HR Professional - October/November 2008 - (Page 22)

C O M P E N S AT I O N BY K AREN DEBORTOLI AND TERENCE YUEN INFLUENCE OF HR GROWING IN THE FACE OF WORKFORCE CHALLENGES recent survey by Watson Wyatt Worldwide and the Conference Board of Canada reveals that Canadian organizations face serious attraction and retention challenges resulting from a tightening labour market and an aging workforce. The fifth annual Survey on Pension Risk asked chief financial officers and senior human resources executives about their views on, and actions related to, various financial and HR management issues affecting their defined benefit (DB) and defined contribution (DC) pension plans. A 58 per cent believe HR and ﬁnancial functions will play equally important roles in plan design decisions. Optimistic outlook Following trends from last year’s survey, respondents this year continue to be increasingly optimistic about the long-term outlook of DB pension plans ‘‘ Attraction and retention are becoming significant challenges for many companies. in Canada. Higher funded ratios and diminishing funding deﬁcits in many pension plans lessen concerns over a long-lasting pension crisis in Canada, although this optimism may be contingent on the performance of the stock market and long-term bond yields. Despite the improved long-term outlook, coping with the level and volatility of DB pension costs continues to be a key challenge. This means CFOs are still highly involved in pension plan design decisions. But many respondents believe the inﬂuence of CFOs will decline over the coming years, thereby allowing VPs of HR to play a more important role in these decisions. While half of respondents indicated that ﬁnancial considerations currently outweigh HR issues when making plan design decisions, only 30 per cent think this will be the case in ﬁve years. Instead, ’’ Talent management The expected larger role of HR functions is likely a reﬂection of the tightness in the Canadian labour market in recent years. With the unemployment rate staying at a historically low level and wages growing at an accelerating pace in 2007, attraction and retention is becoming a signiﬁcant challenge for many companies. Seventy per cent of respondents are very concerned about attracting highly skilled individuals, and 76 per cent are very concerned about retaining high-performing employees. With the peak of the baby boomers approaching retirement age in the next decade, it is important to manage exit patterns to prevent the sudden loss of a large number of experienced workers. Yet only 18 per cent of respondents are very concerned about ensuring that employees exit their organization in an orderly pattern. Another way to manage the ﬂow of retirements, while addressing labour shortages, is through a phased retirement program. While only seven per cent of respondents currently have such programs in place, almost 20 per cent plan to implement them in the future. Plan design While managing ﬁnancial risks is critical for a company’s balance sheet, using effective plan design to attract and retain highly skilled and highperforming employees is equally important. Only 18 per cent of respondents view cash as superior to any form of pension arrangement as a way to attract highly skilled employees. For almost 30 per cent, DB plans are the most valuable for attracting highly skilled individuals, compared with 19 per cent who selected DC plans, 11 per cent who selected hybrid plans and 25 per cent who stated DB and DC plans are equally persuasive. Interestingly, when asked which type of retirement savings mechanism is the most valuable or HR P R OF E S S I ON A L 22 O c t o b e r / N o v e m b e r 2 0 0 8

Table of Contents Feed for the Digital Edition of HR Professional - October/November 2008

HR Professional - October/November 2008 Contents Editor's Letter Contributors Leadership Matters Upfront Legal Compensation Human Capital Talent Management Murphy’s Law Wise Counsel On Message HR 101 Interview with Joseph McCool Off the Shelf The Last Word

HR Professional - October/November 2008

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