The majority of hiring managers plan to offer a bigger year-end bonus to their employees than last year, despite ongoing economic challenges, according to a new survey by recruiting firm Robert Half Canada. Those gifts are also likely to go further this year, as Canadians continue to struggle with financial stress because of rising costs.
According to the survey of more than 1,000 Canadian hiring managers, 95 per cent of respondents – who are primarily employed in professional services sectors – intend to award year-end bonuses to their teams this year, up from . Furthermore, while 45 per cent planned to increase the bonus amount in 2023, 65 per cent now intend to offer more than last year, and 6 per cent expect to offer less.
“What we saw [in the survey] was a little bit more generous than expected, but when you dig into it a little bit further, it makes sense,” says Robert Half Canada senior regional director Mike Shekhtman.
Mr. Shekhtman says bonus amounts typically increase during times of economic prosperity and strong labour market competition, neither of which is widespread this holiday season. In fact, unemployment recently reached its since January of 2017 – not including the pandemic years – and high interest rates have this year.
The fact that Canadian employers still plan to offer more generous year-end bonuses this season, according to Mr. Shekhtman, suggests they may be looking at the perk through a different lens.
“What you do see from a lot of organizations is the three things that they’re really focusing on right now are rewards, recognition and retention,” he says. “Many would rather reward and bonus at higher levels now to ensure that they are retaining their top talent later.”
Mr. Shekhtman adds that the economic challenges of recent years forced many businesses to cut back on staff and ask those who remained to do more with less. Now that the economic outlook has improved somewhat, he suggests employers are looking to reward those efforts, while guarding against turnover in the more competitive hiring landscape they anticipate in the new year.
“Even paying a little bit more in the form of a bonus is cheaper in the long run if it helps keep some of those folks, so they’re looking at it as an investment,” he says. “It does seem like a lot of companies feel like the bleeding has stopped and are moving away from that holding pattern mindset to a mindset of growth; there’s a little bit more of that cautious optimism.”
The added funds may also go further this year than in year’s past, because of ongoing economic challenges. According to the , 41 per cent of working Canadians are feeling financially stressed this year, up from 37 per cent in 2023.
“It’s a big issue for employers, because Canadians are bringing their financial stress into the workplace,” says National Payroll Institute president Peter Tzanetakis. “About 36 per cent of working Canadians reported reduced performance at work due to financial related concerns, and the time that they spent dealing with and worrying about their finances at work equates to approximately $54-billion in lost productivity annually [across the Canadian economy].”
Mr. Tzanetakis adds that the cost of financial stress on the Canadian economy has doubled since 2021, and that high year-end bonuses could ultimately have secondary economic benefits in the form of less distracted and stressed-out workers.
The single biggest culprit, according to the data, is debt, with 77 per cent of those facing financial stress citing it as the primary source. As a result, Mr. Tzanetakis emphasizes the importance of using the extra funds wisely.
“About 23 per cent of working Canadians expect to take at least five years to pay off existing credit card debt,” Mr. Tzanetakis says. “So, if debt is your biggest stress factor, you might want to consider using that year-end bonus to alleviate that pressure, as opposed to spending it.”
