-cultural event of their choosing. This option is given to employees where the workplace has the option of them working on those two designated days (Easter Monday and Boxing Day).