By Brandi Britton, Global Executive Director, Contract Finance and Accounting, Robert Half
Inevitably, staff departures occur at all levels of payroll operations, often with little or no warning. Despite this, many payroll departments neglect succession planning or fail to adopt a formal approach. According to a recent Robert Half survey, nearly one-fifth of managers admitted their departments lack a succession plan altogether.
Succession planning should be considered a crucial element in the strategic management of any payroll function, regardless of organization size. Prioritizing succession planning can help you improve talent management practices while ensuring continuity in critical payroll operations. Importantly, it can help you make better hiring decisions when the time comes to replace key personnel, and take a more proactive approach toward:
Protecting business relationships: When you practice formal succession planning, you can gradually introduce up-and-coming payroll leaders to important stakeholders outside of the department, like contacts at tax agencies, benefits providers, or key vendors. This provides time and space for relationships to grow organically and trust to be transferred.
Preserving institutional knowledge: Your most experienced payroll professionals possess valuable knowledge that is hard to replace, such as compliance histories, system configurations, process nuances, and regulatory best practices. But with succession planning, you can make sure vital information and insights are passed along to emerging leaders instead of walking out the door.
Retaining your best people: Succession planning demonstrates a commitment to the professional growth and development of your payroll staff members across all generations and experience levels. Employees are more likely to stay with an employer who invests in their future and provides a clear pathway for career progression within payroll operations.
Importantly, succession planning helps you identify which team members don't want to take senior payroll leadership roles but would still like to demonstrate leadership in other ways—such as by managing teams, handling key compliance initiatives, or leading system implementation projects.
Succession planning can be a powerful tool for attracting top payroll talent as well. High-performing payroll professionals are often drawn to organizations that exhibit stability and a clear vision for the future of their payroll operations.
Now that we've examined some of the benefits of engaging in formal succession planning, let's look at how you can jump-start the process within your payroll function and make sure it is successful.
How to Prioritize Succession Planning
1. Identify potential successors
This is not as simple as it sounds. You can't just look at an organizational chart and assume the next person in line for a crucial payroll role is the right person to fill it. Again, that individual may not even want the job. Robert Half's research found that for 34% of employers, the lack of employees interested in leadership roles is a significant hurdle in their succession planning efforts.
As a starting point, conduct a comprehensive assessment of internal talent to identify payroll professionals with both the potential and desire to assume leadership roles. This involves evaluating technical payroll expertise, leadership capabilities, and how individuals align with and contribute to your department's unique workplace culture.
While internal candidates are often preferred for succession in payroll operations, consider evaluating external talent who can bring fresh perspectives and new expertise to your department. You may need to explore this avenue anyway: In a Robert Half survey, 38% of managers said their greatest succession planning challenge is the lack of succession candidates within their organization.
2. Invest in targeted development and training
Once you've identified potential successors, ensure these employees are prepared to step into payroll leadership positions when needed. Since this transition might be years away, create development and training programs that keep these staff members engaged while helping them continuously build relevant payroll skills and knowledge.
Mentoring, job shadowing, and rotation across different payroll functions are effective ways to help future leaders build their confidence and expertise, while giving them both a broader and deeper understanding of payroll operations. These are also cost-effective options for your department to implement and manage.
Additionally, consider what skill sets your future payroll leaders might need to help your department stay competitive and adapt to evolving compliance landscapes. For example, could these employees benefit from expanding their knowledge of specific tax regulations, enhancing their understanding of global payroll operations, or developing their expertise in payroll technology and analytics?
3. Regularly review and adapt your plans
A common mistake payroll departments make with succession planning is to "set and forget" their plans. But like any business continuity plan, succession plans need to be treated as living documents.
The decisions you make today about who is best to lead your payroll operations in the future may not be relevant a year from now. This is especially true if identified successors decide to leave your organization. That's a risk to keep in focus: According to data from the Bureau of Labor Statistics, the voluntary quits rate for workers climbed to 2.1% in October—the highest level since May 2024. This uptick suggests more professionals are feeling confident about their prospects in the job market and are ready to seek new opportunities.
It's good practice to regularly review and update succession plans to reflect the dynamics of your internal talent pool, as well as changes in compliance requirements and your department's strategic direction. Your succession plan should be flexible enough to adapt to unforeseen circumstances, such as the sudden departure of a senior payroll leader or changes in regulatory requirements.
4. Make it official—and secure stakeholder buy-in
Document the proposed succession plan in writing to ensure clarity and accountability across your payroll department. Detail the processes, timelines, and responsibilities involved in leadership transitions. Address critical legal considerations, including partnership agreements, nondisclosure agreements, and noncompete clauses, to prevent potential disputes during leadership changes in payroll operations.
Additionally, secure full commitment from your current payroll leadership team to support and execute the succession plan effectively. This includes allocating necessary resources and positioning succession planning as a strategic priority for maintaining seamless payroll operations. Involve key stakeholders, including senior payroll managers and HR professionals, to gather diverse perspectives and ensure organizational alignment.
Remember that your payroll talent isn't permanent—leadership changes are inevitable at every level. While it's impossible to predict exactly when a valued payroll leader might leave, having a robust succession plan ensures your department is prepared to handle critical transitions smoothly and maintain operational continuity.
Follow Brandi Britton on LinkedIn.
The original version of this article appeared in the April 2025 PAYTECH issue.
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