As CEOs, we invest in people not just because it is the right thing to do, but because talent is the single most important investment we have for growth, innovation, and profitability. And yet, too often, Total Rewards (compensation, benefits, recognition, and well-being programs) sits in the expense column rather than the investment column.
The question is not only whether we pay competitively. It is whether we earn a clear, measurable return on our people investments that ties directly to our strategic and financial goals.
From Expense Line to Investment Thesis
Internally and with our clients, we architect compensation models so that every dollar attributed to an employee’s Total Rewards drives the outcomes stakeholders care about most: revenue growth, margin expansion, innovation velocity, customer experience, and retention of mission-critical talent.
Most compensation plans are built around market medians and pay bands. This is necessary but not sufficient. We must translate our business strategy into talent economics.
An approach we utilize is to identify our top five business initiatives, the SMART goals (Specific, Measurable, Attainable, Relevant to Strategy, and Time Specific), and the critical positions accountable to each goal. We then align the pay architecture to strategic priorities and ROI.
We define our Total Rewards ROI as Strategic Value minus Total Rewards Cost, divided by Total Rewards Cost. Strategic Value includes variables such as revenue uplift, margin improvement, retention savings, and innovation impact.
The Components We Design Around
A well-architected Total Rewards Compensation Package includes:
- Base Pay that provides stability for core roles and a strategic premium for impact roles
- Variable Pay based on simple, outcome-based KPIs
- Recognition that rewards outcome-linked behavior and provides feedback loops
- Benefits that support wellness, team building, culture, and retention
- Equity that ties wealth creation to multi-year performance metrics
Culture as the Multiplier
We cannot forget how much company culture impacts overall performance. We view company culture as a multiplier on ROI. Some ways we have supported company culture internally and within our client engagements:
- Performing compensation benchmarking and providing transparency on pay principles
- Incorporating robust performance management programs that support manager enablement for outcome coaching
- Providing dashboards for transparency on KPI performance
- Integrating team goals into outcomes
- Having fun with each other and enjoying each other as human beings
How We Design at PBO
Our CPO, Nicole Devine, and our Consulting CFO, Kristy Facchini, architect for the details of our Total Rewards Compensation Plan for our unique positions and roles. As a team, we define our core initiatives and values and ensure that we:
- Pay for impact, not optics
- Reward outcomes, not activity
- Design for fairness, growth, and ease of administration
- Create stakeholder value while driving client success
What We Have Seen in Client Engagements
We have seen these compensation plans change work for our clients by:
- Increasing gross margin and profitability
- Decreasing turnover and staff replacement costs
- Experiencing more customer retention
- Delivering projects on time and within budget
- Enjoying happier, more engaged employees
The Strategic Frame
Total Rewards Comp Plans are not just expense items on an income statement. They are a strategy execution plan. When designed with elegant simplicity, disciplined measurement, and cultural coherence, they become one of the most powerful engines for growth and resilience that an organization can deploy.
For the CEOs reading this: the question to ask yourself is whether your Total Rewards plan is the strategy execution plan your business needs, or whether it is the historical artifact your business has inherited. The two are rarely the same.
Francesca San Diego
CEO, PBO Advisory
[email protected]
(858) 622-1681
Is your Total Rewards plan the strategy execution plan your business needs, or the historical artifact it has inherited?
PBO Advisory Group partners with CEOs and their executive teams to redesign Total Rewards programs that move compensation from the expense column to the investment column. Our integrated approach aligns finance, human capital, and strategy so every dollar of Total Rewards earns a measurable return.
