You've done the preparatory work: job families are clean, percentile targets are set, and the philosophy is on paper. It is not over yet. You are only getting started as Step 5 is where you find out if you can afford what you believe is needed.
The Finance dynamic varies. I've sat across from partners who treat every dollar like it's coming out of their own pocket, and others who understand that wasting dollars on inefficiency, unfilled roles, and attrition to save pennies is a risk not worth taking. The argument that lands every time is this: "How much does it cost when you can't hire the right talent to build the engine? How much do you lose when you can't retain the talent you already have?" Framed that way, compensation stops being an expense line and starts being a business continuity question.
You must go in with a clear point of view on where the money must go and why. Be specific and ready to defend it. And be ready to resharpen the pencil.
Resharpening the pencil doesn't mean retreating from your philosophy. It means applying it more precisely. If the budget won't stretch to top-percentile positioning across the board, the questions become: where must it? Which roles, if not filled by exceptional talent, stop the business in its tracks? Those get the aggressive targeting. Roles where strong but less scarce talent can thrive or where an early-career program could work get a different approach. The constraint doesn't change the philosophy, it refines it.
Step 6 is where creative problem solving when evaluating tradeoffs can save the philosophy.
When the numbers still don't work after prioritization, options remain beyond just cutting percentile targets. Geographic-based adjustments can unlock meaningful savings without compromising your ability to compete in your core markets. Reallocating budget from lower-priority initiatives or offerings with lower utilized spend elsewhere is worth exploring before you start trimming the comp structure
itself. Occasionally, the best move has nothing to do with cash at all.
At a prior company where I was leading the People function, we were running an RFQ process to evaluate new medical benefits vendors. Instead of treating it as a straight cost exercise, we used the competition between vendors to negotiate hard. We walked away with lower overall benefits costs, better coverage and cost sharing for employees, and a healthy wellness subsidy that we extended as a fitness reimbursement program. Three wins from one process, none of which came out of the comp budget.
That reimbursement became a genuine part of our total rewards story. The lesson: when you're telling candidates and existing team members what you offer, the number on the offer letter is only one line. Everything else you've built around it is the rest of the story. Make sure you know how to tell it and tell
it often since team members sometimes need the reminder.
The companiesthat get the most out of their compensation investment aren't necessarily the ones spending the most. They're the ones who know exactly where every dollar needs to go and why.
Next up, Steps 7 & 8: audit first, then launch.
Photo by Tima Miroshnichenko