How You Can Combat Pay Bottleneck With Employee Incentives

4 people raising a yellow trophy

Whenever there is a minimum wage increase, some employees assume that it will naturally lead to a proportional pay increase for all employees—even those who are not currently at minimum wage. In reality, it can take months for the market to self-adjust, particularly when there is a sudden and significant minimum wage increase like the one Ontario experienced earlier this year. More commonly, there is a pay bottleneck, known as wage compression, which occurs in the middle pay ranges rather than the assumed ripple increase effect. 

While we are huge proponents of incentive programs as the norm, it may be particularly important to consider these kinds of programs during the adjustment period after a minimum wage increase. For now, here are some of our top recommendations for incentive programs you can offer employees.


Time Off: This is a big incentive for people and the cost to the company can be minimal compared to a salary increase. Vacation time can even be accrued through performance-based initiatives to kill two birds with one stone.

Job Sharing: Some employees are interested in this option especially in summer months, to reduce the length of the work week by combining roles with another co-worker, allowing employees to take time off while kids are on summer break or to take a few long weekends.

Family Perks: Hiring employees’ children for the summer, or offering internships and co-ops, gives valuable opportunities to employee family members and helps them build their experience, skills, and network.

Special Recognition and Awards: Offering incentives such as gift cards, company lunches, weekly draws, and so on are an effective and inexpensive way to recognize the dedication and efforts of hardworking employees.

Try offering incentives like an education fund or training and development seminars for employees.

RRSP Options on Payroll: Companies may choose to contribute financially, but even offering the option of payroll deductions or direct-withdrawals to a RRSP account will be greatly appreciated by employees.

Education Fund: Providing an education fund for employees and their family is a meaningful way to show your team that you are invested in their future.

Training and Development: Try offering some professional and personal development opportunities, including some non-work related options for employees who want to expand their skillset.

Project Completion Bonuses: These incentives can be provided upon the successful completion of a project, or in recognition of early delivery of a project.


Check out the book “Three Job Miseries” by Patrick Lencioni for a useful tool to help you increase employee retention and productivity through incentives that are not tied to an outright pay increase. Lencioni describes how Anonymity, Irrelevance, and Immeasurement are the biggest factors in employee disengagement.

With the recent minimum wage increase in Ontario, now is the perfect time to focus on non-salary incentives you can offer employees to help combat the pay bottleneck. After all, happy employees are the most productive.

Looking For Staff?

Looking For Work?

Complete the form below and tell us about your Staffing Needs!