Everyone! I want to introduce you to a brilliant mind and all-around nice-guy, Brian Sommer. He has graciously agreed to be a guest blogger on my site and I am ever so grateful. Check out his VERY interesting viewpoint on HR Executive pay. (Want my 2 cents worth of advice? If you want to make millions of dollars as a HR Exec, work for Home Depot.)
HR Executive Pay vs. Quality of People Hired
Human Resource Executive published a list of the top 50 highest paid HR executives (see “HR’s Elite: The Class of ’06”?, August 2007). The table they produced is still giving me heartburn as the top two highest paid HR executives are with companies that I don’t believe hire the best and brightest. Should HR executive pay be tied to the quality of the employees / workforce?
The article reports that the top HR executives at Home Depot, Inc. and Best Buy Co., Inc received total compensation of $5,804,081 and $5,700,869 respectively. Stock awards made up a significant portion of each of these ($4,327,850 and $3,167,961 respectively). However, the Home Depot executive was also reported to have received an additional $12,987,242 in other compensation. Other compensation was defined as ‘typically includes benefits and perquisites’. What kind of perks are worth that sum?
Yes, I recognize that HR is a huge area of concern for big-box retailers. However, Wal-Mart employs more than anyone and their executive wasn’t on this list. Curious?
Let’s put an even finer point on this matter. The same publication ran a cover story this month on the Top 100 HR executives (see “Terms of Engagement”, January 2008, Human Resources Executive). This article shows the total employee headcount of the top 100 largest US employers. Wal-Mart was indeed #1 with 1.8 million employees. Second was McDonald’s Corp. at 465,000 followed by UPS (427,000), IBM (329,000), Home Depot (364,000) and Target (352,000). Best Buy is 43rd on the list with 140,000 employees. On a cost/employee basis, the Best Buy executive is costing almost $41/employee. The Home Depot executive is costing almost $52/employee.
Best Buy may get some things right as a profitable electronics retailer but their in-store help where I live is often unmotivated and unwilling to help get the right products stocked for that store. Repeatedly, I’m told that this store doesn’t carry a lot of the products other Best Buy stores offer because some system or person has pre-determined what we need in this market. I guess we need lots of DVDs and music CDs because when I need special computer cables, low cost hard drive enclosures, etc. I usually end up going to TigerDirect after getting blank stares at Best Buy. Should I expect the help at Best Buy to really take ownership of customer situations, act entrepreneurial, etc.? Probably not. My LaserJet toner cartridge problem just isn’t what gets them juiced.
Home Depot workers, when you can find them, aren’t all that bad, they’re just scarce. I can’t count how many times I’ve gone into my local Home Depot and never encountered a single employee. Maybe that’s their business model at work. When you need an employee there’s no way to call for them. You may have to roam across rows and rows and rows of the store only to find someone in decorative wall coverings who doesn’t know a thing about PVC pipe fittings. If someone is getting almost $13 million in perks to hire the skeletal or hidden crews at these stores, I’d like some of that cash. Better still, send some of that perk money to the store near my house and hire some additional help.
Maybe we need some more oversight over egregious CEO and HR executive pay. Readers, do you think these executives deserve this sort of pay?