Navigating increased compensation ranges for HR leaders

Along with the ongoing war for talent, we’ve seen a continued increase of wage and salary expectations, and the HR function is not immune.

Even prior to the pandemic, our team noticed a substantial rise in HR leadership salaries across the board. While this is in part due to the HR function going from underappreciated and undervalued to a more strategic function driving the business, it’s also due to stronger talent in the market commanding higher compensation.

Combine these factors with the general conditions of today’s candidate-driven market, and you find yourself looking at a much higher price tag when it comes to hiring a new HR leader for your organization.

Investing in the talent function today will result in even more prosperous results in the future. Of all the functions in your organization, this is certainly not one you want to shortchange.

How can leaders and organizations navigate this without breaking the budget?

• If you realize you’re not able to afford the level of talent you’re seeking, it’s time to adjust. This can be in the form of compensation or level of talent. If you’ve already stretched to the top of your budgeted compensation range, you’ll likely need to adjust your expectations for the level of talent you’re seeking. We’re not saying you need to find a tier-two candidate, but think about hiring for potential rather than proven ability. Think of your opportunity as a set-up for someone coming in, rather than finding someone who has “been there, done that.” This means your vetting of the candidates will become even more important, as you’re assessing the candidates’ traits and potential for success, rather than the results they’ve already achieved. In this scenario a trusted executive search partnership can add value since we’re on the front lines of the market talking to candidates across all levels.

• Get creative with the total rewards offering. If you’ve already stretched to the maximum base salary for a new hire, look at the broader compensation package. Do you have any flexibility on the short-term incentive or annual bonus? Is there potential to achieve higher than the target? Are you offering equity for this role? If so, can you increase it? Even if you don’t have a ton of flexibility on these levers, you should be prepared to discuss the upside potential with candidates. While base salary is certainly important, strong leadership candidates value the upside just as much. They want to know that if they join your team, they’ll be rewarded for the value they bring to the table.

At the end of the day, all signs show these compensation increases are here to stay, and organizations need to be prepared to navigate future increases as well.