3 Critical Ways for Payroll to Seat in the Boardroom

Global Payroll Week is a time to appreciate the importance and the role of payroll professionals around the world. The reality is that Payroll has long been an overlooked function in many organizations. It is often deemed to be a necessary back-office function of little strategic importance or value to the success of the company. As far as corporate hierarchies go, it is probably fair to say that Payroll ranks near the bottom of the totem pole – far off from Sales, Operations, R&D, Finance or Marketing – in most companies.

So how can we change the perception of Payroll being non-strategic? How can Payroll claim the famous seat at the boardroom table?

The current COVID-19 crisis has certainly raised awareness and appreciation for Payroll. While it is taken for granted in “normal” times that employees receive their paychecks accurately and on time, in a time of crisis were nothing works as it used to work suddenly many people realize that getting employees paid is non-trivial and is at the same time absolutely crucial to the survival of the business. Because if you cannot get your employees paid, employees will leave and you will not have a business anymore. And if you cannot run a business anymore, down goes the economy. It is that simple. So when a crisis like the current one flushes out all the noise and brew-ha in the organization, people start to take notice and get a better appreciation for what really matters and what is crucial to the business. The new-found appreciation for the critical role of Payroll has also been reflected in the fact that a number of countries (e.g. the UK) have dedicated Payroll professionals as “critical workers” with special rights and privileges during the crisis.

So Payroll is now getting recognized for being important and mission-critical to the survival and proper functioning of the business. However, does that mean Payroll finally gets to claim a seat at the boardroom table? Being invited to the boardroom generally implies that you have something strategic to contribute to the conversation. There is an important difference between being mission-critical and being strategic. If you are mission-critical, you might get invited to the boardroom on occasion, i.e. when a crisis jeopardizes the mission, but not during normal times. So what does it take to claim a “permanent” seat in the boardroom?

Based on my experience having worked in senior executive roles in large Fortune 500 companies, in order to be considered a peer in the boardroom, you need to have three things:

    1. Demonstrate that you have strong command of your business area
    2. Deliver new strategic insights based on facts and figures
    3. Show how you can support the strategic objective of the company

So let’s break these down and see what they mean for Payroll:

1. Strong command of your business area:

As a Payroll leader you need to be able to show that you are running a tight ship in your payroll operations. Your processes are clearly documented and have been standardized across the organization, KPIs are transparently tracked and remediating actions are being taken, you have a track record of improving the operational efficiency and delivering high-quality results (i.e. handling larger volume of payslips with reduced costs while minimizing payroll errors), and you are operating with modern, state-of-the-art technology.

2. Strategic insights based on facts and figures:

In Payroll, we sit on a wealth of data. We have information about EVERY employee of the company. How long they have been with the company, when they have received a salary increase or a bonus, how their pay compares to their peers, what the total cost of employment for certain employee groups looks like, what the turnover in a certain department looks like, etc. And for many organizations, the employees are their most important asset but also their biggest cost block. So having deep insights into employees and the related costs of employment is absolutely critical. However, in order to deliver meaningful insights, you need to establish powerful reporting and analytics in your Payroll operations. The challenge with many payroll departments is that their data is fragmented, sitting in data silos across lots of different local payroll systems. So you need to have a consolidate reporting capability that lets you cut and slice the employee data to glean real insights from it.

3. Support the strategic objective of the company:

So one of the key objectives in any company is to retain and promote their top talent. A lot of time and money is spent on employee engagement surveys and programs to motivate employees. But at the end of the day, most employees are motivated by being paid for their services. Nothing is more demotivating than not getting paid correctly or on time. Or having other issues with your pay statement. So having a strong payroll function that delivers the highest level of services, through strong service delivery and transparent communication – for example, in form of an employee portal that provides employees access to their payslips and shares proactively important updates about changes in their pay with them – is absolutely crucial.

So is now the time for Payroll to claim a seat in the boardroom? Well, while Payroll may have proven during the COVID-19 crisis that it is absolutely mission-critical, it does not automatically mean it is strategic and gets access to the boardroom. However, the ongoing crisis has certainly increased the appreciation and awareness for Payroll. Now is the time for Payroll professionals to ask for the support from senior management to execute important improvement initiatives and transformation projects: To standardize and align processes across the global operations. To implement powerful reporting and analytics tools. To roll out modern employee portal capabilities to improve the payroll experience of your employees. And once you are able to claim those victories and you are equipped with a strong level of competence, insights and data, you are then able to make a claim for the seat in the boardroom.

To learn more about how you can improve your payroll operations to get them “boardroom-ready”, please read some of our other articles.


Marc-Oliver Fiedler

Marc-Oliver Fiedler

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