With salary budgets flattening, a restless workforce is prioritizing benefits as a recruiting draw, according to a study
Benefits have overtaken salary as the top reason Canadian professionals say they would switch jobs in 2026, according to research from Robert Half Canada. And nearly half of Canadian hiring managers say their answer to rising compensation expectations is not to raise base pay but to add new employee benefits and perks. The data reflects something more fundamental than a preference shift – it’s what employees now understand a competitive employer looks like, according to Sania Sanzgiri, Human Resources Director at Neo Performance Materials in Toronto.
The benefits conversation used to happen at onboarding, but now it’s happening at the first interview, says Sanzgiri. "Even when you recruit people, they ask what do the benefits look like," she says. "And that conversation now happens not when somebody has joined but right at the recruiting level."
At Sanzgiri’s Neo Performance Materials, a global advanced materials company, she oversaw a comprehensive benefits review in 2025. Her team conducted workforce surveys and utilization analyses broken down by age group and gender before making targeted changes to health coverage, financial wellness support, and professional development funding. "We did a full project last year in assessing what our current benefits are, what’s out there, and what are people looking for," she says, adding that changes were made based directly on what employees said they valued – and the response was positive.
More broadly, as younger cohorts become a larger share of the workforce, employees are reading benefits plans not just as practical tools but as cultural signals, says Paula Allen, Global Leader, Research and Client Insights at TELUS Health in Toronto. "The benefits and perks overtaking base pay isn’t surprising to me, as it’s an increasing mindset as the younger cohorts become more dominant in the workplace,” says Allen. “What [a strong benefits package] does is signal what’s a priority for that employer and does that employer actually care about my wellbeing?”
Younger generations prioritizing benefits
That question carries more weight than it did a generation ago. "We’re seeing more cancers, more cardiovascular issues, and increased rate of mental health risk in younger cohorts because our world has been progressively changing to make us as individuals unhealthy," says Allen. "And the younger you are, the bigger brunt you pay."
Allen believes that employers offering the bare minimum benefits aren’t just missing a recruitment opportunity – they’re communicating indifference to a workforce that’s paying close attention. How Canadian employers are rethinking their benefits strategy has become one of the defining questions in talent strategy.
The risk of a weak benefits strategy extends well beyond recruitment, according to Allen. She says her research at TELUS Health – which tracks workforce mental health and engagement across Canada through the TELUS Health Mental Health Index – points to a direct relationship between employees contemplating leaving and measurable performance decline.
"There's a very strong relationship between productivity decline and contemplating leaving," she says. "When people have it in their minds that they’re not sure that they want to be here, it becomes almost impossible for them to put in maximum effort."
That finding carries significant implications for 2026. According to the Robert Half 2026 Canada Salary Guide, 44 per cent of Canadian professionals plan to look for a new job in the second half of 2026 – up sharply from 26 per cent just 12 months prior – with better benefits and perks (38 per cent) tied with career advancement opportunities as the top reason. Organizations that focus on actual turnover as their retention metric may be dramatically underestimating the drag on their productivity. "Some organizations say, ‘Yes, that might be the case, but we don't have a whole lot of turnover,’” says Allen. "It might be a unique industry, you might have a good pension plan, but you're still losing productivity."
The right balance between benefits and salary to drive recruitment
Neither Allen nor Sanzgiri argues that benefits can simply replace competitive base pay, but both are clear that the additive value of well-designed benefits significantly outpaces what an equivalent salary increase delivers over time. This becomes more crucial given that projected average salary increases in Canada have remained flat in 2026, according to Normandin Beaudry's 2026 Salary Increase Survey.
"The increase of salary is great – I think we all would like higher salaries – but the benefit of that goes away pretty quickly," says Allen. "So it might feel great and then it becomes kind of your norm, but the purpose of benefits is to improve health and to improve engagement by showing that you care about people's wellbeing, to reduce disability."
Sanzgiri holds the same view on balance: "Yes, we need to maintain a base salary, but benefits may work well because that's something that employees are really valuing,” she says. “I do believe that in the long run employees feel it's the right balance – it's not that one can supersede the other."
A broad, flexible scope to target talent
When it comes to particular types of benefits that may better close the deal in recruiting, Allen leans towards broader flexibility over narrow focus. “What’s the most attractive is where there’s a broad scope with those foundational things like dental and drug benefits – those don’t differentiate that much anymore unless you have a particular need,” she says. “If you have that broad scope of benefits, think about the message that it's sending – it's saying, ‘I want to meet you where you are, and I want to make sure that as your needs develop and change over time, we’ll look at your preferences and goals are in terms of your health, and I'm there as an employer to support you.’”
Sanzgiri says she believes that a benefits program encompassing physical, mental, and financial wellness, along with flexibility and professional development, can be a difference-maker for talent.
With five generations in the workforce simultaneously – a reality Sanzgiri's team at Neo Performance Materials manages across a global operation – standardized benefits plans are increasingly inadequate, she says. Both she and Allen stress that listening directly to employees, not relying on assumptions, is the only reliable design methodology that will help close the deal when recruiting top talent.
"You have to actually look at your workforce and ask them what is meaningful to them," says Allen. "And it will change over time. It's not a one-time thing."
Sanzgiri says she’s formalized that principle into practice. Her team conducts benefits assessments every two to three years, runs certain new offerings on a six-month trial basis, and maintains open channels for employee feedback. "We’re very flexible and open in trying out new things that work for the most employees," she says. "If it works, it works, and if not, let's look at something else – that's how we're trying to balance different requirements across [different cohorts]."
The benefits navigation gap
Allen identifies navigation – the ability for employees to understand and access the benefits available to them – as the single most underdeveloped area in Canadian benefits strategy, and that can undermine benefits as a recruiting tool. "The immediate gap that I see right now is navigation because we see a lot of employers have the right scope of services to meet the needs of their population, it's just the employees don't really know it," she says.
In such circumstances, HR should ensure benefits awareness and access are less complicated, appear less fragmented, have single entry points to multiple things being leveraged, some guidance tools to help people navigate through and optimize their benefits, says Allen.
For Allen, a well-funded benefits program that employees can’t navigate isn’t a retention strategy, it’s a missed opportunity. Organizations prepared to invest in both the substance and the communication of their benefits package now hold a meaningful competitive advantage in Canada's talent market, while those still treating benefits as a background consideration may find that the employees looking elsewhere have already made their decision, she says.
“Employers shouldn’t take benefits for granted, but have their benefits shaped for the population that they want to attract,” says Allen.
