· 13 min read · Features

HR directors' pay - Paid and displayed

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Public-sector HRDs on 150,000 or more will need Treasury approval, said the Government before Christmas.

How many would this apply to, and are they worth it?

Who should earn more - Clare Chapman, the NHS's director-general of workforce and former Tesco HRD, responsible for 1.25 million staff; or Lucy Adams, director of BBC People and overseer of 25,000 staff? Well, had the Beeb not bowed to public pressure to reveal the salaries of its top 50 executives last June, no one would have been quite sure how to call it.

Incredibly, it is not the £267,500-earning Chapman who sits at the top of the earnings tree. The best-paid public-sector HRD is actually Adams, at £320,000 per annum. Crudely, it means she earns £12.80 per member of staff; if Chapman's salary was calculated using the same multiplier, one could say she is underpaid to the tune of more than £5 million.

Critics might denounce such comparisons as unjust, but not so the Government. After a year of fat-cat and bonus scandals in the private sector, now is the turn of the public sector to justify its salaries against outcomes, not least because the public purse is predicted to shrink in 2010.

The Treasury wants clarification on why such vastly different salaries exist for two public-sector jobs of equal description. This was first alluded to in December when Alistair Darling's Pre-Budget Report revealed all civil-service roles paying more than £150,000 would in future need Exchequer approval. Then it was announced this would extend to all public positions, when communities secretary John Denham confirmed all councils and police forces will be legally required to publish the names, pay and perks of staff earning more than £150,000.

But the last sting in the tail could hurt most. On 20 December 2009, the Public Accounts Committee's report on salaries in the public sector stated its belief that all posts paying more than £100,000 should be published and opened up for scrutiny. While it agreed pay is always a relative issue, it concluded there were serious inconsistencies - in the way, for instance, pay bargaining had led to some HRDs in the smallest councils earning more than those in larger ones.

So how many public-sector HRDs earn more than £100,000? HR magazine endeavoured to find out. As we soon discovered, this was no easy task.

Each year The TaxPayers' Alliance (TPA) publishes its Public Sector and Town Hall Rich Lists. It is compiled from thousands of Freedom of Information (FOI) requests, but not everyone plays ball. Scores of councils refused/failed to answer their requests.

As for the rest of the public sector, the TPA list is incomplete. Most notably missing are the police forces, and government quangos. There is also no mention of the Royal Mail's HRD. Admittedly it is currently without one, but HR magazine suspects its outgoing head of HR, Tony McCarthy, would easily have made the cut. (One source suggests he was on £0.3 million). Nor too is there any mention of Royal Bank of Scotland's HRD, Neil Roden (the TPA now defines RBS as a public-sector company). When contacted, both firms said they only disclose board salaries.

Transport for London also refused to disclose any data, but HR magazine has discovered it has 50 staffers earning more than £150,000, so it is reasonable to assume its HRD is one of them. To the left then is the first reasonable stab at aggregating a list of public sector HRDs earning £100,000-plus.

But now we have it, should Government, or the profession, care about this salaried elite? Will cynics argue we are not comparing apples with apples?

The HRDs we spoke to were well aware they are conflicted. "I have no problem with HR salaries being public," says Martin Tiplady, HR director of the Metropolitan Police. At the same time, he admits he would not be comfortable revealing his exact pay to HR magazine just because we asked for it.

This sentiment is echoed by Stephen Moir, corporate director of people, policy and law at Cambridgeshire County Council, while adding: "It is reasonable for the public to expect accountability."

Tiplady adds: "If the disclosure of pay was normalised, of course I would welcome it. The public sector has to be seen to be as accountable as the private sector. People speculate anyway, so it's better to be honest and open and make people less surprised by what they see."

But both believe transparency will carry the danger of misinterpretation. Tiplady says: "Arguably the same effort and processes are expended by a HRD with 1,000 staff as one with 10,000 staff, but there are unique factors that make one job more taxing than another, and particular market conditions make what some do more niche. In this respect, pay must rightly be assessed in relation to market conditions, and a simple list won't explain that."

Moir adds: "Accountability is only reasonable if it is set in context. If you look at my job title, I don't just do HR. The problem is making the public understand this, because without context, the process becomes inflammatory."

The fact collating figures remains so difficult will not help diffuse suspicions that the public sector is avoiding the microscope; because as soon as any HR pay details are published, the obvious question to ask is if they are worth it.

