HR Compensation: It Pays to Specialize

Increasingly, organizations are recognizing the value of human resources and its strategic role in helping recruit, develop and reward talent. As a result, salaries and the opportunity to earn incentives have increased for HR professionals.

This report examines total targeted annual cash compensation and incentive eligibility for HR jobs in the United States, revealing how pay can vary by a number of factors, including job level, specialization, location and company size.

Total Cash Compensation by Job Level

Total targeted cash compensation varies across job levels (Figure 1). The median total targeted compensation for an HR senior executive ($273,000) is approximately twice as high as for an HR senior manager ($136,910) and over five times greater than an entry-level associate HR job ($50,120).

As job levels increase from associate to senior executive, compensation does not always increase in a consistent and predictable pattern. Pay levels for skilled experts in nonmanagement, advisory-level jobs often equal or exceed pay for first-level leadership positions. In critical job functions, often companies will pay advisory-level employees at market rates close to or above supervisor and manager-level positions.

For example, the median total targeted compensation for an advisory HR job ($96,170) is about 20 percent higher than for an HR supervisor ($80,400).

Specialists Outpace Generalists

Table 1 reports the total targeted cash compensation by job levels for five select HR job functions:

• HR (general).

• Benefits analysis.

• Compensation analysis.

• Employee and labor relations.

• Employee training and development.

• HR information systems (HRIS) analysis.

• Recruiting and talent management.

Across most nonexecutive job levels, cash compensation for HR specialists is higher than for HR generalists. The median total targeted compensation for employees at the individual contributor level in an HR specialty is about 20 percent more than for HR general positions. Total cash compensation for directors and managers in specialized HR jobs averages between 8 percent and 13 percent higher than directors and managers in general HR jobs.

For most job levels, compensation analysis leads the way with the highest levels of total targeted cash compensation.

The wide range spread within each job function and level combination in Table 1 is attributable to a variety of factors that influence compensation, including, but not limited to, location and company size.

Location Impacts Compensation for Nonexecutive Jobs

In addition to job function, it is critical to consider location when benchmarking pay rates and developing salary ranges for most nonexecutive-level jobs (Table 2). For example, the median total cash compensation for individual contributorHR jobs is nearly two-thirds higher in San Francisco ($84,700) than in Wichita ($51,000).

Company Size Impacts High-Level Management and Executive Jobs

There is a strong correlation between company size and compensation, particularly for director- and executive-level positions. For example, the median total cash compensation for a senior executive of HR is more than twice as much in a U.S. company with more than 10,000 people ($387,700) as in a company with less than 100 people ($159,100).

Eligibility for Incentives

Historically, HR employees were less likely to be eligible for incentives than employees in other job functions. However, in recent years HR has expanded its role beyond administrative duties to become more of a strategic partner with top management. In turn, there has been an increase in the percent of HR employees eligible for incentives and the amounts targeted.

Figure 2 shows the percent of HR employees eligible to receive short-term and long-term incentives. There is a strong correlation between job level and incentive eligibility, particularly for long-term incentives.

• Short-term Incentives (STIs) include all forms of variable short-term cash compensation, including bonuses, commissions, cash profit sharing and other forms of variable cash payments earned within 12 months.

• Long-term Incentives (LTIs) include all forms of long-term incentives, including stock option awards, restricted stock shares/units, performance stock shares/units, phantom stock shares, stock appreciation rights (SARs) and long-term cash awards typically earned for periods longer than one year.

Conclusion

When benchmarking HR pay it is critical to consider a variety of factors that influence compensation, including job function/specialization (i.e., responsibilities) and job level (i.e., skills, scope of leadership, experience). In addition, it is critical to consider the impact of location for most nonexecutive jobs and company size for management and executive positions.

Data Source: 484 participating organizations in the Culpepper Human Resources and Operations Compensation Survey U.S. Database as of July 1, 2011.

Culpepper and Associates, Inc. conducts worldwide salary surveys and provides benchmark data for compensation and employee benefit programs. Reposted with permission. Source: The Culpepper eBulletin, July 2011.

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