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The Challenges of Managing Payroll at a High-Growth Company

The Challenges of Managing Payroll at a High-Growth Company

Accelerated growth adds a whole new level of complexity to payroll’s ordinary operations, as it entails enabling expansion into new countries, servicing fast-paced headcount increases,

Accelerated growth adds a whole new level of complexity to payroll's ordinary operations, as it entails enabling expansion into new countries, servicing fast-paced headcount increases, and designing future-proof processes that can support this growth in the long term.

Whether your organization is already at a high-growth stage or expecting to enter it shortly, the more you know about the implications of this accelerated growth, the better you can prepare to manage payroll in such an environment.

To help you navigate this context in the best possible way, we have asked payroll experts Pierre Thenes, Ronald van Santen, and George Luca to share their best advice on how to enable such high growth and sustain it over time. See how you can apply their learnings to your organization and ensure that your payroll operation is growth- and future-proof!

The evolution of Payroll next to the business' expansion

When an organization reaches the high-growth stage, it typically finds itself in a moment of evolution where, after the disorganization and urgency of the beginning, processes are starting to become more standardized, and there is a higher emphasis in governance and compliance. 

And, as the business is evolving, so is its payroll operation. As Pierre Thenes, Global Head of Payroll at OLX Group, explains, “in a moment of fast growth, Payroll must find its place. The organization is gaining maturity, so Payroll needs to gain maturity as well”. To get there, “Payroll must understand what are the overall strategy and priorities: are they to build a cost-efficient, profitable business? Or is the main focus to be really agile and enable the business to develop quickly? And then, look into the priorities for the payroll department itself, its own goals, which could be for example achieving higher accuracy, or maybe better compliance.

It is key, then, for payroll “to understand what the organizational strategy is and, as part of it, what payroll means for the organization”.

However, regardless of the organizational strategy, argues Pierre, “Payroll is going to need to go through a certain transition process. As the company is growing and the payroll function becomes more specialized, it will need to focus on defining segregation of activities and duties, defining procedures, and documenting the process”.

This is definitely a hot topic”, adds Ronald van Santen, Sr. Manager Payroll at Equinix. “In my experience, once a company starts evolving and maturing it is essential to look into segregation of duties, the position of payroll, and where it should be located for things to work in the best possible way: under HR, under Finance, or maybe as its own separate entity.

Once that definition and segregation of duties has been completed, the second step is, according to Pierre Thenes, to begin standardizing: “as the company is entering new markets and gaining maturity, payroll needs to be able to standardize to be able to scale. That is how Payroll will experience maturity gains within the organization.

The last step in this evolution would be “the simplification of processes and the introduction of automation to increase productivity and to obtain more control over the payroll operations, which will enable the business to scale faster”, concludes Pierre Thenes. 

The payroll department is quite special, and it is unique in each company, as every organization can have its own vision for it, sometimes considering it part of HR, others of Finance, but in any case, it is very important for the process to be well defined”, adds George Luca, EMEA Payroll Manager at ServiceNow. “As the company evolves, many things can change, like the technology, or the key stakeholders. That increases the complexity, adds new layers to the process, and the company really needs to be paying attention to it, ensuring the process is clear so that the key functions of the Payroll department are not lost, and it maintains its ability to do the job.

Managing payroll in a rapidly expanding company VS in a more settled environment

Managing payroll in a company that’s growing and changing very quickly is very different from doing so in a more settled organization. “The complexity comes, of course, when the company is growing and expanding into different markets”, explains George Luca. 

This kind of growth is often not sustained by the processes and technology already in place, so it adds a lot of challenges, because the payroll still needs to be processed with the same deadlines, but the headcount, the volume of information, the complexity, and the questions received are all significantly increasing. That’s the moment to start considering what the best vision for the future is: What should the process look for the company? Where to invest?”

“From my past experiences, if the existing technology and systems can grow alongside Payroll’s needs, the process is much smoother. But when that’s not the case, it becomes a huge challenge”, concludes George. 

The biggest struggle I have experienced in this moment of the company becoming more mature is data management and securing one source of truth for HR- and Payroll-related data”, explains Ronald van Santen. “You run to a country, you start processing payroll, you keep Excel sheets everywhere, the vendor has some data, HR has some data, and once you start to grow, nobody really knows which data is correct. Having one source of truth for, at least, most data, is key when you’re growing.

Cost focus is another aspect that changes significantly as the organization evolves: “If a company is growing really rapidly, it is true that, at that earlier moment of urgency and lower number of employees per new country, the cost per payslip per month doesn’t really matter. But once you keep growing and growing, this monthly cost rises exponentially, and it needs to be carefully considered or it could bankrupt the company.

From my perspective, the biggest difference between a more established organization and a growing company -adds Pierre Thenes- is the expectations towards the Payroll department. When you have an established company, you have a determined model, procedures, controls… so you just have to follow what is already in place. There is little space for change, and there is a strong focus on being cost-efficient. On the other hand, when you are in a growing organization, that’s not the focus at all. Here the main requirement is flexibility, being able to adapt to change to be able to support the business with new openings or huge waves of new hires. The Payroll department then needs to be more agile, more solution-oriented, and costs are not really the priority.

However, as already mentioned by Ronald van Santen, Pierre Thenes agrees that cost control cannot be left aside for long, as “it must be sustainable in the long term.” It is essential to maintain an eye on the future and think about whether the steps taken at a quick-growth moment are sustainable as the organization matures and expands.

How can you future-proof Payroll operations in a high-growth context?

When it comes to future-proofing the Payroll operation while in a high-growth environment, Pierer Thenes doesn’t hesitate: “leverage technology to be able to scale. To enable the use of technology, you need to first ensure that your process is simple and harmonized. Then you can integrate technology and automate as much of it as possible, removing as much manual workload as you can, because manual workload is not scalable.” 

It is also essential, explains Pierre, “to have access to Payroll data and reduce data sources”, much in line with what Ronald van Santen was mentioning earlier. “To future proof your payroll operation, you need to simplify and reduce your inputs, streamline the payroll processing part, and find a system that can automate your post-payroll activities such as reporting.

Once the company starts to grow, planning is essential -adds Ronald-. Maintaining deadlines, and ensuring that stakeholders know what happens if they don’t deliver on time. Make sure everybody is aware of the plan and sticks to it.”

Key learnings on managing payroll at a high-growth company

To me, the best way to approach managing payroll at a high-growth company is to focus on the process documentation and the technology -asserts George Luca-. When you are growing, you need to be focused on what the mission is, you need to be fast and scalable, and having the process, the stakeholders, and everyone’s responsibilities documented and clarified can help you run payroll much quicker. And focusing on the technology will definitely help you grow faster.”

The key takeaway for Ronald van Santen is “to pick the right stuff to do so you keep things moving and contribute to the overall strategy of the business, instead of running around doing things ad hoc because you have been asked to. Make sure what you do adds value.

Pierre Thenes agrees fully: “It is essential to understand what we’re trying to achieve, and what a payroll transformation success means for the company -with a long-term vision! Before taking an action you have to ask yourself: does it meet the vision? Does it help us get there? 

Besides, adds Pierre, “make sure you involve your stakeholders in your payroll transformation from the beginning. You will avoid a lot of later changes and blindspots”. And, finally, “upskill your team members to be more agile, train your team to adapt and embrace change.”

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