Graham White, HR director of Westminster County Council, says secrecy has to be stamped out. "I earn £128,000, have a leased car and a healthcare package. It's not difficult to be open about pay. But what I can say is that I believe I deserve every penny. I'm actively pushing my organisation to publish the salaries of all senior officers, and this will be achieved by March. We have to get the public sector to go public with its pay. HR should lead by example. It's about time a head of HR justified his salary."

White says the only HRDs who should fear their pay being published are those that cannot explain their contribution. "We've virtually removed bonuses and introduced the concept of business value - what HR delivers. My view is that HR should be contributing towards 10% of the business, however one measures it. That's how I'm assessed, and that's how I'm paid."

He argues that only when HR pay becomes transparent and accountable to outcomes will the industry be able to have a proper debate about what constitutes excessive pay (he says the salary of the BBC's Adams is "intolerable").

Again, just finding out the average salary of an HRD is not easy. A report by Remuneration Economics put it as high as £120,000 in 2007, but in December 2009, research by employment consultancy IDS found it to be £91,350.

Assuming the datasets used the same ratio of private:public sector responses as the CIPD's membership (65 private vs 35 public), this average will be skewed by higher private-sector salaries. This arguably puts the average public sector HRD role at around £85,000 - much less than the £150,000 mark the Government is worried about - but close to the £100,000 disclosure level.

But does this reveal public-sector HRDs actually have a case for being paid 'more' and would publishing salary comparisons with the rest of the board aid their case? "Senior HR roles that affect the direction of the business should be paid equally with the rest of the board," says an unapologetic White.

At the moment, this is not at all the norm. According to last year's Executive Compensation report by Hay Group, HRDs are paid 2.6% less than the median in base pay for all executive functions, when compared with jobs of the same size. Mercer recently compared the pay of HR, finance and marketing directors in 14 countries in its Global Pay Summary, and found HR was the lowest-paid discipline of the three. UK HRDs were found to earn 10% less than UK FDs, and about 4% less than UK marketing directors. However, UK HRDs were the second-highest paid, second only to those in the US.

"Is HR underpaid? I'm still not sure," says Tiplady. "Chapman will actually have taken a pay cut to join the NHS, and you wouldn't have got anyone of her calibre by offering £140,000. Pay is relative; but I agree that board-level pay should be kept close together, if everyone has the same benchmarks."

According to Duncan Brown, director of reward for the Institute of Employment Studies, the Government will be creating a problem for itself if it does demand the details of those earning more than £100,000. "It pioneered the concept of giving local councils discretion over pay to get the best; now it does not seem to like what it has caused."

Brown says while HR has historically been underpaid relative to other disciplines, the wage gap between good and great HRDs is actually growing. "Really good HR folk are commanding a higher price in both the public and the private sectors because the recession has highlighted their value," he says.

According to our table of public-sector HRDs earning £100,000 or more, the average increase in salary over the past year was about 8%. According to John Maxted, chief executive of HRD search and selection agency Digby Morgan, HR salaries have gone up by 20% relative to the rest of the recruitment market, as HR's strategic role has been increasingly recognised. He says: "To this extent, it's crept ahead of other disciplines, but the system works well in that better, higher-calibre people are in the industry now, and so they demand higher wages. The problem is that any salary that you see published could be defined as 'right' because it was determined as so by both parties."

He adds: "An HRD is a risky investment, so companies can't afford to go in cheap; at the same time, candidates can't normally add more than £20,000 to the asking offer right now."

The worrying development for those HRDs only a pay rise away from hitting the magic £150,000 mark is the prospect of the Government signing off their salaries. White argues this will at least put an end to poaching within the public sector, which, he says, is "turning HRDs into mercenaries, going where the most money is". However, Gillian Hibberd, HRD of Buckinghamshire County Council and chair of the Public Sector People Managers' Association, says the Government has no right to set HR director pay in the public sector, and that a £150,000 threshold for approval would effectively create a pay cap.

Hibberd - who says she earns "more than £100,000, but less than £150,000" - adds: "This 'cap' would be an unnecessary interference. Councils are accountable to local MPs. It is not the Treasury's place to determine what an HRD earns. Public-sector pay does need to be reformed, but not by targeting particular HRDs and saying they earn too much. The best solution would be to have less central control and more transparency. It is right HR is paid in accordance with its responsibilities and a market rate must be allowed."

But for Moir the threshold could have an even more damaging impact. "It's a real concern that people who are on the fringes of the £150,000 mark will not want to take on senior HRD roles for fear of their pay being published. I'm all for transparency, but without proper explanation HR folk will have to dodge bullets. Forcing them to reveal their pay could result in fewer people coming into the industry. We can't risk driving people out of the profession right now."


