Let’s talk money!
As a recruitment partner to North American tech companies, we’ve had the opportunity to talk with hundreds of high-growth start-up and scale-up leaders about their experiences, aspirations, motivations, and of course…. their compensation strategies!
When establishing a target compensation range for a new search, clients always ask us “What are you seeing in the market right now for a role like this?” Since we’re having these conversations on a regular basis, we thought we would pull back the curtains and share some insights to help you create a competitive compensation package. And if you’re on the hunt for your next challenge, we hope you’ll find this data to be useful in the negotiation process.
In this edition, we’ll be providing an updated salary snapshot for the ever-important Head of People role, with super fresh insights from 5 recent searches that had us talking to the best Tech HR leaders from across Canada and the US. We’re sharing insight on compensation structures and how widely the scope of HR leadership roles can vary among tech companies.
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How senior is a “Head of HR” you ask? It’s important to note that the top HR role within tech companies might be a VP or C level, or it could be a Director, as the scope of responsibilities varied from highly tactical to purely strategic.
While we’ve broadly defined this role as a Head of People, the companies we’ve partnered with have typically been high-growth SaaS startups at different stages of scale. With that in mind, they had a set of criteria for bringing a leader on board with either a ground-up builder mindset or strategic scaling experience. For this reason, we’ve broken down our candidate pool further into two key subsets based on the company requirements and skill level.
1) Tactical Head of People
Among the 5 most recent Head of People searches we’ve completed, two of the companies defined the role as very operational and process-oriented, with this individual being responsible for leading a relatively small team (1-5 direct reports). This role scope and experience required would equate to a Director level, where the primary responsibility was for defining the tactical approach and owning execution, but not driving high-level strategy.
Typical Responsibilities of a Tactical Head of People
Manage, coach and scale a team of HR, Culture and Recruitment specialists
Build an employer brand and a compelling growth story for talent attraction and retention
Focus on talent acquisition (sourcing, referral program) typically with a quota in mind
Introduce tools and processes to scale sustainably, drive engagement and create a positive candidate/employee experience
Implement talent acquisition, employee engagement, learning and development initiatives as mandated from the top
Run foundational programs such as compensation, benefits, and HRIS
2) Strategic Head of People
The other group falls under a high-level VP/C-level HR purview with responsibility for leading larger teams comprised of people working at the manager level and above. This leader is a key member of the executive leadership team, tasked with defining the long term People strategy and owning the execution.
Key Responsibilities of Strategic Head of People
Consult leaders and managers on people practices and programs to support long term strategy growth, leveraging data to drive decisions
Collaborate with executive leadership to define the organizations long-term mission and goals
Champion and evolve company culture with a strong integration to the overall mission, values and objectives of the company.
Develop programs that drive talent acquisition, diversity inclusion and belonging, employee engagement, learning and development, and employee relations.
Designs competitive compensation, benefits, performance appraisal, and employee incentive programs.
Manage all HR budgets for recruiting, HR, culture & L&D initiatives
We’ve analyzed a spectrum of compensation packages to share both the high-level summary and some of the related insights around how your peers are crafting plans with a mix of base and variable pay. Below are snapshots for the two groupings of HR leaders that emerged from the data, along with some very interesting insights.
What are you looking at?
This data represents volunteered current (2022/2023) and past (2020) compensation summaries from Director-VP People professionals in SaaS start-up or scale-up companies. Each individual has between 1 - 20 direct reports.
There is some variability in the structure of compensation plans for People executives, but we’ve seen the majority structured as base-heavy with a 10-30% bonus structure plus an equity stake. Because compensation is largely base salary in most cases, we’ve opted to show data as total on-target earnings rather than separate out variable incentives.
Salaries in the tech industry have very publicly been on a major rise since 2019, and People & Culture leaders are certainly not the exception. We also believe that the pandemic brought on new complexities and the need to invest in a strategic HR function to support not only growth, but also engagement and retention of staff.
Total cash compensation plans ranged from $89-280K for the Tactical HR Leader, and $157-350K for those more senior Strategic HR Leaders. Despite having some data points on the extreme low end for the Tactical HR leader, those appear to be clear outliers with the median total compensation increasing by a whopping 33% from $150K to $200K when comparing large samples from 2020 and 2022/2023 respectively. At the Strategic HR Leader level, we’ve observed a more ‘modest’ increase in median total compensation, with an increase of 11% from $225K to $250K total cash compensation.
