HR executives command higher salaries as function becomes more strategic and data-driven

HR has evolved from an administrative function to a strategic powerhouse over the past three decades pushing the compensation of HR executives up. According to a recent report by Stanford University economist Nick Bloom, the share of companies in the S&P 1500 whose HR leaders are among the top-five highest-compensated executives has increased from just 0.5% in 1992 to 13% in 2022. This trend reflects the growing importance of HR in managing the people impact of major events such as the pandemic, the MeToo movement, and the shift towards remote work.

Source: “The Rise of Human Resources” by Mert Akan, Nick Bloom, Stanford University

The increasing complexity of HR roles has also led to a shift in titles for top HR leaders, with titles like chief human resource officer (CHRO) and chief people officer (CPO) becoming more prevalent, replacing older titles like vice president of HR. This change in nomenclature underscores the increasingly strategic nature of HR and its critical role in driving business success.

As Dan Kaplan, senior partner at executive recruiting firm Korn Ferry International, notes, "For years, HR leaders demanded the cliché 'seat at the table.' Now, boards and CEOs have said, 'Pull up a chair and let's go,' and it's incumbent on HR to deliver on everything in front of them."

To meet the growing demands placed on HR, leaders are increasingly turning to talent analytics to derive insights on key outcomes such as attrition, performance, and employee sentiment. However, many organizations are struggling to maximize the impact of talent analytics due to a lack of necessary skills and data literacy within the HR function. 

• Read More: How EY leans into data to make well-being decisions for 65,000 employees. (Employee Benefits News)

To build successful talent analytics teams, CHROs should focus on developing professionals who can play three key roles: analytics experts, decision enablers, and strategic consultants. By fostering a culture of technical learning, enabling data-driven decision-making, and developing strategic consulting skills, HR can enhance its credibility as a strategic partner and drive business success in the ever-evolving world of work.