Can High CHRO pay Affect Employee Performance?

According to a report from the Stanford Graduate School of Business, workplaces where Chief Human Resource Officers (CHROs) are higher paid tend to be more productive and have happier employees on average. 

The study, which was conducted in collaboration with S&P Global, uses CEO pay as a benchmark and finds that CHROs who received higher wages relative to their organisation are associated with better human capital management.

Using survey data, the study found more rigorous performance evaluation systems, greater knowledge capital outputs and higher quality talent in these organisations. 

The importance of HR in a changing workforce

The number of CHROs in American companies has increased by 120% in the past 10 years, according to the report – as HR begins to play a more strategic role in business performance. 

A need to increase HR visibility in companies is also reflected in research from EY, which finds that 85% of employees feel that having a strategic HR function will be critical for the success of their business in the next five years. 

In order to achieve this, 89% of employees believe their organisation will need to change significantly. 

According to EY, these changes involve improving employee engagement, further integrating financial metrics in the HR function and developing a strategy to improve employee confidence in emerging technologies such as AI. 

Stanford’s research suggests the strategy to do this is by ensuring CHROs are well paid within the context of the business and the wider C-Suite, as these organisations were seen to be more likely to hire innovative, productive workers with better credentials. 

New workers who joined companies with higher paid CHROs were more likely to come from competing firms and to hold degrees from higher-ranked universities.

Increases in employee satisfaction

Companies with high CHRO pay also had happier employees on average, with better Glassdoor ratings for compensation, benefits, career opportunities, culture, values and work-life balance.

This can be seen in companies like Siemens, which was voted a Glassdoor best place to work in January 2026.

By ensuring the company has a centralised Human Resources strategy under the leadership of Judith Wiese, Chief People and Sustainability Officer, the company has developed a collaborative work culture and learning and development opportunities – such as a reverse mentoring programme – to embed learning into every day work. 

Discussing her approach to Siemen’s HR strategy, Judith says: “Success for me is measured by business impact and whether our people remain relevant and employable throughout their careers.”

A need to prioritise HR in the business

As leading organisations begin to place more emphasis on the importance of HR as part of an overall strategy, Stanford research finds that HR departments are being given bigger budgets and higher staff counts. 

Edward Watts, Assistant Professor of Accounting at Yale, who co-authored the study, describes the resources HR departments are now in charge of as “tremendous”, with the right investments in HR leadership making a significant difference to value creation. 

Edward also shares that the benefits of CHRO investment are only seen in companies where HR is tangibly valued, saying there is "virtually no effect for lower-paid CHROs”. 

The study also suggests that CHRO pay alone is not enough to improve overall business performance, with companies that have a higher CHRO spend likely to allocate more resources to HR.