HR chiefs at some companies earn up to $8 million annually, with their pay increasing significantly.
HR chiefs at some companies earn up to $8 million annually, with their pay increasing significantly.
The Shifting Landscape of Corporate Ambition
Who doesn’t dream of being the top dog in corporate America? Well, as it turns out, fewer people than you might think. According to ANBLE’s Geoff Colvin, fewer C-suite executives are aspiring to become CEOs these days. While the increasing difficulty of the job and managing unruly employees may be factors, one “little-noticed significant factor” is money.
In recent years, the average CEO’s pay has skyrocketed. However, the pay of other C-suite executives, including Chief Human Resources Officers (CHROs), has increased even more. Laszlo Bock, former HR chief at Google and co-founder of Humu, a maker of HR-related software, notes, “There’s less financial incentive to be a CEO. The compensation of the layer below the CEO has risen at a higher rate than the CEO.”
Even CHROs, who traditionally make the least among their C-suite counterparts, have seen a surge in pay packages. Bock mentions that some HR chiefs may be making around $8 million annually at the largest companies, although that figure is not the norm. The median compensation for HR chiefs at the 500 largest publicly traded US companies grew by almost 13% to $2.2 million in 2022, according to an Equilar analysis of HR executive pay trends. The communication services sector offered the most extensive median HR pay packages at $2.9 million, while the energy sector gave the lowest at $1.2 million. Companies with over $30 billion in revenue awarded HR executives a combined median pay of $3.3 billion.
Amidst these substantial financial rewards for navigating paradigm shifts and dealing with the complexities of modern business, some executives are content with their current pay. However, energetic strivers continue to fight for the CEO position, and HR chiefs in particular are emblematic of this trend.
The rise of CHROs as contenders for the top job has been well-documented. But the increased pay and elevated stature of the HR role may slow down this trend as CHROs, along with their C-suite peers, may lose interest in snagging the corner office.
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While the lure of being a CEO may be diminishing for some, outsourcing labor through contracting has become increasingly popular among employers. According to data from the HR services platform Gusto, the number of employers using contract workers has increased by 28% since the start of the pandemic. However, these contract workers often receive less pay, fewer benefits, and face greater job instability compared to their full-time peers.
Research from the TechEquity Collaborative highlights the need for responsible contracting practices. TechEquity Collaborative CEO Catherine Bracy recommends six responsible contracting standards, including family-sustaining wages and equal pay for equal work, to avoid legal, financial, and reputational liability.
As we navigate the ever-evolving landscape of work, it’s essential to consider the broader implications of these trends. The pandemic has highlighted the need for better protections and fair treatment for contract workers, while executives weigh the costs and benefits of pursuing the prestigious CEO position. Strike action has been on the rise in 2023 as worker conditions worsen and wages struggle to keep up with inflation. It’s a critical time for companies to prioritize the well-being and fair compensation of their employees.
In conclusion, the shifting ambitions of C-suite executives, alongside the rise of outsourcing and contract work, reflect the changing dynamics of the corporate world. As CHROs and other executives enjoy lucrative pay packages, the desire to become a CEO may wane. However, the pursuit of success and the drive to make a difference will continue to motivate ambitious individuals in their quest for the top.
