HR pay and benefits – what can you expect, and when?

Few HR professionals have enjoyed significant salary increases in the past couple of years. In fact, many have had their salaries frozen and some – particularly freelance and contract workers – have had to stomach a fall in rates.

“Over the past couple of years, we have seen a substantial fall in pay increases, particularly last year,” says Mark Crail, head of XpertHR’s salary surveys and data benchmarking. “One-third of companies had a pay freeze in place. This affects overall rates and even those getting rises were getting smaller rises than in previous years.”

Guy Ellis, director at HR consultancy Courageous HR, agrees: “It’s a tough market out there and those that are in jobs are keeping their heads down. Rates have come down 30% to 40% in the interim market from two years ago, although it has started to pick up in the last three months. It is too early in the year to say if that is continuing but we would hope to see the permanent market pick up in the near future.”

Crail also hopes that the financial constraints have eased a little: “Partly because of the economic situation, also because it’s hard to keep pay freezes two years running and also because of inflationary rates.”

But, Mervyn King, the Governor of the Bank of England, is urging another year of pay restraint across all sectors, saying that a “squeeze” on take-home pay is again necessary this year because of rising inflation.

Given this economic climate, the rates HR professionals can command – and demand – is rather different to two years ago.

Entry level rates start at about £15,000 per year, with the standard basic entry level salary standing at £17,436, according to the XpertHR computer staff salary survey 2010/11.

Getting a foothold in HR is quite difficult, but once you are in, it is quite easy to progress up the career ladder and pay scale. “If you are good at your job, you should be getting to an HR manager role by the time you’re 30, so eight years into your career,” says Ellis. “And an HR manager in a fairly large company will typically earn £50,000 to £70,000.”

According to XpertHR’s survey, those at professional level 1 earn an average of £21,507 per year, £27,607 at professional level 2, £33,348 at professional level 3 and £41,490 at professional level 4. Salaries rise sharply at managerial levels – a department manager can expect to take home a salary of around £61,000 and around £80,000 at function head level. Salaries pass the £100,000 mark for senior function head and the average salary for an HR or personnel director is just below £130,000.

Where HR professionals sit within those averages depends partly on the sector they are operating in. The really good payers are the obvious ones – financial services and consultancies, for example. “The financial services industry in particular has greatly inflated pay and benefits expectations, with many packages at 20% to 30% above other private sector industries, and 50% above the public sector,” says Steve White, HR manager at recruitment consultancy, Badenoch & Clark. Big bonuses also feature more in the financial sector.

Professionals working in London tend to command higher salaries, particularly those based in the City. “There is less of an issue of a North-South divide,” says Ellis. “But people working in London tend to receive 15% to 20% more. It works out at about 10% to 15% more at the bottom end and 20% to 25% more at the top end.”

Retail traditionally pays lower rates. So does the public sector, although Ellis thinks the pay gap between the public and private sector has really narrowed in recent years. “There used to be quite a significant difference, but my perception is that there is not a lot of difference between pay levels anymore. The thing is that it takes longer to get to more senior roles in the public sector.”

Ellis says that impressive HR professionals can move through the ranks quite quickly in the private sector, but progress is much slower in the public sector. Pay prospects in the public sector have taken a further knock recently with the Government’s cutbacks. “There is a two-year pay freeze in the public sector for anyone earning over £21,000,” says Crail.

Some skills improve a person’s marketability – specialists in employee relations and project management may be able to command more of a premium, for example. CIPD membership is a prerequisite for most roles up to middle management level, so having it does not boost earnings.

At the moment, the fiscal power lies much more with employers than it does with employees, across all sectors. Now is not the time for HR professionals to be going for gold in terms of salary expectations. Moderate increases in reward are the best that most can hope for.

Take part in the XpertHR benefits and allowances survey to receive a free copy of the research findings.

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