payroll maturity

Climbing the Payroll Maturity Ladder: How to Advance Your Company

How can you measure and improve your organization’s payroll maturity level? Use this guide and assessment to reach the next stage of payroll excellence.

Shannon Hodgen
Written by Shannon Hodgen
March 18, 2024
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Key takeaways

  1. Payroll maturity falls into three buckets: Low, medium, and high.
  2. Achieving higher levels of payroll maturity involves transitioning from manual to fully automated processes, enhancing efficiency and accuracy.
  3. The right combination of people, processes, and technology is crucial for moving your payroll maturity upward to become more scalable and strategic.

As your business matures, so should your payroll operations. But what does that process actually look like?

Identifying the necessary steps and benchmarks for each growth phase is essential for HR, payroll, and compliance teams, no matter your business size. The journey from basic payroll operations to advanced, automated processes ensures employees are paid accurately and on time, compliance is maintained, and the company can scale efficiently. 

In this article, you’ll learn what each stage of payroll maturity entails, assessment methods, and improvement strategies to help you reach the next level.

This article includes insights from our Global Payroll Summit, where Daniel Greaves, Head of Global Payroll at Klarna, spoke on combining payroll maturity and communication strategies on an international team. Watch it here.

What is payroll maturity?

Payroll maturity refers to the level of sophistication and automation in a company’s payroll processes. It encompasses the systems, processes, and people involved in payroll management, aiming for efficiency, accuracy, compliance, and scalability. A mature payroll system can handle complex scenarios, diverse employee needs, and compliance requirements with minimal errors.

3 stages of payroll maturity

There are three stages of payroll maturity: low, medium, and high. While most companies naturally progress through these stages, your pace and experience will depend on your organization’s size, financial capabilities, and growth ambitions.

Low payroll maturity

Think of this stage as payroll infancy. Many employers keep their workforce small during the initial stages of a company, with fairly basic payroll operations. They might use tools such as Excel spreadsheets to handle their employee data and usually lack clear documentation or standard operating procedures for their payroll processes.

Typically, organizations at this stage rely on one person to handle their payroll functions, due to their company size or hiring budget. However, this singular reliance is not sustainable—if their payroll manager takes paid time off or has an emergency, the entire company’s payroll cycle can be disrupted.

Other signs of immature payroll include a lack of legislative knowledge, especially if their workforce only hires domestically. Many times, these teams do not have the resources to hire and retain full-time compliance or legal experts to advise them. They likely do not have robust employee self-service options, which increases their payroll department’s workload. 

Due to a lack of resources, automation, and centralization, companies at this level of payroll maturity often encounter more payroll errors, which can increase their risk of non-compliance.

See also: Benefits of Employee Self-Service for Global Payroll Teams



Medium payroll maturity

At this stage of payroll maturity, the organization has taken some steps to progress but has not fully optimized its operations. Their approach to payroll typically ranges from reactive to controlled. Reactive meaning that, when payroll challenges arise, they take that opportunity to find a solution, but they are not taking preventative measures or future-proofing their processes. 

This stage can also refer to organizations with controlled payroll operations. They typically have good payroll software technology in place with some automations, but overall, they are focused on maintaining their current system and still have a cumbersome amount of manual work.

Companies in this stage typically use several different systems to run payroll and HR in different regions, and do not have comprehensive compliance support. While they’ve reduced some of their repetitive tasks and risk of error, there is still room for improvement.

See also: 8 Must-Have Features in Sustainable Enterprise Payroll Software

High payroll maturity

So, what does it mean to reach full payroll maturity?

In our Global Payroll Summit, Daniel Greaves, Head of Global Payroll at Klarna, said, “Realistically, payroll maturity is looking at full automation, full documentation, integrated reporting, compliance, and limited errors. That’s what you want to get to.”

Breaking that down further, a mature payroll model includes a clear payroll strategy that defines the company's pay processes, compensation strategy, and more. These teams also have self-service technology that enables employees to upload documentation, download payslips, and access additional personal information. They may even have AI functions that streamline the payroll process or provides employees with immediate answers to queries.

“If people have questions, we want to make sure they can get access to answers as soon as possible,” explained Daniel. “That’s a really important step to reaching payroll maturity.”

