2013-2014 Compensation Trends Trista Straver, Senior Survey - - PowerPoint PPT Presentation

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2013-2014 Compensation Trends

Trista Straver, Senior Survey Consultant October 17, 2013

1 | ITAC 2013-2014 Compensation Trends

Agenda

• Canadian Market Headlines and Indicators
• Current Hiring Environment
• Expected Workforce Changes
• Turnover and Engagement
• Base Salaries
• Salary Budget Trends
• Pay Increases and Engagement
• Midpoint Adjustments
• Cash Incentive Payments
• Long-term Incentive Awards

2 | ITAC 2013-2014 Compensation Trends

Technology in the Headlines

• Canadian technology industry…

“Demand for new software tools that enable cloud, social, mobile and data analytics can be expected to remain robust for the foreseeable future,” Raman Chitkara, a PwC partner and global technology industry leader

• Jacob Serebrin, TechVibes, September 6, 2013
• Your talent reality…

“…only one in 10 organizations in Canada is able to meet critical IT needs in emerging areas like mobile, cloud computing, analytics and social media, according to a new IBM

• study. By 2016, we’ll be a full 100,000 tech workers short.”
• “Why Canada is Failing at Tech” (Ryan Holmes, Financial Post, July 10, 2013)
• Engagement on the rise...

“...Companies that managed higher employee engagement relative to their peers throughout the economic downturn are now seeing dramatic, positive impacts to their revenue growth. Engagement levels are on the rise globally... shifting across regions.”

• 2013 Trends in Global Employee Engagement (Aon Employee Engagement Survey)

3 | ITAC 2013-2014 Compensation Trends

Key Canadian Market Indicators

0.5%

• 2.5%

3.2% 2.9% 1.8% 1.5% 2.4% 0.3% 1.8% 2.9% 1.5% 1.5% 6.2% 8.3% 8.0% 7.6% 7.3% 7.3% 3.6% 0.9% 2.6% 3.0% 3.1% 3.0%

• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 2008 2009 2010 2011 2012 2013 GDP Inflation Unemployment Salary Increase

Source: Radford Trends Report – Technology Edition – Q3 2013; IMF World Economic Outlook, 2013

4 | ITAC 2013-2014 Compensation Trends

Global Market Trends

• Canada continues to see less market fluctuation than other

global regions

Country Average Voluntary Turnover Aggressive Hiring* Expected Workforce Increasing* Average 2013 Overall Salary Increase Budget (Diluted) Argentina 8.5% 1.5% 12.9% 18.8% Brazil 10.2% 4.4% 21.1% 7.8% Canada 8.6% 3.7% 17.2% 3.0% China 11.9% 9.4% 30.5% 8.4% India 12.4% 11.2% 38.4% 10.8% Russia 8.4% 3.1% 19.2% 8.1% United Kingdom 12.4% 5.2% 26.4% 3.1% United States 11.4% 14.8% 38.7% 3.2%

*Percent of companies responding Source: Radford Trends Report – Technology Edition – Q3 2013

5 | ITAC 2013-2014 Compensation Trends

Current Hiring Environment

• Companies in Canada are increasingly in a “normal” hiring

mode vs. more aggressive hiring in the US

2% 6% 6% 6% 2% 38% 35% 32% 30% 34% 56% 53% 57% 60% 49% 4% 6% 6% 4% 15% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Canada 2010 Canada 2011 Canada 2012 Canada 2013 US 2013 Hiring Freeze Very Selective Normal Aggressive

Source: Radford Trends Report – Technology Edition – Q3 2010 - Q3 2013

6 | ITAC 2013-2014 Compensation Trends

Expected Workforce Changes

Changes in Full-time Workforce 2013 to 2014 Decrease 6.2% Stay About the Same Size 63.5% Increase by up to 5% 10.6% Increase more than 5% up to 10% 3.3% Increase more than 10% 3.2% Unknown 13.1%

• Over the next 12 months, most companies in Canada

expect to add headcount or stay the same size, with 17% expecting to increase their workforce

Source: Radford Trends Report – Technology Edition – Q3 2013

7 | ITAC 2013-2014 Compensation Trends

Historical Turnover

• While involuntary turnover continues to fluctuate, voluntary

turnover in Canada holds steady at approximately 9.0%

9.3% 9.2% 9.8% 9.3% 9.1% 8.6% 6.2% 4.4% 5.8% 8.0% 6.2% 6.8% 15.5% 13.6% 15.6% 17.3% 15.3% 15.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Voluntary Turnover Involuntary Turnover Overall Turnover

Source: Radford Trends Report – Technology Edition – Q1 2010 - Q3 2013

8 | ITAC 2013-2014 Compensation Trends

Voluntary Turnover & Engagement

• Voluntary turnover over the

next 12 months (April 2013 – April 2014)

• 40% of companies in

Canada state some level of concern

• About 60% not concerned
• More likely in Product

Development, Sales and Services than other areas

• 78% do not offer retention

bonuses

Source: Radford Trends Report – Technology Edition – Q2 2013

Top Two Reasons Why Employees Voluntarily Terminate Canada (% of Co) n=181 More pay/better benefits/higher level position 91.7% Career change/return to school 51.4% Issues with the company, management or peers/low job satisfaction 32.0% Relocation out of area/retirement 9.9% Other 14.9%

9 | ITAC 2013-2014 Compensation Trends

Canadian Base Salary Budget Trends

• Overall salary budgets are stable, at around 3% since the

2009 downturn

Source: Radford Trends Report 2010-13 and Radford International Semi-annual Summary of Industry Trends – 2009

