• Retention

  January 17, 2024

Compensation Philosophy & Benchmarking Wages

Determining what to pay your employees is a critical decision for your business. Benchmarking your wages gives you a strategic perspective that aligns with your business goals, needs and direction.

4 min read

Benchmarking Wages

Deciding what to pay your employees including seasonal and permanent is important for retaining staff, especially when good candidates are difficult to find, business margins are tight, and employee turnover is rising in tourism and hospitality. All of these can raise challenges for your business, but when employers focus and refine their compensation philosophy and strategy, this can lead to higher staff retention and stronger workplace morale.

Let us discuss four options to benchmark wages that help you frame your compensation philosophy and strategy.

Minimum Wage:

  • Legislated by the Government as the minimum or lowest wage allowed by the Employment Standards Act in BC.
  • Is the same across the province despite the differences in the Cost of Living in every region.
  • Increases annually on June 1 to account for the Cost of Living increases.

Competitive Wage:

  •  A salary that is equal to or above the industry standard for similar jobs such as cooking, and housekeeping in the region, and is adequate to hire and retain high-quality employees.
  • Is based on the regional market data for specific skill sets.
  • You can check out go2HR’s Employment Tracker for more insight into wages in Tourism and hospitality. The average wage in the industry reached $28 per hour in August 2023.
  • Consider participating in regional wage surveys to give you further region-specific benchmarks.

Leading the Market Wage:

  • Committed to paying more than your competitors and leading the local market for wages.
  • Desire to recruit and retain the best talent available.
  • Customer service and stability in staff will also benefit your clients.

Living wage:

  • Represents the lowest wage needed to provide for basic needs and participate in the regional community.
  • Draws on Community Data (such as housing costs and groceries) across the province and can vary between communities. This is calculated by Livingwageforfamilies.ca.
  • Generally leads to better workplace culture and morale, with higher customer satisfaction and employee retention.

As of June 1, 2023, BC’s Minimum Wage is $16.75 per hour, while the Living Wage varies across the province from a low of $20.64 per hour in Dawson Creek to a high of $26.51 per hour in Clayoquot Sound. The current Living Wage is from 23% to 58% which is higher than the minimum wage in BC. To give you some regional perspective, in Vancouver, the Living Wage is at $25.69, Kelowna is at $24.60, Golden is at $25.78, and Prince George is at $22.09.

Since Competitive Wages and the Leading Market Wage are both skillset-specific and vary by region, it is not easy to generalize the salaries over a wide area or sample size.

Where to position yourself in the market?

How you decide to position yourself in the market and determine your compensation philosophy depends on how you value the different wage benchmarks. To help you decide, here are some pros and cons for each:

 

Wage Philosophy Pro’s Con’s
Minimum Wage
  • budget-friendly
  • allows room for future wage increases (wages, incentives, bonuses)
  • works best where job skills are simple and easily trained

 

  • unlikely to be competitive in the marketplace beyond entry-level roles
  • it might be hard to recruit people with experience
  • staff turnover and training are expected

 

Competitive Wage
  • possible to recruit new workers with a higher skill, and requires less training
  • lower staff turnover rates
  • higher level of customer service

 

  • it can be difficult to pinpoint specific wages for specific positions in your region
  • requires a higher budget for wages

 

Market Leading Wage
  • will have the advantage in recruitment and retention over your local competitors
  • should help deliver market-leading customer service

 

  • is the most difficult to fit into your budget
  • average performers may be making above-average wages

 

Living Wage
  • happier staff generally deliver higher customer service and contribute to a positive work culture
  • longer-term relationships between staff and customers
  • less resources needed for recruitment and training
  • positive community recognition for being a Living Wage employer

 

  • higher wages require higher budgets
  • may not be possible to implement immediately, and may take time with gradual increases
  • the living wage rate is not fixed and will increase outside of your business’s control
  • paying the living wage in your market may not be enough for all positions in your operations

 

 

Compensation Philosophy

A compensation philosophy explains the ‘why’ behind the compensation choices, is a decision unique to your business, and your choice needs to be reasonable and sustainable. Choosing to pay competitively (for example, a Living Wage) can improve your bottom line by limiting your risks in recruitment, retention and staff quality. Both your compensation philosophy and your strategy should be shared with your employees, candidates, and your community.

Here are some samples of compensation philosophy statements:

Sample Minimum Wage Philosophy Statement:

We believe in giving people opportunities to enter our industry, gain new skills and grow their careers while keeping our prices low to be competitive in the marketplace.

Sample Competitive Wage Philosophy Statement:

We are committed to paying competitive wages that allow our employees to grow their careers with us. This provides stability to our operations, our team members and our customers.

Sample Market Leading Philosophy Statement:

We want to attract the best talent available in the marketplace to provide market-leading customer service and to surround our dedicated staff with the highest quality coworkers available.

Sample Living Wage Philosophy Statement:

We are committed to our community, our customers and our employees. By paying a living wage, we recognize the economic realities in our community and want to be leaders in raising the bar for everyone. 

Any questions? go2HR’s team of HR Consultants is here to help you with your compensation strategy and philosophy. Contact your Regional HR Consultant today.