The hidden remuneration problem driving senior finance talent to the market

Last week, I had a conversation with a Finance Director in the renewable energy sector that, unfortunately, has become all too familiar, because on the surface, everything looked positive. The person was well respected internally and a key member of the Senior Leadership Team. They had helped steer the business through significant growth and investment and heavily involved in strategic decision-making, playing a central role in supporting the company's expansion plans.

Yet despite all of this, they had quietly started exploring external opportunities. Why? Did they dislike the business, want a bigger title or feel disengaged? No, they simply felt undervalued and, more specifically, felt no meaningful attempt to benchmark their role against the external market had taken place, or even a review as to whether their remuneration reflected the value they were creating for the business.

Therein lies a challenge that many growing organisations fail to recognise because the person running the benchmarking exercise is often excluded from it.

In many SMEs and scaling businesses, annual salary reviews are now a standard part of workforce planning. Businesses invest considerable time and effort into ensuring they attract and retain the right people. Market data is gathered when benchmarking exercises are conducted and pay increases are consequentially recommended. Retention strategies are tailored with particular focus often given to functions where talent shortages are most acute.

In sectors such as renewable energy, technology, engineering and life sciences, organisations frequently pay premium salaries to secure the specialist talent they need to achieve their growth ambitions but, ironically, the individual often leading or overseeing these discussions is the Finance Director.

Working alongside the CEO and HR lead, they will help assess market rates, evaluate compensation proposals and sign off salary recommendations across the organisation but when it comes to their own role, nobody is doing the same exercise for them.

Nobody is independently testing whether their remuneration remains competitive and nobody is proactively benchmarking their package against equivalent opportunities in the market. This creates an the uncomfortable situation.

The awkward conversation nobody wants to have.

For many Finance Directors and CFOs, raising the subject themselves feels incredibly difficult, because, after all, they are usually the individual with the greatest visibility of the company's financial performance who understands cash flow, investment requirements, inflation, rising costs and margin pressures.

In sectors such as renewable energy, the challenge can be even greater as most businesses operate with significant upfront investment requirements and long-term return horizons. It can take years before major projects begin generating meaningful returns, all-the-whole the Finance Director is often responsible for monitoring these investments, reporting on performance and helping the Board navigate the journey to profitability.

Asking for a salary increase in these circumstances can feel uncomfortable, even when market evidence clearly suggests their compensation has fallen behind, many simply choose not to raise the issue and quietly absorb the frustration - until a recruiter calls.

This isn't just a renewable energy issue.

While renewable energy provided the catalyst for this particular conversation, the reality is that the same challenge exists across numerous industries.

I regularly encounter similar situations within:

• Technology businesses investing heavily in product development and innovation.
• High-growth scale-up organisations focused on expansion rather than profitability.
• Manufacturing businesses managing significant capital expenditure programmes.
• Life sciences and biotech organisations funding lengthy research and development cycles.
• Investor-backed businesses prioritising future valuation growth over short-term earnings.

In each case, senior finance leaders are expected to balance commercial realities with talent retention strategies for everyone else and often lack the same support themselves.

The cost of inaction

Many organisations assume that if a Finance Director isn't actively complaining, they must be content. In fact there are many situations like this and the stoic accountant can often be a quiet and undramatic figure.

This assumption can be dangerous as senior finance professionals are typically resilient, commercially minded and pragmatic individuals who do understand that remuneration decisions are not always straightforward, but expect fairness, transparency and their contribution to be recognised appropriately.

When these expectations are not met, dissatisfaction doesn't always reveal itself immediately but manifests quietly with a decline in engagement and motivation

At the risk of painting myself as the pantomime villain, this is where external conversations begin and before long, an organisation finds itself trying to replace a trusted Finance Director at precisely the point when continuity and stability matter most. The cost of replacing that key individual will almost certainly exceed the cost of reviewing their remuneration proactively.

A simple question for boards and CEOs

If your organisation conducts annual benchmarking exercises for employees across the business, ask yourself some simple questions:

1. Who benchmarks the Finance Director?
2. Who independently assesses whether your CFO, Finance Director or financial leader remains fairly rewarded against the external market?
3. Who ensures their remuneration reflects the scale of responsibility they carry?
4. Who gives them the opportunity to discuss compensation without feeling conflicted by their visibility of the company's financial performance?

For many organisations, there is no positive response to these questions, because they are not considered.

Final Thoughts

The best Finance Directors rarely leave purely for money but because money becomes a visible catalyst that is primed by a lack of recognition, communication and a structured review.

The organisations that retain exceptional finance leaders are typically those that apply the same rigour to senior leadership remuneration as they do to the wider workforce and I am proud to say that I've been contacted by CEO's and COO's to make sure their finance chief's rewards are meeting, or exceeding the market rate. 

If your Finance Director is responsible for ensuring everyone else is valued appropriately, somebody should be doing the same for them and if nobody is, don't be surprised when the market does.

I am happy to have confidential discussion if you are on either side of this fence. I can help you benchmark your Finance Leadership and team, always quoting our annual talent survey, have a confidential chat if you feel that you might be out of sync with the market in terms of salary or EVP, or if none of these are of interest, I'll be speaking to your CFO/FD very soon.

Email john.gilbertson@merakitalent.com or meet me on LinkedIn.