CHRO Pay Trails Other Top Executives

A new study of executive compensation reveals chief HR officers (CHROs) at private U.S. companies are expected to earn a median salary of $117,000 in 2016—a 6.4 percent increase over 2015. The median expected CHRO bonus is expected to be $15,000—a 20 percent increase over 2015, if achieved.

The findings are reported in the 2016-2017 CEO and Senior Executive Compensation Report for Private Companies, published by the Chief Executive Group, a Stamford, Conn.-based research firm, and are based on compensation practices from over 1,300 private companies throughout the U.S. The firms were surveyed in April through June 2016 about their 2015 fiscal year compensation levels and practices, as well as their current and expected cash compensation levels for CEOs and senior executives in 2016.

Comparisons with Other Top Officers

Looking at 2015, the median salary for a CHRO at a private company comprised total cash compensation that was less than other senior-level positions, the report shows.

Senior Executives' Cash Compensation at Private Companies

Source: Chief Executive Group.

"It is interesting that the HR head made less than the other senior executives at most private companies, not just on an overall median basis, but even in each company size group—and company size is a big driver of executive compensation," said Wayne Cooper, chairman of the Chief Executive Group. "The gap is less as companies get larger, but there is still a gap nonetheless."

As to why this might be, "Many companies still don't recognize the central role HR has to a company's success—probably the most important function, since without good people who are aligned and motivated, companies have nothing—but HR is still fighting to get a seat at the senior executive table at a majority of private companies, especially in the middle market," Cooper noted.

Gender bias could also be a factor: A 2016 study by Korn Ferry Institute and the University of Michigan showed that 55 percent of CHROs are female, a significantly higher percentage than for other executive roles.

Workforce Size

Company size is a major driver of compensation for top HR executives. The report shows that for 2016 the median cash compensation (salary plus bonus) for CHROs at private companies is expected to be:

• $93,750 in private companies with under 100 employees ($87,000 salary/$6,750 bonus).
  
  
• $129,652 in private companies with between 100 and 999 employees ($114,652 salary/$15,000 bonus).
  
  
• $284,819 in private companies with more than 1,000 employees ($221,401 salary/$63,418 bonus).
  

Regional Pay Differences

Among the regional pay difference for CHROs in 2016, at the median:

• The highest CHRO cash compensation ($186,500) was expected to be earned by those in the mid-Atlantic region ($162,500 salary/$24,000 bonus).
  
  
• The lowest CHRO cash compensation ($103,500) is in the West North Central region ($88,500 salary/$15,000 bonus).
  

Major metropolitan areas also showed higher median pay for CHROs in 2016:

• In major metro labor markets with populations of more than 1 million, median CHRO cash compensation at private companies is expected to be $149,000 ($124,000 salary/$25,000 bonus).
  
  
• In small markets with populations of 25,000 to 100,000, median CHRO cash compensation is expected to be $112,500 ($97,500 salary/$15,000 bonus).
  

Bonuses by Industry

The median executive bonus for private company CHROs across industries was 10.9 percent of salary. Higher CHRO bonus percentages were found in industries that have greater turnover and hiring needs (e.g., retail, restaurants and transportation), have more regulation (e.g., financial services) or are going through radical transformation of skill requirements (e.g., media).

Related SHRM Article:

Expected 2016 HR Pay Raises Trail Others, SHRM Online Compensation, October 2015