The average pay increase senior executives received when changing jobs has improved since the 2008-09 recession but has yet to return to the levels reached in the years leading up to the financial crisis, according to a study by executive search firm Salveson Stetson Group.
Since 2010, senior executives moving to new companies received an average jump in total compensation of more than 16 percent vs. the nearly 25 percent increase they enjoyed during the boom years of 2006 and 2007.
"The financial meltdown quashed the boosts in pay that senior executives moving into new roles had come to enjoy and expect in a robust economy," said John Touey, principal at Salveson Stetson Group. "Not surprisingly, as the demand for talent dried up through the depths of the recession in 2008 and 2009, so did the premiums companies were previously willing to pay when hiring new executives," he added.
In an encouraging sign for both the jobs market and the economy, "we have seen compensation offers steadily increase for new hires for more than two years now," said Touey. "For companies to compete for the talent they want, they must be willing to offer attractive pay packages, as candidates are more likely to be fielding multiple offers once again."
Talent Market Hot, Then Not
The study of more than 175 senior executive hires for financial, general management, human resources and sales & marketing positions found that:
• The market for talent was extremely hot leading up to the financial crisis, raising salary expectations of senior executives nationwide.
• Total compensation increases dropped dramatically during the recession. The average compensation increase offered to new executive hires from 2008 to 2009 dropped to 11.07 percent as companies tightened their belts and made the most out of existing staff.
• Since 2010, executives have received, on average, a 16.56 percent compensation increase when they switched jobs, an improvement from the increases of 2008 and 2009 but still a 34 percent decrease from pre-recession levels.
"The slow bounce-back in pay increases for executives changing companies is emblematic of the sluggish nature of the economic recovery as a whole," Touey said. "If the rate of increase remains relatively constant moving forward, we won't see a return to the premiums of 2006 or 2007 for another two to three years."
Stephen Miller, CEBS, is an online editor/manager for SHRM.
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