Walk into any 200-person European SME and ask the HR Director where the compensation data lives. In roughly nine cases out of ten, the answer is a Google Sheet or an Excel file. Sometimes shared with the CFO, sometimes only with the CEO. Sometimes versioned, often not. Sometimes with a tab per year, often with the current year overwriting the last.

This is not a technology criticism. The spreadsheet is, for many SMEs, exactly the right tool for what it has historically been used to do. It captures salaries, tracks raises, supports the annual review conversation. The HR Director knows where everyone sits. The CFO can see the total. The CEO trusts the HR Director's judgment on calibration.

The directive does not break the spreadsheet as a recordkeeping tool. It breaks the spreadsheet as a defensible compensation methodology. The two are different things, and most SMEs have been operating without noticing.

What the spreadsheet has always been good at

Three things the spreadsheet handles well for the SME:

For a company of 50 people, this is sufficient. For 200 people, it is workable. The spreadsheet stack is the right tool when the recordkeeping is the deliverable and the methodology is implicit in the HR Director's head.

Where the spreadsheet breaks under PTD

The directive asks three questions the spreadsheet stack was not built to answer:

01"What is your category structure?"
The spreadsheet has a "role" column. The directive asks how roles are grouped into categories of equal work or work of equal value (Article 4). The spreadsheet does not have this column — and adding it after the fact is the work of weeks, because the underlying job evaluation has not been done.
02"How was this pay decision made?"
For each employee at their current pay, the directive expects documented rationale. The spreadsheet records the number. It does not record why the number is what it is. The rationale was a conversation between HR and the manager, captured in an email if at all, three pay cycles ago.
03"Can this be reproduced?"
The directive's Article 9 metrics need to be computed identically every year, with the same compensation basis applied consistently. The spreadsheet's column definitions drift over time. Last year's "total comp" included equity; this year's does not, because the model changed mid-year. The Article 9 calculations diverge from prior reports without documentation explaining why.

The audit trail problem

The deeper issue is not what the spreadsheet contains. It is what the spreadsheet cannot prove. When a regulator, a works council, or an Article 7 requester asks "show me how this pay was set" — the spreadsheet has the number, not the derivation.

In a documented methodology, the derivation is observable:

The spreadsheet has none of these as first-class data. They can be added — but the work to add them retrospectively, for every existing employee, is the work the company would have had to do anyway to build the methodology. The spreadsheet does not save that work; it postpones it.

Worth noting

This is not an argument that SMEs need an enterprise compensation platform. Most don't. The argument is that the spreadsheet stops being a complete answer when the directive's documentation requirement enters. What is needed is a methodology layer that produces the audit trail — which can sit on top of the spreadsheet, or replace parts of it, but cannot be substituted by the spreadsheet alone.

What the migration actually looks like

The companies handling this well are not throwing out the spreadsheet. They are layering structure on top of it. Three additions that produce the directive's required artefacts without an enterprise rollout:

1. A category-definition document. A separate file (a docx, a markdown file, or a tab in the spreadsheet) that defines the categories of equal work or work of equal value, lists which roles belong to each, and documents the criteria used. Created once, maintained quarterly.

2. A band structure document. For each category, the documented floor, midpoint, and ceiling. Plus the methodology behind those numbers (e.g., "calibrated against three publicly-observable references; updated annually in February"). Created once, refreshed annually.

3. A pay-decision log. For each compensation event (new hire, raise, promotion), the rationale captured at the time of decision. Can be as simple as a structured comment in the spreadsheet column. The discipline is the rationale being recorded contemporaneously, not reconstructed two years later.

Total additional infrastructure: three files. The spreadsheet itself stays as the recordkeeping tool. The methodology lives next to it.

When dedicated tooling adds value

A purpose-built compensation analytics tool is not strictly required to satisfy the directive. What it adds is:

For a 50-person company, building this in-house alongside the spreadsheet is feasible. For a 500-person company, it becomes unwieldy. The 100–500 segment lives in between — where the spreadsheet works for recordkeeping but not for the audit trail.

The spreadsheet stops being sufficient at the moment the methodology has to leave the HR Director's head.

Where the diagnostic starts

Before any tooling decision, the honest position view is what the company benefits from. ReadinessCheck™ surfaces where the company sits across the directive's principal obligations — including methodology documentation, category structure, and audit-trail readiness. The output tells you whether the spreadsheet alone gets you there, or where additional structure is needed.

Before the tooling decision

See what the spreadsheet actually answers.

ReadinessCheck™ takes about 20 minutes and requires no salary data. Produces an observational position view by axis — including the documentation inputs the directive expects beneath whatever stack the company is running.

Start the ReadinessCheck →