By achieving optimal payroll maturity, your company can benefit from strategic payroll operations that set your entire workforce up for success. This leads to:

  • Lower error rates
  • Enhanced automations
  • Comprehensive compliance with legal, payroll, and data security requirements
  • Full integration with HRIS, HCM, and other systems
  • Positive employee experiences
  • Real-time payroll data analytics and customizable reports
  • Scalability as you grow in size, diversify worker types, and enter new markets
  • Operational standardization across jurisdictions

Reaching the next stage of payroll maturity requires a balance of the right people, processes, and systems. More specifically:

  • Skilled and knowledgeable payroll professionals who understand the complexities of payroll management and cross-border compliance
  • Efficient, documented processes that guide payroll operations and ensure consistency
  • Advanced payroll technology that automates tasks, integrates with other HR systems, and provides data-driven insights for informed decision-making

“You can be absolutely anywhere on this scale when you find the right people, process, and systems. You can be in the first stages, that’s absolutely fine. But as long as we’re on that journey to payroll maturity, that is what’s going to matter.” — Daniel Greaves, Head of Global Payroll, Klarna via Deel’s Global Payroll Summit

Why is payroll maturity important?

Identifying where your company sits on the payroll maturity scale will help you understand how efficient your systems are in relation to your stage of business. For example, a small business with a low payroll maturity score will encounter different problems than an enterprise with a low maturity score. 

Regardless of your company’s size or location, having a mature payroll system is vital for several reasons:

  • Compliance: Ensures adherence to legal and tax obligations, minimizes the risk of penalties
  • Efficiency: Automates repetitive tasks, saving time and reducing errors
  • Employee satisfaction: Timely and accurate payments contribute to a positive work environment
  • Scalability: Supports business growth without proportional increases in payroll management complexity

payroll maturity

Assess your current level of payroll maturity

Determine your organization’s payroll maturity level by answering the following questions. Choose the statement that best describes your current payroll system for each feature or function.

1. Automation and manual work

A) I primarily use manual processes to calculate pay, deductions, and taxes
B) My automation of payroll processes is partial and still dependent on manual inputs
C) I have achieved full automation of payroll processes, including pay calculations, deductions, and taxes

2. System integrations

A) My payroll system lacks integration with HR management systems
B) I have made initial efforts to integrate payroll with HR systems, but it's not fully optimized
C) There is comprehensive integration with HR management systems for a seamless operation

3. Data standardization

A) I experience minimal or no real-time data synchronization across systems
B) I have begun to implement real-time data synchronization across some systems
C) I ensure real-time data synchronization across all systems

4. Compliance with global employment, tax, and payroll laws

A) Compliance updates are manually managed and often outdated or incorrect for various jurisdictions
B) I have introduced automated compliance updates, but they do not cover all jurisdictions
C) My compliance updates are automated across all operating jurisdictions

5. Documentation

A) I rely on undocumented processes and individual knowledge for payroll management
B) I have developed some documented processes and contingency plans
C) My processes are well-documented with robust contingency plans for staff absence

6. Data reporting

A) My payroll system lacks employee self-service options, affecting employee satisfaction with payroll processes
B) I make some use of centralized reporting and metrics for workforce analysis
C) I provide extensive reporting and analytics with centralized dashboards, real-time data, and customizable reports

7. Employee self-service options

A) My payroll system lacks employee self-service options
B) I offer some online access to payroll information but not a comprehensive self-service solution
C) I offer comprehensive employee self-service options

8. Scalability for a global workforce

A) I struggle with adding new employees or expanding operations efficiently due to limited scalability
B) I am increasing my focus on scalability with some cloud-based solutions
C) My systems are highly scalable with cloud infrastructure to support global workforce growth

9. Employee training and support

A) Minimal training and support are available for my payroll staff
B) I have enhanced training and support for my payroll staff
C) My payroll team receives regular, in-depth training sessions and accessible support

10. Security and data protection

A) My security measures are basic, potentially exposing me to vulnerabilities in data protection
B) I have implemented some data and security measures but have not considered global requirements
C) I have stringent security and data protection measures, including encryption and multi-factor authentication to ensure cross-border compliance and security

A: 0

B: 0

C: 0

Tally your selected statements to see which maturity level—Low (A), Medium (B), or High (C)—most of your answers align with. This will give you insight into your current payroll system's maturity and guide you toward areas for enhancement.

Level up your global payroll services with Deel

As your global workforce matures, consider whether your current approach to payroll can support you. With a global payroll solution that centralizes your processes and gives your team a single point of contact, a move to Deel will allow you to simplify your operations and scale them more effectively. 


Book a demo and see first-hand how Deel can transform your payroll management.

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