Architect the Comp Team by Considering Size, Structure, Roles

It’s a unique time for compensation practitioners. The compensation function within total rewards has never been under more pressure. Increasing pay transparency has put the work of compensation teams under the spotlight, creating both risks and opportunities. Compensation teams have the chance to strategically engage the workforce in a meaningful way, but that requires being equipped with the right mix of resources.

This article aims to:

• Explore the resourcing of the compensation function,
• Delve into the drivers of team size, and
• Provide vantage points into how teams organize limited resources to achieve their goals.

While there is no perfect answer or formula, the insights within this article are derived from Novo Insights’ recent research on compensation team sizes, the data and findings of which speak to the complexities of staffing these teams.

The Work of the Compensation Team

What is the right number of compensation professionals for an organization? The answer, predictably, depends on a variety of factors. Most importantly, it depends on the scope and scale of the workforce as well as the specific tasks that the compensation team is expected to perform.

Typically, the compensation function’s work can be categorized using the following framework:

Compensation functions are not standardized, as each organization has unique objectives, programs and approaches. The compensation team’s work is typically categorized into different disciplines, each with varying levels of involvement from organization to organization. For example, some organizations place equity compensation management under payroll or legal, while others integrate it with compensation.

Additionally, the type of work can significantly differ. Some compensation teams provide hands-on support during an annual compensation cycle, while others focus on delivering enabling tools and training.

Drivers of Team Size

In our recent research, we received responses from organizations of various sizes and shapes. Using statistical techniques, we identified the following key drivers of compensation team sizes. For organizations with more than 3,000 employees, compensation team size is typically influenced by:

• Headcount. Compensation team size increases in proportion to the square root of employee headcount.
• Global presence. Organizations with a global footprint require larger teams to handle the complexity of local regulations.
• Administrative ownership. Determining who will own sales compensation administration was seen as an important consideration.
• Industry type. All else being equal, technology companies tend to have larger compensation teams.

For organizations with less than 3,000 employees, patterns are less consistent, though headcount and sales compensation management continue to be significant factors. Team size and structure vary significantly across industries and geographies, making benchmarking an essential tool for understanding how well-resourced a compensation function is in comparison to its peers.

In most cases, none of these effects are linear or independent. For example, the effect of company size is amplified by owning sales compensation administration.

Structures and Roles as You Scale

In smaller organizations, compensation teams often start as a “team of one.” This can mean a lone leader brings thought leadership to the HR table, but this can often lead to burnout during peak times, as the leader is responsible for both strategic and administrative tasks. Alternatively, some organizations bring in an analyst who is focused on delivery and recurring processes, though this approach may lack the necessary strategic input.

With these tradeoffs, many organizations consider a “tweener” with a manager title intended to focus on both strategic and tactical support. However, such roles are often highly marketable, and individuals may leave for more senior opportunities.

Resourcing the compensation function isn’t just about headcount; it’s about aligning resources with the work that must be done.

As teams grow, they often evolve into a “leader plus one” model, where a manager or analyst is added to support the head of compensation. As the team scales further, roles become more specialized, focusing on areas such as equity administration, benchmarking or compensation cycle management. For larger teams, compensation functions often introduce business partner roles that align with specific segments of the organization. These roles enhance the team’s ability to tailor compensation strategies to the unique needs of different business units, creating greater familiarity with the type of work being done and increasing the function’s overall impact.

Making the Business Case for More Resources

When seeking additional resources for the compensation function, it’s likely crucial to frame the request in terms of outcomes and investments rather than simply workload. Arguments like “we’re overworked” are rarely compelling to leadership. Instead, focus on the specific value additional resources can create, such as improving compensation accuracy, supporting pay equity initiatives or enhancing decision-making capabilities.

Compensation technology can play a vital role in unlocking productivity from existing resources. Tech investments may minimize the need for incremental headcount by automating routine tasks, allowing team members to focus on strategic initiatives. Fractional expertise is another solution — bringing in niche skills for thought leadership or tactical support to manage peak workloads without committing to permanent hires.

A well-resourced compensation function can drive substantial business impact by optimizing compensation spend, reducing attrition and improving new-hire processes.

Pursuing Balance and Leverage

Compensation teams are more visible now than ever, particularly as pay transparency demands increase. The current labor market dynamics and evolving compensation expectations present an opportunity for positive change — if the right resources are in place. By balancing strategic leadership, technology investments and effective role specialization, compensation functions can elevate their impact and contribute significantly to organizational success.

Leaders must think critically about how to best leverage their teams to maximize efficiency, enhance strategic influence and enable powerful outcomes. Resourcing the compensation function isn’t just about headcount; it’s about aligning resources with the work that must be done.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Compensation
• Organizational Performance