The Voice - Summer 2021 - 41

ONTARIO ENGINEERING ACADEMY
The COVID-19 pandemic has created different
outcomes for industries. High Tech, Mining and
Bio Sciences have been thriving while Retail
and Energy have been challenged through this
period of crisis response.
NATIONAL
Pre COVID-19
Post COVID-19
Merit
Increase
Total
Increase
Actual average data
including zeros
Data from
Mercer Canada
Compensation
Planning Survey
April 2020 Edition
Merit
Increase
Total
Increase
1.5%
1.7%
2.3%
2.3%
RETAIL &
WHOLESALE
2.4%
2.5%
Merit
Increase
Total
Increase
2.5%
2.6%
Merit
Increase
Total
Increase
COVID-19 is affecting INDUSTRIES
in different ways - there are highs and lows
ENERGY
1.8%
1.6%
OTHER
MANUFACTURING
2.8%
2.8%
Merit
2.7%
2.8%
Increase
Total
Increase
2.1%
2.1%
Merit
Increase
Total
Increase
SERVICES - NON
FINANCIAL
1.9%
2.0%
2.5%
2.7%
HIGH TECH
2.4%
2.4%
2.7%
2.9%
and by March many provinces where on mandated quarantine.
This timing coincides with the period in which the majority of
companies typically deliver raises and bonuses based on decisions
and performances from 2019. Nearly 70% of organizations went
through with merit increases as planned, and nearly 80% of
bonuses were paid as originally planned.
In March 2021, when Mercer asked Canadian employers how
their increase budget for 2021 compared to years prior to 2020,
50% said their increase budget was similar or larger.
Salary Increase Budgets
Budgets for salary increases from one year to the next are
developed by applying the average increase to the total salary
budget for all employees. In application, some employees may
receive more than the average increase and some may receive
less. Not all companies increase salaries every year and values
are based on a combination of many factors, including some of the
following considerations:
* The economic situation of the company
* The competitive pay positioning of the critical jobs needed to
reinvent and thrive in the future
* Any planned hiring or reduction in workforce
* The differentiation strategy of the company
* The broader employee value proposition-what employees want
and need and what they value
* The desired future state of an organization and the strategy to
get there-the investments in people that need to be made now
in order to drive employee and business success in 2021 and
beyond
Merit Increase Budgets
A merit increase budget is a portion of the total salary
increase budget that is typically reserved to reward individual
performance. Typically, the more successful an employee's
performance, the higher the expected merit increase.
In 2020, the timing of salary increases and bonus distributions
played a role in compensation distribution decisions. Many
companies proceeded with planned distributions early in March
without the benefit of a clear understanding of the impact that
COVID-19 was about to have. Companies that had the time to
pause and adjust decisions following the March quarantines
tended to adjust increases downwards or froze salaries all
together.
The chart above shows that energy and retail sectors made
more drastic decisions than other industries after the country
became aware of the impact of COVID-19.
What does compensation look like
in 2021?
Remember that compensation decisions are influenced by both
the company and employee's performance during the previous
year. Yet, given the variety of impact to organizations based on
June 2021 THE VOICE
41
The Voice - Summer 2021

Table of Contents for the Digital Edition of The Voice - Summer 2021
