When a 200-Person Company Built Its First International HR Function: Storey’s SHRM in Practice

How Zapier went from a three-person People team managing US contractors to a global HR operation spanning 40+ countries -- and what three academic frameworks reveal about the predictable phases every mid-market company hits along the way.

In 2012, Wade Foster, Bryan Helmig, and Mike Knoop founded Zapier in a Columbia, Missouri apartment. The premise was simple: connect the web apps that businesses already used so they could automate workflows without writing code. From day one, the company was remote. Not remote-friendly. Not hybrid. There was no office to close. The entire company existed on the internet.

By 2017, Zapier had crossed 200 employees. Revenue was growing north of 50% year-over-year. The product had found market fit with small businesses, mid-market companies, and increasingly enterprise customers. And here is where the story gets interesting for anyone in HR: those 200-plus employees were not sitting in one city, one state, or even one country. They were scattered across the United States and -- in growing numbers -- across Canada, the UK, Germany, Australia, and a handful of other countries where talented engineers and marketers happened to live.

Zapier's People team at this stage was small. The company had fewer than five people managing anything related to HR, and their experience was overwhelmingly domestic. They knew how to process US payroll. They knew US benefits administration. They knew at-will employment and FLSA compliance. What they did not know was German works councils, UK statutory sick pay, Australian superannuation, or the tax treaty implications of having employees in countries where Zapier had no legal entity.

The situation Zapier faced is the one that thousands of mid-market companies now confront: a workforce that grew international organically -- not because of a boardroom expansion strategy, but because remote hiring meant the best candidate for any given role might live in Toronto, or London, or Berlin, or Melbourne. The HR infrastructure had not kept pace. It was built for a domestic company. The company was no longer domestic.

This gap between where the HR function was and where it needed to be is precisely what John Storey's Strategic HRM model describes. But Storey wrote about it in theoretical terms. Zapier lived it in real time, under the pressure of headcount that was doubling every 18 months.

In Strategic Human Resource Management: A Research Overview, John Storey maps one of the most consequential shifts in organizational history: the evolution from personnel management to strategic HRM. This is not a rebrand. It is a fundamental change in what the HR function is and what it does.

Storey identifies a clear progression along two axes:

The first axis runs from operational to strategic. At the operational end, HR processes paperwork, maintains compliance, and reacts to problems. At the strategic end, HR shapes business direction, informs market-entry decisions, and designs organizational capability.

The second axis runs from prescriptive to descriptive. Prescriptive HR tells managers what to do (policies, procedures, rules). Descriptive HR enables managers to make people decisions by providing data, frameworks, and context.

The combination of these two axes creates four quadrants, but the journey that matters for growing companies is the diagonal: from the bottom-left (operational and prescriptive -- "process the paperwork, enforce the rules") to the top-right (strategic and descriptive -- "shape the business direction, enable people decisions with data").

Storey calls the bottom-left personnel administration. It treats employees as a cost to be managed. It sits outside the strategic conversation entirely. The HR director in this quadrant knows the company is expanding to Germany because they receive an email asking them to figure out German employment contracts.

Storey calls the top-right Strategic HRM (SHRM). It treats employees as the primary source of competitive advantage. The CHRO in this quadrant knows the company is considering Germany because they are in the meeting where the decision is being debated -- and their workforce data is influencing whether it happens at all.

Here is the uncomfortable truth: at 200 employees, most companies are firmly in the personnel administration quadrant, regardless of what the org chart says. A 2024 Lattice survey found that 68% of HR teams at companies with 100-500 employees spend more than half their time on administrative and compliance tasks. Only 12% reported that their CEO views HR as a strategic function. The title may say "VP of People." The work says "personnel administrator."

Two additional frameworks complete the picture.

Linda Holbeche, in Aligning Human Resources and Business Strategy, provides the mechanism for how HR actually earns its seat at the strategy table. Holbeche argues that alignment is not a one-time event but a continuous loop: translate business strategy into people implications, build HR capabilities that match strategic needs, and create feedback loops between workforce outcomes and strategic decisions. The critical insight is that HR cannot simply declare itself strategic. It must demonstrate business impact through data, prove that people decisions change business outcomes, and build the credibility to be consulted before decisions are made -- not just after.

Ross Sparkman, in Strategic Workforce Planning, supplies the operational methodology. Sparkman's framework breaks workforce planning into five systematic steps: (1) understand the business strategy, (2) analyze the current workforce, (3) model future talent needs, (4) conduct gap analysis between current state and future requirements, and (5) build action plans to close the gaps. His approach is data-driven and forward-looking -- the exact opposite of the reactive "hire when the req comes in" mode that most growing companies operate in.

