Are CHROs overpaid?
CHRO compensation in large organizations increased by 78% in the last 5 years, taking it to over 1 crore average of total cash compensation at par with the CFOs and the CMOs
To difficult questions one normally has vague answers. And compensation is one such area of discussion where determining relativity is a little difficult. Are CHROs overpaid? Well, it depends. One the one hand we have seen CHRO total compensation grow by 45% in the last 5 years from an average of INR 55.5 lakhs in 2010 to a INR 80.6 lakhs in 2014 as per Mercer Executive Total Remuneration Survey; on the other hand we have seen the peer group at the C-Suite also growing at a similar rate, CFOs total compensation has moved from INR 62 lakhs to INR 92 lakhs (up by 48%) and CMOs total compensation from INR 57 lakhs to INR 87 lakhs (up by 52%).
This year’s State of the CHRO study that People Matters conducted for the April 2015 issue clearly shows that CEOs and Board of Directors see the contribution of the CHRO as really critical for the future of the organization. The expectations of CEOs from the role of the CHRO are that they should align business strategy with talent strategy and also partner in driving business execution. That is probably why the salary levels have risen to be at par with the other counterparts at the C-Suite.
What this year’s data shows is that while CEOs want CHROs that have strong business acumen, as low as 38% of CHROs today have played a non-HR role and only half of those have actually played a role that had business targets associated with it (operations or sales).
If the expectation of the business is to have a real business partner and the experience that CHROs bring is not up to the mark (by lack of exposure in driving businesses) then one needs to ask the question again. Are CHROs overpaid? Well, some may be.
Headhunters we spoke for inputs on the State of the CHRO Study, estimate that only 4 out of 10 CHROs today may have the experience to be able to play the role that CEOs expect. Which means that while salaries continue to raise up for CHROs, so does the pressure to continue to show value and contribution.
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