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HR professionals in high-demand positions see big salary gains in 2011; others lag.
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Like most U.S. workers, human resource professionals didn't see their paychecks grow much in 2011. But the rewards were considerably richer for some—especially executives who focus on quality issues. Managers with expertise in organizational development and in compensation and benefits also fared better than most of their peers.
Overall, HR professionals received a 2.8 percent increase in base salary during 2011, according to results from Mercer's 2011 Human Resources Compensation Survey. That's in line with the average salary increase for most working Americans.
However, percentage increases in median total cash compensation for some of the most common HR positions came in well below that figure and included:
In broader salary surveys, several organizations, including WorldatWork and Hay Group, are calling for median salary increases of 3 percent in 2012. With inflation rates that have been at or above 3 percent for the past several months, according to the U.S. Bureau of Labor Statistics' Consumer Price Index, many workers, including HR professionals, could see virtually no net gains in compensation in 2012, after their paychecks are stacked against rising cost-of-living expenses.
Not everyone in HR came up short during 2011, according to Mercer's survey. HR professionals skilled in quality management were rewarded handsomely. These executives work across departments to help develop an organization's strategic and operational plans with a focus on quality assurance and control.
Those employed as top total quality executives at the division level earned a 2011 median salary of $314,400, a significant increase of 40 percent from $224,000 in 2010. HR professionals working as top total quality executives at the corporate level earned 2011 median total cash compensation of $261,100, an increase of 23 percent from $212,800 the previous year.
Also earning large increases in 2011 were top HR management executives at the division level with median total cash compensation of $264,000, 11.1 percent more than $237,700 in 2010.
Like last year, top HR management executives at the corporate level were the highest-paid HR professionals in 2011, earning median total cash compensation of $350,000. That is a 9.3 percent increase from $320,300 in 2010. In companies with 10,000 or more employees, these top HR executives earned a median $450,500.
Other skills appeared to be less in demand in 2011. The median pay for a top labor or industrial relations executive was $220,500, a decline of 4 percent from $229,900 in 2010. Top organizational development executives collected median total cash compensation of $215,000 in 2011, a drop of 2.6 percent from $220,700 the previous year.
The reverse was true, however, for the midlevel HR position of organizational development and training manager. People in these positions earned a median salary of $120,000, an increase of 9.1 percent from $110,000 in 2010. Compensation and benefits managers earned median salaries of $118,000, an 8.2 percent increase from $109,100.
Considering that more companies have increased efforts to create multicultural workforces, expertise in diversity and inclusion paid off in 2011. Equal employment opportunity or diversity managers earned a median $121,300, up 6.6 percent from $113,800.
Most other midlevel HR categories posted modest gains in compensation in 2011. Examples include median salaries of:
Even without a significant bump in compensation, many HR professionals say pay is not the main reason they punch the clock. Only 51 percent of HR professionals listed compensation and pay as "very important" when determining satisfaction with their job, according to results from the Society for Human Resource Management's 2011 HR Job Satisfaction Survey. HR professionals deemed numerous other factors more crucial to job satisfaction. (For more information, see this month's cover story on page 22.)
Skills in Demand
Strong human capital management skills can be a huge competitive advantage for employers, and smart senior executives want human resource leaders who can deliver on that promise, says Peter Phelan, senior vice president of HR at New York City-based digital media marketing services company MediaMath. The pendulum is swinging toward HR professionals with expertise in employee engagement, culture and communications, as well as creative incentive compensation skills, he says.
"The salary levels would suggest that strong HR practitioners have not needed to lower their sights despite a precarious economic climate," Phelan says. Mercer's survey results demonstrate that HR professionals with expertise in training, diversity, and compensation and benefits are among those that received above-average salary increases in 2011.
"What's been most striking is the greater length and sophistication of the job descriptions for the more-senior HR roles," Phelan adds. "This would seem to speak to much higher expectations around HR delivering business impact."
Others agree, although a broader trend of limited salary growth appears to be the norm in the overall HR community at the moment, says Jennifer Loftus, national director of New York City-based HR consulting firm Astron Solutions.
"In the last six months, I'm definitely seeing more job activity" with respect to HR positions, Loftus says. "That's encouraging, knowing how many HR professionals have been out of work."
However, that good news doesn't extend to significant salary growth for the profession, Loftus says. Most companies are not planning to change their salary budgets and are likely to hand out 2 percent to 3 percent merit increases for human resources jobs in 2012, she predicts. "HR is not one of the hot skill sets right now, like IT, that is attracting the bigger salary increases," according to Loftus.
Many companies do have the money to spend on higher salaries, says Joan Reutter, SPHR, president of JBR Consulting, based in Manassas, Va. But with economic conditions cloudy at best, those funds are not necessarily being deployed to boost workers' paychecks.
"They have the money put aside; they're just not spending," Reutter says. "It's not that they can't afford it, but everyone is being very conservative right now. They're still focused on paying the key people the right amount, but they're focused on other forms of compensation, besides merit" pay.
A high percentage of the most common HR positions were in fact eligible for other forms of compensation during 2011, particularly incentives, according to Mercer's survey. For the position of top HR management executive at the division level, 100 percent were eligible for short-term incentives, which commonly include bonuses tied to performance. Eighty-one percent were eligible for long-term incentives, which commonly include stock options.
More than 90 percent of professionals in several other HR positions surveyed by Mercer were eligible for short-term incentives, including top employee relations executive, top organizational development executive, top compensation and benefits executive, and top compensation executive.
In the manager category, most positions were eligible for short-term incentives in 2011, including 86 percent of those in executive compensation manager and labor relations manager positions. Most HR managers' positions were not eligible for long-term incentives, although 44 percent of executive compensation manager positions did qualify for long-term incentives, according to Mercer.
Note that when reviewing similar compensation data from different sources, direct comparisons may not be suitable, as the methodologies of the surveying organizations may differ.
Even if salary growth is meager in most HR fields—and in the broader workforce—there is a silver lining, Loftus says. More companies are restructuring their salary plans or perhaps implementing new salary structures altogether, with an eye toward retaining top employees. HR professionals who are less seasoned in financial practices now have the opportunity to gain valuable experience in compensation planning, she says.
"This is a cross-training experience for HR," Loftus adds. "Many in the profession have not been exposed to finance. Compensation experts tend to be less prevalent than recruiters, for example, or other skill sets, so this is a good opportunity."
More business leaders are keeping a closer eye on salary structures and examining their current policies, agrees Bob Cartwright, SPHR, president and chief executive officer of Intelligent Compensation LLC, a consulting company based in Pflugerville, Texas. Employers want to find the right talent and keep those employees through effective retention strategies.
"There's an uptick in heavier salary analysis, rather than just worrying about merit increases," Cartwright says. Executives are saying, " 'Let's take a look and make sure we're paying what we should be paying to keep our top talent.' "
The author is a specialist with the Workplace Trends and Forecasting program at SHRM.
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