Report highlights importance of benefits to boost productivity, alleviate financial stress
Canadian employers are grappling with declining employee productivity despite expressing optimism about their businesses' prospects, according to a new survey.
Inflation and interest rates are cited as key challenges, with 78% of employers reporting negative impacts from inflation—up seven percentage points from 2023.
Employee burnout (68%), increased hiring competition (63%, down eight points), and ongoing labour shortages (62%, down nine points) are further straining employers, found the survey by the Healthcare of Ontario Pension Plan (HOOPP) and Angus Reid Group.
Interest rates are also a concern, with 60% of employers noting their negative impact when the policy rate stood at 4.5%. Even if the rate drops to 3.5%, more than a third (37%) believe their businesses will continue to face challenges.
While 82% of employers feel optimistic about their business productivity and 77% about employee productivity for the year ahead, these sentiments are at odds with recent trends. Only 24% of employers reported better-than-normal productivity in the past year, a significant drop of 17 points since 2022.
Additionally, the proportion of employers rating employee productivity as excellent or very good fell to 47%, down 10 points since 2023, found the survey.
A notable 20% of employers reported worse-than-usual productivity in the past year, up seven points from 2023, found the survey.
Nearly three-quarters (72%) agree Canada is experiencing a productivity crisis, and 90% recognize that business productivity hinges on employee performance.
The survey highlights a strong correlation between investing in employee benefits and improved productivity. Employers who introduced or enhanced retirement benefits were more likely to report better-than-normal productivity (42%) than those who did not invest in their employees (12%).
Similarly, 28% of employers who improved compensation saw productivity gains, found the survey.
Employers who reported declining productivity also expressed greater concern for their employees’ well-being:
These employers were also more likely to cite employee burnout as a significant challenge (85%) compared to those with better productivity outcomes (64%).
A vast majority of employers (86%) believe offering benefits that alleviate financial stress is crucial, with 83% agreeing retirement benefits are a cost-effective way to address financial stress. Two-thirds (66%) believe such benefits help maintain employee productivity.
Despite these acknowledgments, fewer employers invested in benefits last year (78%, down 15 points since 2023) or plan to do so in the coming year (62%, down 20 points). This reluctance to invest may exacerbate the downward trend in employee productivity despite employers’ optimism for future performance.
The survey was conducted online from August 12 to 22, 2024, and involved 759 Canadian business owners and senior leaders with at least 20 employees who influence HR decisions.
