To connect with your organization’s leadership, you need to present ideas and solutions in the language that guides their decisions: business metrics. These numbers frame how success is measured and how compensation strategies are evaluated. It’s how you validate your compensation strategy against measurable business results.
Understanding this context allows you to position compensation as a strategic tool that drives measurable results.
Below are seven core business metrics, defined in plain language, with direct links to how compensation influences each one. Use them to frame proposals, inform tradeoffs, and build fluency with finance partners.
| Metric |
Plain definition |
Why it matters to comp |
| Revenue |
Sales before costs |
Growth incentives must match how revenue is earned — whether through volume, premium, or recurring |
| COGS/COS |
Cost to deliver a product or service |
In labor-heavy organizations, comp is a major variable driver of these costs |
| Operating expense |
Costs to run the business (including salaries) |
Raises, bonuses, and benefit programs land here, shaping overall spend |
| Gross margin |
Revenue minus COGS, expressed as a percentage |
Signals operational efficiency — pay strategy directly affects margin compression or lift |
| Net income |
Profit after all expenses, taxes, and interest |
Retention costs, legal risk (pay equity), and turnover all hit this bottom line |
| Customer acquisition cost (CAC) |
Total cost to win a new customer |
Sales comp, onboarding investments, and role structure drive CAC variability |
| Return on investment(ROI) |
Outcome achieved relative to cost |
Compensation has ROI, especially when tied to measurable KPIs like productivity or retention gains |
Start referencing these metrics in your next compensation justification deck to shape the conversation.
Beyond the basics: metrics for deeper connection to business strategy
When planning for the longer term or preparing for senior-level conversations, these advanced metrics offer added clarity:
- Total Cost of Workforce (TCOW): Total investment in salaries, bonuses, benefits, and contractors — used to model full workforce cost.
- Time to Productivity: How long it takes new hires to ramp up. This helps link onboarding pay and role design to speed-to-value.
- Labor Cost % of Revenue: A key metric for service-based or margin-sensitive businesses, helping assess pay in context.
These advanced metrics sharpen how you model the ROI of compensation. You don’t need to lead with them, but recognizing them can sharpen how you frame costs, investments, and efficiency across the organization.
For more context on how organizations are adjusting compensation strategy this year, explore the Mercer QuickPulse® Canada Compensation Planning Survey report.
Build your business fluency: four practical habits
Business fluency is built by what you practice. These four habits can help you build fluency in the business metrics that frame comp strategy conversations:
- Listen to quarterly earnings calls. Spend 10–15 minutes on your company’s or a peer’s call. Pay attention to what execs emphasize: margin pressure, market bets, and cost efficiency. It clues you into what matters when you build a business case.
- Ask finance to explain one margin trend. Whether it’s rising operating expenses or tightening gross margin, understanding what’s driving the shift will strengthen how you justify compensation decisions and the conversations that follow.
- Add a KPI to every comp recommendation. Even one sentence that ties comp to retention rate or cost per hire can reframe the entire conversation. Over time, this positioning builds influence.
- Read one business article a week through a comp lens. Choose a source like SHRM or CFO Daily. Ask: How would this shift affect our pay strategy? What questions would leadership raise?
Want help connecting your compensation strategy to business performance? Call 866-605-1031 or email surveys@mercer.com.