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Third-party review finds $820,000 needed for Town of Banff wage gap

"The cost of living within the Banff townsite is pricier compared to other municipalities, and the wages and benefits have experienced competitive pressure that may not have been addressed."
Banff Town Hall 1
Banff Town Hall

BANFF – An independent consultant has indicated it would cost about $820,000 to fill the wage gap for Town of Banff employees.

According to P Walters Consulting, the municipality’s compensation is generally below competitive market rates, in part due to what essentially amounted to a wage freeze during the COVID-19 pandemic. The benefits package, however, is considered generally quite competitive.

A competitive compensation package is key to attracting and retaining qualified employees – and the third-party consultant indicated some staff who have left their jobs had indicated wages and the high cost-of-living in the tourist town were main reasons behind their departure.

The consultants say Banff has historically been a draw for potential employees, although this may be less so now.

“The cost of living within the Banff townsite is pricier compared to other municipalities, and the wages and benefits have experienced competitive pressure that may not have been addressed,” according to the consultant’s report.

“The labour market in Canada and Alberta is tightening, due in large part because of an ageing population, and exacerbated by the current labour crunch and tight labour markets due to things such as the recent pandemic and the ‘great resignation’.”

Mayor and councillors are expected to discuss the compensation review at the Oct. 24 governance and finance committee meeting.

The Town of Banff’s compensation philosophy targets the 50th percentile, which means 50 per cent of the comparable organizations pay more and 50 per cent pay less than the municipality’s median rate for the positions in each job grade.

Wages and benefits represent approximately 40 per cent of the Town of Banff’s annual operating budget.

In terms of wages, the independent review found the Town of Banff tends to lag most notably in the areas of entry to senior professional administrative roles, managerial or supervisory positions in administrative and operational roles, and entry-level operators.

The compensation review found the Town of Banff’s benefits program is generally competitive in terms of statutory holidays, offering more than other organizations and businesses surveyed in the local market.

In addition, the municipality typically aligns with municipal practices on vacation, employer paid contributions, benefits, pension and retirement plans, flexible work practices and a number of non-traditional benefits.

But in a competitive market, the consultants suggested the Town of Banff may wish to consider traditional and non-traditional benefits for employees that are typically overlooked such as temporary, part-time, seasonal or casual to help with attracting and keeping staff.

“The Town of Banff is slightly less competitive, in general, to the comparator municipal market in providing overall benefits as a percentage of wages,” according to their report.

During the pandemic, the governance and finance committee voted against applying the council-approved formula identified in Banff’s financial plan for the annual cost of living adjustment, which is based on a blended market and inflationary criteria.

Instead, employees got a 1.46 per cent cost of living increase in 2021 and 1.6 per cent in 2022 based on Alberta CPI instead of what would have been in the range of a 4.6 per cent wage increase each year based on the usual formula.

Town of Banff officials say this decision, combined with labour competition and containing costs during the pandemic, has affected the pace with which the Town has maintained wages that are at market and align with the municipality’s compensation philosophy of the 50th percentile.

“The consultant identified that the current cost to address the wage gap is $821,336,” said Barbara King, human resources director for the Town of Banff.

P Walters Consulting indicated it is an established practice of more progressive organizations to approve budgets that can be used to adjust employee compensation to keep pace with the market or increases in compensation for similar roles.

“A salary budget that signals to an organization’s employees that their performance matters, and that good performance is rewarded, has been shown to have positive impact on attraction, retention, employee engagement and overall organizational performance,” the report stated.

Based on the findings of the independent review, administration suggests the financial impact could be mitigated by staggering the increase.

In addition, administration recommends changes in the formula for calculating the annual wage increase.

“A reliable formula to adjust wage ranges annually to maintain pace with market at the 50th percentile has been challenging to establish,” said King.

The Town of Banff’s compensation review was laid out as a priority and supported by the governance and finance committee during the deliberations for the 2022 review of municipal services, programs and projects.

The external market review was initially scheduled for 2021 but was delayed due to COVID-19.

“Participation in wage and benefits surveys by comparator local and municipal employers was not a priority during the peak of the pandemic,” said King.

As part of the third-party review, local employers like the Banff Centre, Parks Canada, Banff and Lake Louise Tourism and Fairmont Banff Springs participated in a wage survey, In addition, the municipalities of Canmore, Airdrie, Cochrane, High River, Jasper and Okotoks and Sylvan Lake took part.