Pay for the 10%: When Capability, Not Workload, Should Drive the Salary Conversation

I had an interesting salary conversation with a client recently.

They were recruiting a senior finance role that sat somewhere between a Financial Controller and a CFO.

It wasn’t a CFO role.

Most of the job was going to be exactly what you’d expect from a strong Financial Controller or senior Finance Manager: owning the day-to-day finance function, reporting, cash flow, compliance, managing advisers and making sure the numbers were right.

But that wasn’t the whole brief.

There was probably another 10% of the role that required a very different level of capability.

Reviewing investment opportunities. Navigating more complex tax and structuring questions. Providing commercially credible advice to a family board. Challenging decisions when necessary. Looking beyond what the numbers said and helping the owners work out what they should actually do about them.

The business didn’t currently have a CFO, fractional or otherwise.

Instead, it was leaning heavily on an external accounting and advisory firm whenever these issues arose, at a considerable cost.

Part of the reason for making the hire was to change that.

They wanted more knowledge sitting inside the business. Someone who understood its history, its assets, its people and the family behind it. Someone who could become, in their words, “part of the family”.

So when we discussed salary, I wasn’t recommending that they pay CFO money for a role that wasn’t a CFO role.

Equally, I didn’t think we should price it as a conventional Finance Manager or Financial Controller role.

We landed somewhere in between.

The objective was to find that slightly unusual combination: someone comfortable enough to remain hands-on for most of the week, but experienced and commercially capable enough to step up when the situation demanded it.

And that distinction matters.

Are you paying for the work, or the capability?

After we’d agreed the broad range, my client received some well-intentioned advice from someone in their network.

The argument was essentially:

“If they’re only doing CFO-level work 10% of the time, why pay more when 90% of the job is Financial Controller work?”

On the surface, there’s logic to it.

Price the role according to what occupies most of the person’s time.

But I think it misses something important about senior finance hiring.

You’re not only paying someone for the tasks they perform.

You’re also paying for the capability you need them to possess when those tasks stop being straightforward.

The difficult 10% is often precisely why you hired the more experienced person.

It’s easy to look at a job description and say:

Month end.

Reporting.

Cash flow.

Budgets.

Compliance.

None of those necessarily requires CFO-level capability.

But then an investment opportunity lands in front of the board.

A complicated tax issue arises.

The business considers restructuring an asset.

A family member wants to understand the implications of a significant commercial decision.

An adviser recommends something and the owners want an informed internal view before accepting it.

That’s when the distinction becomes obvious.

You don’t want to discover at that moment that the person you hired can comfortably perform 90% of the role but isn’t equipped for the other 10%.

Because now you’re paying for the internal resource and going back to the expensive external adviser you were trying to become less dependent on in the first place.

The saving on salary starts to look fairly insignificant.

Capability isn’t used evenly

This isn’t unique to finance.

Senior people are rarely operating at the absolute ceiling of their capability every hour of every day.

You don’t pay an experienced leader because every decision they make requires 20 years of experience.

You pay for the fact that when a decision does require it, that experience is sitting in the room.

That’s particularly relevant in smaller and mid-sized businesses.

Roles are rarely as neatly defined as they are in larger organisations.

A CFO in a large corporate may genuinely spend most of the week operating at CFO level because there are teams underneath them handling everything else.

A $30 million, $50 million or $100 million business might need someone capable of making CFO-level decisions but still expect that same person to get their hands dirty.

Those people exist.

But you’re recruiting for a particular combination of experience, temperament and motivation.

Someone senior enough to provide the judgement, but pragmatic enough not to consider the everyday work beneath them.

That has a market value.

Ignoring it doesn’t make the capability cheaper. It simply changes the type of candidate you’re likely to attract.

The alternative isn’t necessarily to pay more

There was another part of that conversation that I think is equally important.

If a business genuinely looks at the role and concludes:

“We don’t need that level of capability sitting here full-time.”

That’s perfectly reasonable.

In fact, the growth of the fractional CFO market over the past decade has created a very good solution.

Hire an excellent Financial Controller or Finance Manager to own the day-to-day function.

Then engage a fractional CFO for the genuinely strategic work.

I’ve been a strong advocate for that model for years and it represents a healthy part of my own contracting business through arrangements with long-term clients.

For the right organisation, it works exceptionally well.

You aren’t paying an executive-level salary for capability you rarely use, but you still have access to that capability when required.

The important part is being honest about which model you actually need.

Because they are different.

One model says:

We need senior judgement embedded inside the business, even though we won’t call on all of it every day.

The other says:

We need excellent day-to-day finance leadership and can access the higher-level capability separately when required.

Both can work.

What becomes problematic is trying to build the first model while budgeting for the second.

Work backwards from the moments that matter

A useful way to think about these hybrid finance roles is not to start with:

“What will this person spend most of their week doing?”

Start with:

“What are the most important decisions we expect this person to make?”

Then ask:

“What level of capability do we need sitting in the chair when those decisions arrive?”

If you’re comfortable escalating those decisions elsewhere (to a fractional CFO, accountant, tax adviser, the board or another executive) then perhaps you don’t need to pay for that capability in the full-time hire.

But if part of the reason you’re recruiting is specifically to bring that knowledge, judgement and ownership inside the business, then it needs to be reflected in the person you’re hiring.

And therefore, to some extent, in what you’re prepared to pay.

To my client’s credit, once we talked it through in those terms, they understood the reasoning immediately.

It wasn’t about inflating the salary.

It was about going back to the original reason they wanted to make the hire.

They wanted stronger internal capability.

They wanted less dependence on external advisers.

They wanted someone who could manage the everyday finance function but also step up when the board needed more.

That’s the person we were pricing.

And I think there’s a broader lesson in that.

When you’re recruiting one of those awkward roles that sits between two obvious levels, don’t just price the 90% of the job you can see on the position description.

Decide how important the other 10% is.

Because if that is the 10% that really matters when things get difficult, you’re not paying for how often the capability gets used.

You’re paying to make sure it’s there when you need it.