Employee Compensation

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Employee compensation plays a large part in retention and encompasses everything from base wages to other benefits you provide to your employees.  

Wage Increases

The law does not require you to grant salary increases, except to comply with the minimum wage regulations. Beyond that, raises are at your discretion. However, salary increases are a good way to retain employees and remain competitive.

If a company decides to give salary increases, it’s important to establish the basis for these increases and to ensure employees understand them. There are two salary-setting criteria most often used by companies:

1- Cost of living

Adjusting salary increases to the cost of living allows your employees to retain their buying power and keeps your business competitive. Rising prices mean that a $20/h salary in 2023 does not afford an employee the same lifestyle as when that same salary was granted in 2016. The consumer price index (CPI) is a good indicator to use. 

2- Performance

This may involve the employee’s individual performance, the company’s performance, or a combination of both.

When salary increases are based on performance, it is important to establish clear objectives. Employees must know what they have to do, individually or collectively, to earn a salary increase. Individual performance as a measure goes hand in hand with the implementation of a performance evaluation system. That said, you do not have to set the amount or percentage of the increase in advance. 

It is possible that, for all kinds of reasons, the company’s performance does not meet expectations meaning you can’t increase salaries as much as planned or even at all. You must always keep the company’s financial capacity in mind: do not increase salaries more than your budget will allow.


A bonus is a lump sum paid to an employee and can be an alternative or supplement to a salary increase. Unlike salary increases, which are often considered a right by employees, bonuses are largely accepted as being at the employer’s full discretion. 

What’s more, because it does not affect your employees’ base pay, bonuses are a good way to control the size of your payroll. Over time, bonuses cost a business less than salary increases. 

Total compensation: other forms of recognition

To attract and retain the best employees, you need to think about everything you have to offer as an employer – the total compensation. We usually think about benefits like bonuses, group insurance, and retirement savings programs. But don’t be afraid to venture off the beaten path. Here are a few examples:

  • Public transit fees reimbursement
  • Training or study cost reimbursement
  • Advancement opportunities
  • Referral bonus for new employees
  • Discounted gym membership/access to a gym in the workplace
  • Flexible work arrangements
  • On-site daycare
  • Services offered at the workplace (agreement with a garage to perform tire changes onsite, or with a laundry service to collect and return laundry at the workplace)
  • Team and/or family activities (golf tournaments, BBQs, Christmas parties)

The total compensation should be listed and detailed in a compensation policy that is understood by and accessible to all employees. By establishing and effectively communicating your compensation policy, you send a message to your employees that you have a clear compensation vision within your company. 

Survey your employees

As you can see from the previous section, there are many options for benefits, monetary or not, that you can offer your employees.

A successful benefits offer must be in line with your employees’ needs and interests. For example, if you offer the possibility of working from home but what your employees really need are flexible hours, you will not boost their job satisfaction.

Why not ask employees to tell you what’s most important to them? An organizational survey can give you that kind of insight. Here are five tips for a successful survey: 

  • Clearly communicate the objectives of the survey.
  • Keep individual answers confidential but share the overall results.
  • Follow up with employees after the survey.
  • Be ready to make concrete commitments and share with the employees your timeline for implementing changes.
  • Explain why it is not possible to deliver on some suggestions.

Organizational surveys are also a good opportunity to reinforce the corporate culture.

Why is corporate culture important?

Many employees want more than a job that simply “pays the bills.” More and more, workers need to be proud of what they do and to feel like they are making a significant contribution.

A strong corporate culture becomes an important factor in employee retention. If your employees have a strong feeling of belonging to the company and believe in its values, they will be less inclined to accept an offer from a competitor. Since your employees are your best ambassadors, a good corporate culture also becomes an invaluable tool for attracting talent.