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By Larry Basinait
REPORT: CHRO Compensation and Fairness: What a Difference a Year Makes
In recent years, HR leaders have evolved from tactical, administrative roles to strategic players in an organization. They play an integral part in the long-term strategic planning process of the businesses they support. This role expansion is particularly true for larger companies, where CHROs have a prominent seat at the C-suite table. And considering the challenges of 2020, the title “crisis manager” could be added to that list.
With this added exposure and responsibility, compensation paid to HR executives should ideally reflect the scope of responsibilities of these functions as well as company performance.
To garner insight into how CHROs are compensated, HRO Today has published its second annual CHRO Compensation Study. To complete this analysis, publicly available data on the Fortune 500 was used to gather compensation data on 113 senior HR executives from those companies, resulting in a valid sample of 23%. The data was segmented into the Fortune 50, the Fortune 100, the Fortune 200, and the Fortune 500 bands.
Within each of these groups, HRO Today looked at correlations to salary, total cash compensation, and non-cash compensation (stock options and grants). The factors included market capitalization, earnings per share (EPS), earnings before income tax, depreciation, amortization (EBITDA), and total employee headcount.
Further, HRO Today explored how HR practitioners feel about their industry’s compensation. To accomplish this, during August and September 2020, we surveyed 50 senior HR executives from the HRO Today network and compared findings to the 2019 study where appropriate. Results of the study are also combined with the correlation analysis noted above to provide an overview of CHRO compensation structure and perceptions.
In 2019, there were four company performance measures that closely correlated with compensation. In 2020, only total compensation versus EBITA was statistically correlated (0.7). The reasons for this change are very much related to the pandemic’s impact on the stock market. There was a remarkable paradox in the second quarter of 2020 when earnings data was pulled. The S&P 500 regained nearly all the ground lost in its 20% plunge in the first quarter, even though profits at blue-chip American companies fell 44% in the second quarter.
HR really does not know how the structure of compensation should be derived to make compensation fairer, even though company performance and size are most often a key consideration for C-suite compensation packages. Nearly two-thirds (64%) of HR leaders think compensation should reflect the size of the organization, up slightly from 2019 (60%). HR practitioners do not necessarily think compensation for their senior-most leader should be based on company profits either, as only 56% agreed they should be, about the same as in 2019 (55%). The reality then is that there remains little rhyme or reason to the structure of CHRO compensation.
HR leaders continue to believe that compensation of the highest-level representative they have in the company is not in line with the rest of the C-suite. Less than one-half (49%) believed that CHROs at their organizations were compensated on par with other C-suite executives, even though support for that was nearly universal, with 97% agreeing compensation should be comparable, up significantly from 2019’s level of 83%.
As a group, HR feels undercompensated compared to other areas of a company. And because of the particularly stressful year HR had in 2020, this belief is more adamant than ever before. Study respondents were asked about the extent of their agreement with the statement: “HR departments are compensated fairly compared to other departments.” Not a single respondent in 2019 or 2020 completely agreed with the statement, and only 31% partially agreed with the statement. Further, more than twice as many completely disagreed in 2020 than 2019, at 23% versus 10%, respectively. Overall, HR practitioners are not inclined to believe their industry is satisfactorily compensated.
Ironically, there remains a gender pay gap for the leaders of the company department most directly charged with eliminating gender pay gaps. Looking at differences in CHRO compensation by gender, the data shows that males are compensated more than females, but with an important difference. In the Fortune 50, the base salary of males is $1,673,072 versus $965,291 for females, a difference of 54%. However, the total average compensation pay gap is only 2.5%.
The pattern extends to the Fortune 500. Males’ average base salary is $673,786 compared to females’ $545,816, a difference of 21%. Total compensation shows less than a 1% difference. Females’ compensation is much more closely tied to variable income. Given recent market volatility, looking at this comparison next year will offer insight into if this is a trend or simply a result of market fluctuations.
Compensation and Diversity
There are so few African-American CHROs in this data set that a comparison of compensation levels between them and Caucasian CHROs was not feasible. Of the 113 CHROs whose compensation was available, only two were African American.
Despite the lack of diversity among the most senior HR representatives in the company, 76% of respondents felt the level of compensation for minorities is comparable to non-minorities in their HR department. HR lags other departments in achieving diversification. While 66% agree they have representational diversity within their HR department, 78% feel they have it throughout their company.
This report was sponsored by WilsonHCG, though study respondents were not made aware of the sponsorship.
REPORT: Employer Brand Conversation Shifts from Acquisition to Retention and Rebuilding
Candidate experience describes the process job seekers go through during the hiring process. Some elements of the candidate experience include constant communication from pre-application to onboarding, setting expectations, asking for feedback, and providing feedback.
This report, sponsored by PeopleScout, examines candidate experience measurement, employer brand practices, and the impact of COVID-19 on employer branding. Best practices are shown by comparing organizations that consider their candidate experience top-tier versus those with practices that are lacking.
Improving Candidate Experience
Despite its importance, recruiters admit the candidate experience at their organizations can be greatly improved. While 57% felt they had a good candidate experience, only 8% felt it was excellent, leaving many to rank their own candidate experience as lacking.