It’s important to keep in mind that we support organizations who are looking for the cream of the crop when it comes to hiring VP and C level executives. Our sample is for product-oriented tech companies with talent who have demonstrated staying power. Consider these numbers the top 20-25% of the market, which in most cases is exactly what you’re looking for.
Deeper Insights
Our sample provided a unique opportunity to do a compensation comparison between US and Canadian based candidates, as we have recently completed searches for growth-stage tech companies on both sides of the border.
At a surface level it appears that Canadian salaries have kept pace relatively well with our American counterparts for People & Culture leaders in the tech sector. Based on this sample, we’re seeing a fairly nominal difference of $15K in median salary at the Tactical level, and a $25K difference with Strategic roles.
It’s important to note that these samples have been left in their respective currencies (USD & CAD) to better reflect relative cost to American and Canadian companies respectively. This is of course where the comparison between US and Canadian compensation packages becomes complicated, and we see the gap widen by about 25%, which has been the average difference between the two currencies for the past year. Further complicating the matter is that capital from US-based VC firms (in USD) has been increasingly flowing into Canadian tech startups, and talent pools are becoming borderless as a result of the pandemic acting as a major catalyst for a global shift to remote working among SaaS companies. As a result, we’re seeing very wide compensation ranges from company to company, with the true cost of US-based labour impacting some Canadian companies substantially more than others.
At the Tactical level the majority of Canadian candidates fell into the $80-170K CAD range, whereas their US counterparts came in primarily between $130-210K USD.
At the Strategic level, the salary distribution followed a nearly identical pattern with the majority of Canadian candidates coming in one bracket lower than US based candidates. The majority of Canadian candidates at this level fell into the $180-250K CAD range, compared to a range of $210-290K USD for the bulk of the US candidates.
The high-water marks for both levels came from US candidates, at $338K and $405K USD respectively, compared to the low end of the ranges set by Canadian candidates at $89K and $157K CAD. A gap of $249K between the lowest and highest compensation packages at the Tactical level demonstrates just how inconsistent and volatile the market has been during the pandemic, though these extremes shouldn’t be of major concern to most companies seeking to fill one of these positions.
Observing that the distribution follows a normal pattern with around 75% of candidates landing within the middle ranges tightly around the median is good news for the most tech startups and scaleups that are paying at the 50th percentile. Meaning, you should have access to the vast majority of the talent pool with an offer around that target median number.
The Bonus Question:
Within our candidate sample, 58% have a compensation plan that is a combination of base salary and bonus. Among those with a bonus structure, the average variable pay is 16.8% of base with a total range of 7-40%).
At the Tactical level, the bonus ranged from a low of 7% to a high of 30%, compared to the Strategic level with a range of 11.1% to 40%.
With HR representing a cost center as opposed to a profit center for businesses, bonuses were based on a large mix of personal performance objectives and overall business results. For organizations that are highly data-driven, measuring the results of a People leader is much more straightforward.
What about Start-ups and Equity?
Individuals who are part of earlier stage companies tend to be on the lower end of the range but receive a larger share of equity to compensate for a lower base salary. This is typical for all roles, not just People.
Leveraging equity as a key component of compensation not only enables companies to conserve cash but also ensures that your team is aligned around success. The downside of highly leveraged compensation plans is the exclusion of great candidates who have financial commitments that preclude them from roles with lower than market salaries.
Among our sample, 42% of candidates at the Tactical level had an equity stake in their company as part of their compensation plan, compared to 63% of candidates at the Strategic level.
What’s behind the data?
Our snapshots are not typical salary surveys, as they represent only the data we’ve collected from a handful of recent searches. We find it to be pretty useful and topical information, as it represents current data from a sample of individuals who we’ve carefully selected as having credible and validated experience with successful local companies.
Each Salary Snapshot represents between 40 – 80 sources.
Each source is an individual who we deemed a promising candidate for a role within a high growth tech company. Most are gainfully employed and many were recommended as exceptionally talented. As a result, our salary numbers might be skewed towards the top of the range.
We elected not to show compensation figures related to equity or options. Though this was a significant aspect of the comp package for many execs, it’s often tough to put an annual dollar value on equity.
Specific details that would identify an individual or their employer will not be shared for obvious reasons.
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Updated August 2023 with additional data from 2022, no changes in compensation were observed at that time