2.5% 2.8% 3.1% 3.2% 3.2% 0.9% 2.6% 3.0% 3.1% 3.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Q3 09 Q3 10 Q3 11 Q3 12 Q3 13 Canada (Undiluted Avg) Canada (Diluted Avg)

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Canada Merit and Overall Increases

Average Diluted Salary Increase 2013 Budget 2013 Actual 2014 Budget Merit Overall Merit Overall Merit Overall Overall Population 2.7% 3.0% 2.6% 2.8% 2.9% 3.2% Sales Population 2.5% 2.7% 2.3% 2.5% 2.8% 3.0% Prior Year/Next Year Action 2013 to 2014 Freeze/Freeze or Exceptions 0.0% Freeze/Increases 6.0% Exceptions/Freeze or Exceptions 0.0% Exceptions/Increases 0.0% Increases/Freeze or Exceptions 0.0% Increases/Increases 94.0%

Source: Radford Trends Report – Technology Edition – Q3 2013

11 | ITAC 2013-2014 Compensation Trends

Pay Increases and Engagement

• Employee population receiving increases
• Over 60% of companies provided more than 90% of employees

with salary increases in 2012 and 2013

• Companies typically do not limit receipt of salary increases to

high performers or critical functional areas

• Increase budget for promotions
• Only 33% of companies report using a separate salary increase

budget specifically for promotions

• 18% do not track promotional increases vs. a budget
• Nearly half of companies manage promotional increases within

the overall salary increase budget

Source: Radford Trends Report, Q3 2013 Global Edition Hot Topics Survey

12 | ITAC 2013-2014 Compensation Trends

Canada Midpoint Adjustments

• Nearly 50% of companies plan to adjust salary range

midpoints within the next 12 months

Level % of Cos. With Midpoint Adjusted in 2013 Actual Midpoint Last 12 months Forecast Midpoint Next 12 months Executives 37% 2.9% 2.7% Management 49% 2.6% 2.5% Individual Contributor 51% 2.8% 2.5% Support 45% 2.7% 2.5%

Source: Radford Global Technology Survey - Practices Report – July 2013

13 | ITAC 2013-2014 Compensation Trends

Cash Incentive Payout Levels

• Companies in Canada

are paying similar bonuses in 2013 vs. those paid in 2012

• 92% of companies

expect to pay bonuses this year

• For two consecutive

years, fewer companies report “Larger” expected payouts in the current year vs. last year

73% 11% 16%

Formal Bonus Payments CFY vs. LFY

Similar Larger Smaller

Source: Radford Global Technology Survey - Practices Report – July 2013

14 | ITAC 2013-2014 Compensation Trends

Total Variable Bonus/Incentive Payments

• Companies headquartered in Canada allocate 1% of

revenues to variable bonus/incentive payments

• Data for Canada is similar to global totals for companies

headquartered in Canada

Canada Employees: Canada total variable bonus/incentive compensation payments as a percentage of: 50th 75th Canada base payroll 8.9% 11.0% Global revenue 0.9% 1.5% Global operating income 10.3% 19.9%

Source: Radford Global Technology Survey - Practices Report – July 2013

15 | ITAC 2013-2014 Compensation Trends 55% 55% 55% 55% 55% 65% 45% 45% 45% 45% 45% 35% 0% 20% 40% 60% 80% 100% Entry IC (P1) Career IC (P3)

• Sr. IC (P5)

Manager (M3) Director (M5) VP (E7)

For Companies using a Mix of Individual and Non-Individual, the Average Weighting by Level

100% Corporate/BU % Individual 19% 19% 23% 23% 28% 30% 42% 50% 46% 46% 44% 48% 38% 31% 31% 31% 28% 22% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% VP (E7) Director (M5) Manager (M3)

• Sr. IC (P5)

Career IC (P3) Entry IC (P1)

Formal STI Weighting by Level

100% Corporate/BU 100% Individual Mix

• Roughly 45% of companies rely solely on individual

performance goals at all levels, with a mix of corporate and individual goals gaining favor as employee levels rise

Incentive Awards and Engagement

Source: Radford Flash Survey of Large Technology Companies, Q2 2013

16 | ITAC 2013-2014 Compensation Trends

Long-term Incentive Awards

• 87% of public companies have a long-term incentive plan

for Canadian employees

• Restricted Stock/Units have replaced Stock Options as the most

prevalent type of plan (82% vs. 61%), with RSU’s being the most common

• More than 50% of companies have an Employee Stock Purchase

Plan

• Employee eligibility typically extends to all Management and

Professional levels (50% at lower levels), but drops off to 40% for Support levels

Source: Radford Global Technology Survey - Practices Report – July 2013

17 | ITAC 2013-2014 Compensation Trends

Long-term Incentive Awards and Engagement

• Participation in equity programs
• Only 20% of employees actually receive equity grants
• Vesting schedules
• Vesting schedules are typically 3 to 4 years for RSUs and Stock

Options, respectively

• Annual vesting is most common

Source: Radford Global Technology Survey - Practices Report – July 2013

18 | ITAC 2013-2014 Compensation Trends

Summary and Questions

• Canadian market indicators are stable, while there is

aggressive activity in the US, and some uncertainty in global regions

• A primary driver of voluntary turnover (an indicator of

engagement) is pay/benefits/job level

• Competitive pay practices are key in the areas of:
• Salary levels and increases
• Promotional opportunities
• Incentive payout drivers and levels
• Form of equity, eligibility, and receipt

19 | ITAC 2013-2014 Compensation Trends

Name Email Phone

• Trista Straver, Radford

trista.straver@radford.com 604.362.8355

Thank You!