Results of the July 2026 QuickPulse^® Canada Compensation Planning Survey

As we head into late summer, your attention naturally turns to preparing for another year ahead —including how to manage compensation budgets, plan for growth, and ensure your talent strategy aligns with your organization’s direction. If you haven’t already started gathering the information you need, now's the time to begin the conversation internally.

Mercer recently released the findings from the July 2026 Compensation Planning Survey for Canada, which captured input from more than 470 Canadian employers. This comprehensive survey covers salary increase planning, promotional activity, off-cycle adjustments, pay transparency, and emerging topics like artificial intelligence in the workplace. Here’s what Canadian employers are planning for 2027.

Preparing your increase budget

88% of Canadian employers will budget for traditional merit or annual salary increases in 2027. For those planning increases, the projected average merit increase budget is 3.0% (including zero increases), with a total salary increase budget (which includes merit, market adjustments, and other planned increases) of 3.2%. These figures reflect a sustained, steady approach to compensation planning that we have seen consistently across the market over recent years.

It's worth noting that most survey respondents (89%) are still in the preliminary stages of their budgeting process, so these numbers may evolve as planning progresses through the fall. However, based on historical trends, these estimates tend to hold steady as organizations move toward final approvals. If you want to revisit these benchmarks closer to finalizing your budget, Mercer’s October 2026 survey will capture data when organizations are further along in their planning cycle.

Promotions and career progression

Promotion activity remains an important part of how organizations invest in their talent. The average Canadian employer expects to promote approximately 6.4% of their workforce in 2027. However, this varies significantly by employee level: lower promotion rates are expected for executives (5.4%) while higher rates are expected for non-executive salaried professionals (7.3%), reflecting typical career progression patterns.

When it comes to how promotions are managed, the approach differs across organizations. Some structure promotions strategically around key business moments, while others identify and move talented people into new roles as opportunities arise. About half of survey respondents adopt a continuous, “as needed” approach, promoting employees when they take on expanded responsibilities or move into higher-level roles.

Managing your salary structure

85% of Canadian employers maintain a formal salary structure as a core part of their pay management strategy. For organizations using structures, annual adjustments are standard practice (75% update their structures yearly), with typical annual salary adjustments running slightly lower than merit increase budgets. For 2027, Canadian employers expect to adjust their salary structures by an average of 2.5%, helping ensure that the structure remains competitive with market rates while providing a stable framework for positioning individual pay.

Off-cycle adjustments and flexibility

Beyond the annual merit cycle, many organizations use off-cycle adjustments to address immediate market needs, retention risks, or internal equity issues. Half of Canadian employers report that they either have provided or will provide off-cycle salary adjustments in 2026, and a similar pattern is expected to continue into 2027. This flexibility is especially important in competitive talent markets where waiting until the next merit cycle may not be practical.

What’s interesting is that not all organizations formally track or monitor these off-cycle adjustments. Among the employers who do provide them, 45% track off-cycle increases in their compensation system but don’t actively monitor or report on them throughout the year, while 30% track and report on them regularly (monthly or quarterly). Having visibility into all pay movements—whether through the formal merit cycle or off-cycle adjustments—is increasingly important for managing pay equity and demonstrating fair, transparent compensation decisions.

What's on your mind?

When asked about priorities and concerns, Canadian employers highlighted several themes. The growing importance of skills and talent development ranked high, as did market competitiveness of pay levels. Many also mentioned the economic environment as a moderate to significant influence on their compensation decisions for 2027.

Looking ahead

Your compensation budget is just one piece of your total rewards strategy, but it’s a critical one. Armed with these market insights from your fellow Canadian employers, you’re better positioned to have informed conversations with your leadership about what a realistic and competitive budget looks like for 2027. These survey results provide a solid benchmark for those conversations.

If you participated in the July survey, you have access to the full results, including detailed breakdowns by industry, company size, and employee level. Didn't participate this time? You’re welcome to join us for the October survey—we’d love to have your company’s input included. You can sign up to be notified when registration opens at that time.

For questions about the survey or to discuss how you can use these insights for your compensation planning, reach out to our team at 1-888-627-3247 or via email at surveys@mercer.com.

About the author

Rebecca Hall, Principal

Rebecca spent much of her career working in compensation in various corporate roles then transitioning to consulting with Mercer. Her current role, as the Content Leader for imercer.com, allows her to leverage her knowledge of human resources and talent strategy to create materials supporting Mercer’s Products & Services in North America.