The top three candidate experience challenges faced by employers are:
- optimizing mobile-friendly communication;
- providing a timely interview process; and
- not having a formal way to capture candidate feedback.
Leveraging smartphones can help solve some of these challenges; according to Pew Research Center, more than eight in 10 Americans use smartphones. They allow for an easy way to conduct short pulse surveys with candidates to easily capture feedback.
The timeliness of the interview process is also paramount in providing a good candidate experience. A lengthy and drawn-out affair not only conveys a poor image of the company but increases the likelihood a candidate accepts another offer.
Finally, gathering candidate feedback about the recruiting experience is lacking. Overall, nearly one-third (32%) of surveyed organizations do not ask for candidate feedback, while only 21% make it a consistent practice. Without capturing data, employers cannot construct an informed road map designed to deliver a superior candidate experience.
Feedback is consistently provided to candidates who were not extended an offer after face-to-face interviews only 21% of the time, and it is never offered 32% of the time. Organizations have invested in these candidates, and while they may not be an immediate fit, they remain key members of the talent pool who could fit well in a future position at the organization.
Within the next two years, employers plan to focus most on the employer branding tactics of increased social networking and using employees as brand advocates. Nearly two-thirds (65%) of study participants indicated they plan more social networking usage. Fifty-two percent plan to better use employees as brand advocates. Current employees are the most credible source when it comes to speaking about what it is like to work for a company.
Impact of COVID-19 on Employer Branding
The COVID-19 pandemic continues to shake the world economy, with most industrialized nations in a cycle of reopening sectors of the economy only to close them back down again a short time later. Despite those challenges, recruiters remain adamant about the importance of their employer brand—87% of recruiters felt their employer brand is becoming more important, with nearly three-quarters planning a greater investment over the next 24 months.
While many employers paused hiring during the pandemic, companies have adjusted their employer branding efforts by focusing internally. They have done this by showcasing concern for the health of employees though work-from-home arrangements, social distancing while in the office, and the emphasis on sanitation practices.
Practices of Companies with Top-Tier Candidate Experience
Companies with top-tier candidate experiences are far more aware of the challenges they face in hiring. They are more than twice as concerned about the timeliness of the hiring process than those without the best candidate experience, 53% versus 25% respectively. They are also concerned with the challenges of a lack of monitoring social media sites, timeliness of feedback, and incomplete or inaccurate job descriptions, compared to those without a great candidate experience. Conversely, those not providing top-tier programs are far more likely to feel that a positive experience is not a priority and that their onboarding processes need improvement.
More than half (53%) of companies that struggle with candidate experience do not ask candidates to give feedback about their recruitment experience— three times more than those with a top-tier candidate experience (16%).
Providing candidates with feedback is another differentiator. More than one-quarter (26%) of organizations with the best candidate experience always provide face-to-face candidates with feedback—twice the percentage of those without top-tier programs. Further, 60% of companies that do not have top-tier programs never provide feedback after face-to-face interviews, compared to 21% of top-tier programs.
Organizations with the best candidate experience are more likely to anticipate a greater investment in the employer brand over the next 24 months than those without, at 78% versus 64% respectively.
REPORT: Healthcare Recruiting Faces Fewer Applicants Amidst Surging Demand
The COVID-19 pandemic has impacted every industry, but perhaps none more than healthcare. Healthcare HR practitioners have been forced to contend with an unprecedented surge in demand for their expertise and services. Those demands include acquiring the right talent to provide medical services, concerns about current workforce engagement and safety, upskilling, work from home support, and employee burnout.
This report, sponsored by Cielo, examines the healthcare industry and some of the challenges HR continues to face during the worldwide COVID-19 pandemic. Key areas include financial saving strategies, plans for continuing remote work, and applicant volume changes for both clinical and non-clinical roles.
Healthcare organizations are facing reduced job applicant volume for clinical roles. Six out of seven clinical roles showed a net decrease in applications. The two largest net declines were for surgical technicians/certified nurse assistants and for nursing. Surgical technician applicant volume declined for 52% of respondents, while nearly one-half (45%) found a decrease among nursing role applications. All of the decreases came against an unparalleled spike in demand for the services of those in clinical roles.
Concerns over employee burnout are as great as maintaining adequate staffing levels, with 66% of respondents reporting that both are their top issues. The pandemic has led to a crushing workload and stress on employees in the healthcare profession. Employee safety is also a major concern to most respondents. COVID-19 has exposed health workers and their families to unprecedented levels of risk, and healthcare organizations have had to reinvent practices and establish new policies to protect them.
Companies are enacting a broad spectrum of financial savings strategies because of COVID-19, but none by a majority. The most frequently used strategy is to stop organization contributions to retirement plans, selected by 47% of respondents. Temporary or permanent reductions in staff salaries was the second most used savings solution, enacted by 41% of respondents.
Just over one in five (22%) respondents currently working remotely because of the pandemic will continue to do so afterwards. While this percentage is substantial, it does not suggest a massive change in remote work in the immediate aftermath of the pandemic. The dominant driver supporting a continued virtual workforce are health and safety concerns, indicated by 83% of study participants. Employee request is the only other area to be selected by at least one-half of respondents, which likely included health concerns and childcare obligations since many schools are conducting virtual learning programs.