Will province’s pay freeze prompt a ‘talent flight?’
Executive compensation at Hamilton’s hospitals and schools in limbo awaiting government approval
THE HAMILTON’S ABILITY OF hospitals and schools to attract the best and brightest leaders is being questioned after the province reinstated a nearly eight-year freeze on executive salaries.
“I’m very disappointed,” said Pat Daly, chair of the Hamilton-Wentworth Catholic District School Board. “There is no question it will be more difficult to recruit and retain.”
The directive from the Conservative government on Aug. 13 comes after public-sector organizations already went through a lengthy process to determine the first pay increases for executives since 2010.
“Our board went to a tremendous amount of work,” Daly said. “The local frameworks were intended to provide some degree of equity and fairness between the compensation levels of senior staff.”
Ontario’s hospitals, school boards, universities, colleges and designated provincial agencies spent a year creating proposals that went to the province nearly a year ago on Sept. 29 and set out minimum and maximum pay for executives at their organizations.
“All organizations I know used consultants to do it,” said Brian Guest, interim vice-president of people and organization effectiveness at St. Joseph’s Healthcare.
“I’m very disappointed. There is no question that it will be more difficult to recruit and retain.”
PAT DALY Chair, HWCDSB
“There were many, many person hours that went into preparing it. It was very detailed statistical analysis.”
No pay increases were allowed to be given out until the province approved the executive compensation plans despite the former Liberal government officially announcing an end to the salary freeze in September 2016.
Some plans got the go-ahead before the provincial election in June and executive salaries were bumped accordingly.
But many others, including all of Hamilton’s hospitals, McMaster University and Mohawk College, were left in limbo.
“We followed all guidelines and timelines from the province and submitted our proposal earlier this year but never heard back,” Hamilton Health Sciences spokesperson Patrice Cloutier said in an email to The Spectator.
Guest said there appeared to be “no science to who has been approved and who has not.”
“If there were inequities in the system to start with, it has compounded it,” he said.
“This long-standing freeze has been released for some ... It has put us in a position — and we have a lot of company — that basically puts us further at a disadvantage.”
However, even proposals already approved like those of the Catholic board and HamiltonWentworth District School Board have now been halted.
“It’s most unfair,” Daly said. “Staff in any position should be compensated fairly and ... get reasonable adjustments. That has not taken place for over seven years.”
Both boards submitted multiyear plans, so the raises for the first year went through before the Treasury Board put a hold on the increases set for subsequent years.
“We are hopeful that upon review over the next few months that the current salary framework will be supported so that we can continue to retain and attract the best possible people to lead our school boards,” public school board spokesperson Shawn McKillop said in an email.
But others expect the plans created by the organizations could be tossed out altogether.
“Our understanding is the province will be reviewing executive compensation and introducing a new framework by next June,” Mohawk College spokesperson Jay Robb said in an email. “Mohawk is not moving ahead with its draft executive compensation framework.”
The freeze has come as a surprise to McMaster University, which expressed confidence before the June vote that the executive pay raises would go ahead.
Now there are questions about what frozen wages will do to McMaster’s competitiveness.
“As one of the world’s top universities we are competing for the best and most experienced researchers, faculty, leadership and staff,” university spokesperson Gord Arbeau said in an email.
“It will be important that the approach to compensation allows McMaster to remain competitive in the global marketplace.”
It’s a particular concern for St. Joseph’s, which is soon to embark on a search for a new president to replace Dr. David Higgins, who stepped down in June.
It recently hired Dr. Thomas Stewart as CEO of St. Joseph’s Health System. He will be paid a salary of up to $650,000 a year, which is nearly identical to his predecessor Kevin Smith, who was paid $660,190 in 2017.
“When we recruit, it’s national and in some cases, international,” Guest said.
“It’s all about retention and recruitment ... You have to be competitive ... We have to get quality people and hang on to the best people we have.”
The public-sector organizations are right to be worried, said Richard Leblanc, associate professor of law, governance and ethics at York University.
“The pay freeze is not a sustainable solution because ultimately you get what you pay for,” Leblanc said. “This will have an effect on employment in the public sector and you don’t want that. You want the best and the brightest in the public sector. You want good hospitals, good universities, good colleges and good crown corporations.”
The current freeze actually goes further than those in the past because it was imposed on all public sector executives making $100,000 or more and not just on certain organizations.
“It’s overkill. They are bringing a bazooka to a knife fight,” LeBlanc said.
“Not everyone’s salary in the public sector is a problem. It tends to be the extremes, but those are only a minority ... You don’t bring a blanket solution that affects everybody ... You want to be much more nuanced and tailored to address the extreme examples and not punish everybody.”
He warns the latest freeze could prompt a “talent flight to the private sector.”
“You’ve got people who are going to be wooed by the private sector and are going to be recruited,” LeBlanc said. “You’ve got cost of living increases ... It’s not cheap to live in Hamilton.”