Rank Organisation Person/ Total pay 2009
Current position
1 BBC Lucy Adams £320,000
Director BBC People
2 Department of Clare Chapman £267,500
Health Directorgeneral
of workforce
3 Derby Hospitals Tony Riley £246,286
NHS Foundation Director or
Trust Human Resources
4 BBC Anne Morrison £217,869
Training Academy
director
5 BBC John Vickerman £205,000
HR shared director
BBC People
6 BBC Mike Goodie £197,800
(recently left)
Employee relations
and people strategy
director
7 Cabinet Office Gill Ryder £197,500
Head of Civil Service
Capability Group
8 BBC Robert Johnston £196,550
Reward Director
9 Home Office Kevin White £196,300
Director general
Human Resources
10 BBC Frances Allcock £195,100
Organisational
Development and
change director
11 Department for Chris Last £182,500
Work and Pensions Group Human Resources
director general
12 Metropolitan Police Martin Tiplady** £175,000
Service HR Director
13 Ministry of Justice Beverley Shears £172,500
(has now left)
Director general
Human resources
14 National Policing Angela O'Connor ** £170,000
Improvement Agency Cheif people officer
15 BBC Clare Dyer £169,800
HR director
16 BBC Rachel Currie £161,783
HR director
Journalism and news
17 BBC Rachel Stock £157,800
HR director
audio and music
18 Environment Agency Graham Ledward £155,337
Director of resources
19 BBC Lesley Swarbrick £146,400
HR director vision
20 Buckinghamshire Gillian Hibberd £134,890
County Council Corporate director
people, policy and
communication
21 Bedfordshire Peter Lewis* £128,636
County Council (now at Cornwall)*
Director of human and
financial resources
22 Westminster City Graham White £128,000
Council HR director
23 Devon County Heather Barnes* £126,631
Council Head of corporate
resources
24 BBC Paul Greeves £119,200
Head of safety,
security and health
25 Kensington & Chelsea George Bishop* £115,000
Borough Council Director of personnel
and general services
26 London Borough of Janet Wickham* £113,322
Waltham Forest Director of people
Council policy and
performance
27 East Sussex County Andrew Ogden* £106,118
Council Director of law and
personnel
28 London Boroughs of Dean Shoesmith* £100,575
Sutton and Merton Joint executive head
of human resources
29 Kent County Council Amanda Beer* £105,000
Director of personnel
and development
30 Tameside Metropolitan Miriam Lawton* £105,000
Borough Council Assistant chief executive,
people and performance

METHODOLOGY

Information in the table above is based on a number of sources. The primary source is the TaxPayers' Alliance Public Sector Rich List 2009, which arrives at a figure showing the total amount paid to an individual by the taxpayer.

This total remuneration includes salary, bonuses, incentive plans, benefits-in-kind and (where made clear in the accounts) pension contributions. The Public Sector Rich List covers the period 2008/2009.

Figures for the BBC come from the organisation's own list.

* Figures for individuals marked with an asterisk derive from the TaxPayers' Alliance Town Hall Rich List 2009. As before the figure is total remuneration. The Town Hall Rich List covers the period 2007/2008, the latest available data.

** These figures have been estimated by HR magazine, while Graham White of Westminster Council directly revealed his salary to us.

HR magazine verified names and HR responsibilities by telephone and email between 4 and 19 January 2009

Who's moved on?

Many HR directors who featured on the TaxPayers' Alliance's original Town Hall Rich List 2009 (updated May 2008) have since moved on. Aberdeenshire County Council director of personnel & ICT Peter Hay was on a package of £111,003 before he left last year. His position was not filled owing to a restructure of the department, with head of service now the highest HR role. Glasgow City Council's head of corporate HR, Norma Aird, was one of the highest-paid HR directors on the Town Hall Rich List at £107,256. She has also left the council and her role has not been replaced.

Over in the London Borough of Greenwich former director of HR and organisational improvement John Comber has since moved to a new role in regeneration. His previous remuneration was £120,593. Comber was replaced at Greenwich by Shaun Rafferty. Hertfordshire County Council's corporate director, people and property, Alan Warner, had the accolade of being the highest-paid town hall HR director, at £145,411, before he stepped down last year. He retains an active role in the Public Sector People Managers' Association as lead officer for communications. Nick Cook, former director of personnel and administration at Northumberland County Council, was on a package of £102,861 before being promoted to the role of director of corporate services. Head of HR Mike Mullen now reports into him.

What about the private sector?

