In today’s economic climate, CEOs, CFOs, and even board members are scrutinizing budgets more than ever. For Chief People Officers, this means every dollar spent on salary increases, employee programs, or new initiatives needs a clear ROI. 

But how can you successfully navigate these budget-related conversations and confidently present a business case that gets results and builds trust?

Below are 3 steps for Chief People Officers (CPOs) to get ahead of budget-related questions from your CEO or CFO, like:

    📊 "What percentage of payroll did we allocate for salary increases over the last few years? What’s the industry standard?"

    ✒️ "How does the percentage of workforce promotions compare year-over-year? Are we keeping pace with market benchmarks?"

It’s natural to feel caught off guard by these questions. But instead of seeing them as roadblocks, view them as opportunities to showcase your strategic impact. 

Here’s how to navigate these discussions and build the trust you need to secure faster approvals:

Step 1: Build a Proactive Foundation

Preparation is your best defense against budget battles. If your CFO or CEO is questioning budget decisions right before a compensation review cycle, it’s often a sign that the groundwork wasn’t laid early; To prevent this:

✅ Align early: Months before a compensation cycle, meet with your CFO and CEO to agree on budget parameters and expectations, including discuss priorities (i.e., plan A vs. plan B budget spend), market trends, and how your budget supports business objectives.

✅ Anticipate concerns: Bring historical data, like % of payroll used for salary increases, as well as average compa-ratios broken down by department/function, job level, and gender category.

✅ Link budget to goals: Show how investments in salaries, promotions and equity refresh grant programs directly tie to growth, retention, performance, and productivity.

Step 2: Build Relationships, Not Just Spreadsheets

Numbers matter, but relationships drive decisions. Your CFO and CEO are more likely to back your requests if they see you as a trusted partner.

🤝 Assume good intent: It’s natural to feel defensive when your budget request is questioned, but these inquiries are usually about aligning with broader business goals. Treat them as a chance to strengthen alignment.

💬 Have honest conversations: If a question or request catches you off guard, be candid: “I wasn’t fully prepared for that due to limited resources. How can I better support you and these types of budget decisions moving forward?”

👥 Present a united front: Work together to ensure you’re presenting a united front and cohesive narrative for other leaders or the board.

Step 3: Be One Step Ahead

Answering questions before they’re asked signals you’re operating strategically. Your ability to anticipate and proactively answer questions builds trust and confidence. Keep these metrics on hand:

📊 Salary trends: Show average compa-ratios and % of workforce below market by department, job level, and gender.

📈 Retention and compensation: Correlate retention rates with compensation adjustments.

💡Pro Tip: Model out a few different scenarios for budget usage for salary increases (e.g., cost to get all employees who are below market to at least 85% compa-ratio vs. 90% compa-ratio vs.  just the high performers). Share the pros and cons of each scenario (e.g., if we focus on salary increases for just high performers we face a significantly higher employee turnover rate).

Budget scrutiny can feel overwhelming, especially when People teams are already stretched thin. But by proactively preparing your case, fostering partnerships with your CFO and CEO, and focusing on clear communication and rationale for budget needs, you can turn these tough conversations into opportunities to demonstrate proactive strategic leadership.

These moments of scrutiny become opportunities to demonstrate why your budget is a business priority, as well as solidify your role as a strategic partner who drives both business and people success.🌟