According to a recent survey of hiring managers conducted by Robert Half Canada, 92% say their organization intends to distribute year-end bonuses to their teams. 45% will offer more than in 2022, another 39% plan to hand out a sum that matches 2022′s gift and 8% intend to offer less.

According to Robert Half Canada regional director Sandra Lavoy, the bonus structure reflects the current challenges faced by employers, many of whom are struggling with both economic uncertainty and ongoing staffing challenges. “Most companies are running lean, under-staffed and are challenged with hiring new staff,” she said. “Because the economics have changed, they’re not giving as much as last year or the year before, which is not surprising, but companies are still facing significant hiring challenges.”

Ms. Lavoy recommends those companies that can’t afford to dish out cash this holiday season seek alternative forms of recognition that match their budget. She emphasizes that making an effort can go a long way in retaining staff in what remains a tight labour market. Maximizing the effect of those efforts, according to Ms. Lavoy, requires organizational leaders to work with staff to better understand their priorities and seek an incentive structure that matches employees’ needs with employers’ budgets.

But just because most employers intend to distribute bonuses doesn’t mean that most Canadian workers will receive one, as many only distribute the incentive to specific teams or employees of a certain seniority level.

In 2023, however, Canadians need the financial assistance more than usual. According to a recent study conducted by the National Payroll Institute, the proportion of financially stressed Canadians jumped 20% from 2022, and now includes 37% of working adults.

“We’ve been monitoring this data for over a decade, and we’ve never seen an increase of 20% in a single year,” said Peter Tzanetakis, president of the National Payroll Institute. “What’s changed is the cost of living and the higher interest rates, which are eating up much more significant portions of their income.”

That financial stress, according to the research, may also be costing employers. That’s because 40% of those who are experiencing financial stress say it has a direct impact on their job performance.

“Our research shows that working Canadians spend more than half an hour a day thinking about their finances while at work, which equates to $45-billion in lost productivity, and that’s doubled since 2020,” said Mr. Tzanetakis.

While the elevated stress levels suggest that bonuses will be especially needed in 2023, Mr. Tzanetakis also warns that earning more isn’t always correlated with better financial wellness. In fact, 35% of financially stressed Canadians earn more than $100,000 annually, according to the survey.

That is why he recommends Canadian employers consider developing new programs — or reminding staff of existing programs — that support sound financial management prior to distributing year-end bonuses, such as savings and pension plans that match employee contributions.

“One thing employers can do is encourage their employees to put those bonuses into those savings plans,” he said. “Encouraging them to save through these plans can help alleviate some of that financial stress down the road.”

When it comes to incentivizing staff, studies show that cash is king, especially in the face of ongoing affordability challenges. In a recent survey, Toronto-based employee engagement platform Achievers found that those who feel like they are fairly compensated are 35% more likely to feel a strong sense of belonging at work. In an earlier Achievers survey, 79% of respondents said they are more likely to remain in a job that makes them feel supported and valued.

“If you peel back the onion on what incentivizes performance, cash is one of them, but things like building a strong sense of belonging, having the right benefits, feeling like your manager is there to develop [your career], is all part of the package,” said Achievers’ chief people and culture office, Hannah Yardley. “Those organizations that are just throwing cash at year-end but are not employing other [retention efforts] are not going to facilitate a sustainable sense of belonging,”

Ms. Yardley encourages organizations to seek a more balanced incentive structure that incorporates both monetary and non-monetary rewards and offers recognition in both the short and long-term.

Source: Globe and Mail