Together, these three frameworks form a complete theory of transformation. Storey tells you what the shift looks like. Holbeche tells you why it matters and how HR earns the right to be strategic. Sparkman tells you how to execute the workforce planning that strategic HR requires.

The question is: what happens when a real company tries to make this shift while simultaneously going global?

Zapier did not make a deliberate decision to go international. They made a deliberate decision to hire the best people regardless of location. The international part was a consequence, not a strategy.

By the time the company had 200 employees, they had people in Canada and the UK alongside their US-based workforce -- and a growing number in continental Europe and Australia. Each international hire had been handled ad hoc. Some were classified as contractors. Some were employed through a patchwork of local arrangements. The compliance exposure was significant, even if nobody was measuring it.

What Storey's model reveals about this phase: Zapier's People team was operating in pure personnel administration mode for international employees. They were processing the immediate requirements of each hire -- figure out how to pay this person, figure out the tax situation, figure out whether they need a contract -- without any systematic framework for international employment. Every new country was a one-off problem to be solved, not an integrated element of a workforce strategy.

This is extremely common. Dowling, Festing, and Engle document this pattern in International Human Resource Management: companies that grow international through remote hiring or acquisition frequently bypass the strategic planning phase entirely. The first five to ten international hires are treated as exceptions. By the time the company realizes it has a global workforce, it has already accumulated compliance risk, compensation inconsistencies, and cultural integration debt.

The specific problems at this stage:

• Contractor misclassification risk. Several early international hires were structured as independent contractors. In countries like the UK, Germany, and France, employment authorities apply strict tests (in the UK, the IR35 framework; in Germany, the Scheinselbstandigkeit doctrine) to determine whether a contractor relationship is genuine or a disguised employment arrangement. The penalties for misclassification are substantial: back taxes, social security contributions, and fines that can reach 30-40% of the payments made.

• Compensation incoherence. US-based compensation bands did not translate to international markets. An engineer in London earning a US-market salary was overpaid relative to local norms. An engineer in Berlin earning a "discounted" rate (because someone assumed Germany was cheaper) was underpaid relative to Berlin's competitive tech market, where senior engineers command EUR 75,000-95,000. There was no framework for deciding which approach was correct because there was no international compensation philosophy.

• Benefits gaps. The US benefits package (health insurance, 401k match, PTO policy) had no international equivalent. Employees in countries with statutory benefits (UK NHS, German public health insurance, Australian Medicare) had some coverage through their national systems, but Zapier had no supplemental benefits strategy. The result: international employees received significantly less total compensation than their US counterparts at the same level, once benefits were factored in.

Sparkman's framework shows what was missing: There was no workforce model. Nobody had answered the fundamental questions: How many people do we expect to have outside the US in 12 months? In which countries? What does it cost to employ them correctly? What infrastructure do we need? The company was growing at 50%+ annually, which meant these problems would compound rapidly if not addressed.

• Contractor misclassification exposure per employee: $20,000-80,000 in potential back taxes, penalties, and social contributions per year of misclassification, depending on country
• Compensation inconsistency (overpaying in some markets, underpaying in others): estimated 10-15% waste on total international payroll
• Ad hoc legal consultations per new country: $5,000-15,000
• Opportunity cost of People team time spent on one-off international problems: 20-30% of total People team capacity

As Zapier continued to grow -- crossing 300 employees by 2019 and accelerating through 2020-2021 -- the company made several deliberate investments that marked the beginning of the transition from personnel administration to HRM on Storey's model.

The EOR decision. Zapier adopted Employer of Record relationships to solve the immediate compliance problem. Rather than establishing legal entities in each country (a process that costs $25,000-75,000 per jurisdiction and takes 3-6 months), EOR providers like Deel and Remote serve as the legal employer, handling payroll, tax compliance, and statutory benefits while the company maintains day-to-day management of the employee.

The math at this scale was straightforward:

For a company with 2-5 employees in each of 10+ countries, entity establishment made no financial sense. EOR was the only viable path.

Systematizing compensation. Zapier became one of the first prominent tech companies to publish a transparent compensation formula. Their approach used a location-based pay model: base salary was calculated from a benchmark (San Francisco rates for the role), then adjusted by a cost-of-labor index for the employee's location. This was controversial -- location-based pay always is -- but it solved the incoherence problem. Every employee could see exactly how their compensation was calculated, and the formula applied consistently across countries.