HR magazine asked Hay Group to scour its most recent Executive Compensation report to see what it could unearth about the wages of HRDs in plcs. Of the 422 divisional heads and board-level practitioners, it found:

- 17 earn more than £200,000

- 58 earn more than £150,000

- 201 earn more than £100,000

- HRDs in the retail and financial services sectors are paid 10% more than those in other industries

- HRDs in the private sector are paid 15% more than those in the public sector

BBC box

If there is one organisation that dominates this list, it is the BBC. Thanks to it recently publishing the remuneration details of its top 107 executives it is now possible to see just how dominant it is in public-sector HR pay. Half of the top 20 paid HRDs work at the beeb, and top earner Lucy Adams is the sixth highest paid person in the organisation, only just behind its COO and CFO.

Adams was on honeymoon when this article was being put together, but eighth-placed earner, Robert Johnston, the BBC's reward director, said while the BBC faced "the difficult decision about balancing transparency with data protection, we decided that for anyone who is on a divisional board responsible for making decisions, it is appropriate their pay is released."

The decision follows a turbulent year for Auntie, as it has had to defend the pay of everyone from its own executives to its 'talent' (such as Jonathan Ross). In total, 15% of its corporate population earn £150,000 or more, (there were 634 of these in 2009) but, according to its own defence of corporate pay, the current remuneration strategy is that executive directors should be paid within an 80%-120% range of the median of their market rate for base pay, with the majority to be paid within the 80%-100% range.

According to BBC director general Mark Thompson, total reward levels are around 60% discounted vs private-sector companies and the intention is to reduce the pay bill of executive directors and senior managers by 25% of 2009 wages by July 2013.

Johnston says he is "bound to say HR salaries at the BBC are worth it", stressing they are "regularly benchmarked, and set against a comparative group". He adds: "I'd only be embarrassed about what HR earns if I thought we were grossly overpaid, and this is not the case. We're absolutely certain that to get the HR talent we require, we need to pay the salaries we do. By the same token, we won't pay more than we think is right. There have been some HR folk we wanted, but we couldn't get them because we felt they were asking too much. If we think a job is worth £120-£150,000 we won't stretch to £180,000."

On the subject of Adams' pay, he says: "I suppose it's a good achievement she is regarded at the same level as the FD and COO. I don't believe the number of employees you look after is a relevant calculation of HR pay once you get over 10,000 staff."

But if the corporation does indeed benchmark its salaries, why do others in the public sector fail to earn anything like what the BBC pays its HRDs? "We actually benchmark against the private sector," admits Johnston. "We'd argue that we are different from other public-sector bodies though. We're publicly funded, but do not get funding from the public sector. Other councils probably compare against other councils."

According to Johnston, the real issue is whether £150,000 (or indeed £100,000) becomes a cap. "It sounds like it will be a subtle cap on HR pay, because it means anyone wanting more than these amounts will have to present a good case to get extra money. This is not necessarily a good thing; if they possibly can, employers will want to employ people at just below this level. The result is that you'll get not very good people doing increasingly more important roles. It would also instantly extinguish private to public sector movement. Why would a private sector HRD want to move to the public sector under such pay caps. It's not joined up thinking."

Where do you fit in?

Not quite sure how fairly paid you are? Why not compare your own salary with average board-level pay in FTSE 100, FTSE 250 and FTSE 350 companies (data relates to 2008/09).

Source: Data compiled for HR magazine by RTF Navigator


FTSE 100 Average Min base Max base
base salary salary salary
(pounds) (pounds) (pounds)
Chair 391,599 65,000 1,715,436
Chief executive 779,202 288,194 1,535,187
Executive director 454, 383 166,000 978,000
Finance director 475,602 200,001 829,000
Non-executive director 78,685 12,000 583,000

FTSE 250 Average Min base Max base
base salary salary salary
(pounds) (pounds) (pounds)
Chair 159,490 17,000 700,000
Chief executive 447,758 100,000 1,095,000
Executive director 262,406 100,000 1,100,000
Finance director 292,730 100,000 622,000
Non-executive director 42,499 12,500 224,000

FTSE 350 Average Min base Max base
base salary salary salary
(pounds) (pounds) (pounds)
Chair 232,547 232,547 1,715,436
Chief executive 565,937 100,000 1,535,187
Executive director 329,914 100,00 1,100,000
Finance director 353,177 100,000 829,000
Non-executive director 57,196 12,000 583,000

Can HR pay top them all?

In 2008 it was reported that T.V. Mohandas Pai, the HR director at IT giant Infosys, was paid the highest salary and bonus of all the company's board of directors - including its chairman and CEO.

Pai received a salary of $82,033 and a bonus of $308,625 in a year, the highest among the 15 members of the board.