As organizations face tighter budgets, shifting labor markets, and growing scrutiny around pay equity, finance leaders look to compensation teams for deeper insight into how workforce investments affect the bottom line.
Bettercomp’s recent survey of 150 HR and finance leaders reflects this recent shift. Many respondents said they want compensation teams to help quantify the financial impact of pay decisions, model tradeoffs, and translate workforce data into insights that inform broader business strategy.
For compensation leaders, this means evolving from a reporting function into a strategic partner — especially for finance teams responsible for managing one of the organization’s largest expenses: payroll.
A strategic approach to compensation
Compensation sits in between people strategy and financial planning, but finance and HR leaders often approach employee compensation from different perspectives. Bettercomp’s research found that while 79% of HR leaders view compensation primarily as an HR necessity, 56% of finance leaders see it primarily as a financial cost. For finance leaders, compensation decisions are rarely just about individual salaries; they’re about how labor investments affect organizational performance over time.
“There’s a generational split in how CFOs think about payroll,” said Derek Schlicker, who operates as both Bettercomp’s CFO and COO. “Some view it purely as a cost center. Others see it as a strategic allocation — more like an investment portfolio where you’re making bets on the people who will deliver the most value.”
That perspective highlights why finance leaders increasingly expect compensation teams to provide more than historical reporting. Instead, they want insight into how pay decisions affect retention risk, performance outcomes, and long-term business goals.
4 ways comp teams can be better partners
Many organizations now operate on quarterly — or even continuous — forecasting models. Thus, finance leaders need access to real-time insights about workforce costs, talent risks, and market shifts.
According to Schlicker, that means comp teams should present data in ways that directly support executive decision-making. “If comp teams want to be strategic partners, they need to come in with recommendations and the tradeoffs attached,” he said. “Executives often have to make big decisions with incomplete information and no-win situations. Having a framework that lays out the risks and potential outcomes makes those decisions much easier.”
Four strategies that can help compensation teams strengthen their partnership with finance:
- Build a clear narrative: Compensation insights often need to serve multiple audiences, from board members focused on ROI to people managers responsible for communicating pay decisions. Translating complex pay data into a coherent story helps leaders understand the business rationale behind compensation strategies.
- Model short- and long-term scenarios: Finance teams rely heavily on modeling to forecast costs and evaluate potential outcomes and risk. Comp teams can support this by modeling scenarios such as promotion costs, hiring tradeoffs, and longer-term compensation structures tied to growth or geographic expansion.
- Identify emerging risks: Pay equity concerns, market misalignment, and retention cliffs can all create financial risk. Compensation teams that proactively highlight these issues give finance leaders the visibility they need to act before problems escalate.
- Evaluate outcomes after the fact: Many organizations spend significant time debating comp decisions but rarely review their impact afterward. Evaluating outcomes 6–12 months later (e.g., whether a pay increase actually improved retention) can generate valuable insights for future decisions.
“It’s essentially a risk-adjusted bet,” Schlicker explained. “You’re deciding whether to invest more in a role, hire someone at a higher level, or adjust compensation to keep someone. But you need to go back later and ask whether the bet paid off.”
Compensation strategy for the long-term
As workforce costs continue to rise and organizations rethink how talent contributes to business performance, comp teams are increasingly important partners for senior finance and HR leaders. Perfectly positioned between these two business functions, compensation teams can detect even small changes in hiring strategy, pay structure, or retention outcomes. They can also help answer questions that traditional financial models can’t, such as how pay decisions affect productivity, talent pipelines, and long-term sustainability.
When compensation teams combine workforce data with financial context, they help organizations move beyond reactive pay adjustments and toward more intentional workforce investment strategies. Ultimately, the goal is to move past simply reporting on compensation data and focus on sharing recommendations and insights that help leadership understand what those numbers mean for their business unit.
For more insights into how HR and finance leaders are rethinking compensation strategy, read the full survey report.