Human resources salary survey: the demise of HR bonuses

Does the slowing in the rate of increase in pay and bonuses mean HR staff are less valued?

Despite the job satisfaction of an HR role, no-one works solely for the love of it, so professionals in the sector will be interested in the latest HR salary survey issued last week by the Chartered Management Institute.

While not dramatic, the results showed the rise in wages has slowed over the past year (end of January 2006 to end of January 2007) to 5.9% compared with 6.9% the previous year.

The figures also showed 75.8% of HR executives were awarded bonuses, compared with 78.6% in the previous year and go on to reveal an average bonus payment across the sector of £4,075 for employees, compared with £4,708 the previous year

Downward trend

So, is this part of a general trend downwards across all sectors or a sign that HR is less valued?

At HR recruitment specialist Courtenay HR director Gareth Jones said comparing just the last two years of salary figures is misleading. He says the bigger picture – the past five to 10 years – has been a period of unprecedented growth in HR salaries as the function’s importance has been recognised.

“People are at the top of the agenda in the majority of companies and the move towards the HR business partner model has seen HR become a crucial part of many organisations,” he said.

Jones says HR professionals working in specialist areas such as reward and organisational design are particularly able to command impressive salaries.

He suggests that the slight drop in salary increases over the past year may reflect a situation where the FTSE 250 companies have completed their transition to an HR business partner structure and that demand for HR professionals with expertise in this area may have dropped slightly.

“There’s still a lot for HR to do but, for the moment, demand may have cooled off,” he said.

Bonuses

As for the decline in bonuses, Jones says it is a sign of how far HR has come that this is now an issue.

He said: “HR wasn’t always a function that received bonuses but today its bonuses are as good as any other part of the business with the exception of the sales function.”

This state of affairs, he says, is down to HR being measured more by the business as well as HR increasingly driving projects – be they general business programmes or specific HR projects, such as leadership development or succession planning. 

As bonuses are generally also tied to the financial performance of the business as a whole, the dip in bonus levels is just as likely to have been caused by companies not performing as well this year, points out Jo Selwood, managing director at HR head hunter firm Strategi Search and Selection

She says from her recent experience at the senior end of the HR sector bonus levels are still very healthy.

“Several bonuses I have heard about recently are up to 100% of the basic wage,” she said.

Sellwood is also at pains to point out that much of what makes up today’s HR packages is not be reflected in the recent Chartered Management Institute’s statistics. This is true of the payment of golden hellos – a bonus paid on joining the company – which she has seen a marked increase in.

She says she has seen a notable increase in packages that offer flexible working and no-monetary benefits. “Many people today aren’t driven purely by financial awards,” she said.

At the CIPD, rewards adviser Charles Cotton agrees that quality of life considerations are becoming more prevalent as are concerns about life after work.

“We have seen more people sacrificing their bonuses in the short term and having them paid straight into their pensions,” he said

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