Is Your Payroll Team Too Small?
When day-to-day tasks begin to spill over into the next, and your payroll team is burning the candle at both ends, it’s natural to assume the system is to blame. While technology can certainly contribute to inefficiencies, it may not be the full picture. Often, issues in payroll performance stem from misaligned team sizes, unclear responsibilities, or outdated processes. To bring clarity, we analysed guidance from Tier 1 payroll providers such as SAP, Oracle, and Workday to establish a practical rule of thumb for evaluating payroll team structures. Before committing to a new system, it's crucial to first understand whether your challenges are rooted in staffing, processes, or technology.
Benchmarking Payroll Team Structure
Ensuring the right team size is often the most cost-effective first step before considering a new payroll system. Industry benchmarks provide helpful guidance on how payroll roles should be distributed depending on complexity and scale. Multi-country payroll operations typically require layered support, while single-country structures are simpler to manage with leaner teams.
L1 payroll support handles basic queries and issue triage, L2 addresses process and configuration issues requiring functional expertise, and L3 manages complex technical problems, system changes, and escalations.
In short:
L1 = Basic support (front-line help)
L2 = Functional expertise (in-system operations)
L3 = Technical and strategic (deep fixes and system changes)
Single-country example:
Level 1: 1 per 300 to 500 employees
Level 2: 1 per 1,500 to 2,000 employees
Level 3: minimal, primarily for statutory changes
Multi-country example:
Level 1 (regional support): 1 part-time user per 100 to 250 employees
Level 2 (system administrators): 1 per 800 to 1,200 employees
Level 3 (consultants): 0.5 to 1 full-time equivalent for updates
Significant deviation from these figures may suggest a mismatch between team capacity and organisational needs.
| Payroll Type | Role Level | Staffing Ratio | Description |
|---|---|---|---|
| Multi-Country Payroll | L1 – Key Users | 1 per 100–250 employees | Typically part-time HR or finance staff providing localised support |
| L2 – System Admins | 1 per 800–1,200 employees | Full-time experts managing global configurations and processes | |
| L3 – External Consultants | 0.5–1 FTE as needed | Engaged for complex system changes and major updates | |
| Single-Country Payroll | L1 – Key Users | 1 per 300–500 employees | On-site HR staff managing routine payroll tasks |
| L2 – System Admins | 1 per 1,500–2,000 employees | Responsible for national configuration and compliance | |
| L3 – External Consultants | Minimal | Generally only needed for tax updates and audits |
Using Performance Metrics for Insight
If benchmarks are inconclusive, operational data can reveal performance gaps or staffing shortfalls. Key indicators such as correction rates, escalation volumes, and cycle times are useful to diagnose whether your team is overstretched or if training levels are inadequate.
Indicators of inefficiency:
Correction rates over 5 percent may indicate poor training or under-resourcing
High ticket escalation from Level 1 to Level 2 suggests Level 1 needs more capacity or training
Delayed payroll cycles and reliance on overtime point to process or staffing challenges
Frequent compliance issues may highlight the need for localisation expertise at Level 2
Evaluating these metrics over time helps isolate the cause of inefficiencies and focus your response.
| Performance Metric | Indicator | Possible Cause |
|---|---|---|
| Error Rate | More than 5% of payslips require corrections | Understaffing or inadequate training |
| Compliance Issues | Frequent penalties or regulatory breaches | Lack of localisation expertise at Level 2 |
| Escalation Volume | More than 20% of payroll tickets escalated to Level 2 | Level 1 users may need more training or headcount |
| Cycle Delays | Regular delays in payroll processing | Insufficient team bandwidth or process inefficiencies |
| Overtime Dependency | Excessive overtime during payroll close periods | Understaffing or lack of automation |
Identifying Process and Technology Gaps
Not all payroll inefficiencies are caused by headcount. In many organisations, the underlying issue lies in outdated systems, disconnected platforms, or reliance on manual processes. Addressing these gaps can often reduce the need for additional hires.
Key areas to evaluate:
Manual corrections by employees can be reduced with self-service portals
Repetitive tasks should be automated using reporting dashboards
Lack of integration between systems increases error risk and time spent
Poor documentation or training leads to delays and bottlenecks
Process redesign and technology upgrades can often unlock efficiency without changing team size.
Making Informed Adjustments
When the data is gathered and assessed, businesses can make evidence-based decisions about their payroll operations. This may involve restructuring the team, introducing automation, or providing more targeted training. Seasonal pressure points should also be considered when evaluating capacity.
Actions based on assessment:
If understaffed: hire more Level 2 staff or invest in Level 1 training
If overstaffed but inefficient: reallocate duties or automate processes
If process bottlenecks are present: improve workflows and consider system upgrades
Use temporary contractors during known seasonal peaks such as tax year-end
Key performance metrics such as error rates, ticket escalations, and payroll cycle times can highlight gaps in staffing or training. Often, inefficiencies stem from outdated systems, poor integration, or a lack of automation. In such cases, upgrading technology or optimising workflows may be more effective than increasing headcount.
A thorough workload assessment helps clarify seasonal pressures and team burnout, guiding whether to hire, restructure, or invest in training. By taking a data-driven approach, organisations can build a payroll function that is efficient, scalable, and compliant.