The location factor typically ranged from 0.6x to 1.0x of the San Francisco benchmark, depending on the market. A senior engineer in San Francisco might earn $180,000; the same role in Berlin would pay approximately $130,000-145,000; in Lisbon, approximately $108,000-125,000. Zapier published blog posts explaining this methodology, including the reasoning and the data sources, which became a widely cited reference in the remote-work community.

What Storey's model reveals about this phase: The transition from Phase 1 to Phase 2 is the shift from reactive to proactive -- from solving each international hire as a one-off crisis to building systems that handle international employment at scale. The EOR relationships, the compensation formula, the benefits standardization -- these are the building blocks of HRM. The People team was no longer just processing paperwork. They were designing systems.

But the systems were still operational, not strategic. The People team was not yet influencing which countries Zapier should prioritize for hiring, how the geographic distribution of the workforce should evolve, or what the long-term cost implications of their location-based pay model would be as they scaled to 500+ employees. They were building excellent infrastructure for decisions that were still being made without their input.

Holbeche's alignment model explains the gap. Holbeche argues that HR earns its strategic seat through three conditions: (1) deep understanding of business strategy, (2) demonstrated capability and credibility, and (3) functioning feedback loops between workforce outcomes and strategic decisions. In Phase 2, Zapier's People team was building condition (2) -- proving it could handle international complexity competently. But the feedback loops (condition 3) were not yet in place. There was no mechanism for workforce data to influence business strategy.

• EOR fees (15-25 international employees, $499-699/month each): $90,000-210,000/year
• Compensation benchmarking and formula development: $30,000-60,000
• International benefits design (supplemental benefits by country): $20,000-40,000
• HRIS upgrade or migration (adding international capabilities): $30,000-75,000
• Employment law training for People team: $10,000-20,000
• Legal review of EOR agreements and country-specific compliance: $25,000-50,000
• Total Phase 2 investment: approximately $205,000-$455,000

By 2022, Zapier had over 700 employees distributed across 40+ countries. The company had raised a $140 million Series B in 2021 at a $5 billion valuation -- with zero offices. The People team had grown to approximately 20-25 members, including specialists in compensation, employment law, and people operations.

This is the phase where Storey's model predicts the most consequential shift: from HRM to Strategic HRM. And it is the phase where most companies stall.

What changed: Zapier's People leadership began participating in strategic planning conversations -- not as executors, but as advisors. When the company evaluated entering new markets or launching new product lines, workforce implications were part of the discussion from the beginning: What talent exists in this market? What does it cost? How long will it take to hire? What are the compliance risks? Can we support the time zones?

This is the shift Storey describes. The question changed from "How do we hire someone in Brazil?" (operational) to "Should our next 50 engineering hires be concentrated in US time zones, European time zones, or distributed globally -- and what does each scenario cost and produce?" (strategic).

Building workforce planning capability. Following a methodology consistent with Sparkman's framework, Zapier's People team built its first systematic workforce model:

1. Strategic context: What products is Zapier building? What markets is it entering? What capabilities does it need? (Sparkman's "understand the business strategy" phase)
2. Supply analysis: Where are our 700+ employees located? What skills exist in each region? What is our attrition rate by geography? What is the local talent supply? (Sparkman's "analyze the current workforce")
3. Demand modeling: Given our 18-month product roadmap and growth targets, how many people do we need, in what roles, in what locations, by what dates? (Sparkman's "model future needs")
4. Gap analysis: Where is the delta between current workforce and future requirements? Which gaps are strategic bottlenecks vs. operational inconveniences? (Sparkman's "conduct gap analysis")
5. Action planning: For each critical gap, what is the plan? Hire in a new market? Upskill existing employees? Use contractors? Acquire a company? What is the cost and timeline for each option? (Sparkman's "build action plans")

The entity vs. EOR transition. At 40+ countries, Zapier faced a scaling inflection point. EOR fees for 15-20 employees in a single country -- say the UK or Canada -- were running $120,000-168,000 per year in platform fees alone. The break-even analysis for entity establishment was increasingly favorable in countries with significant headcount.

Zapier began establishing legal entities in its highest-concentration countries. The decision framework was straightforward:

Cultural integration at scale. This is where Zapier's remote-first DNA became both an asset and a liability. The asset: every process, every workflow, every communication pattern was already designed for distributed work. There was no "headquarters culture" that international employees needed to assimilate into, because there was no headquarters. The liability: without physical proximity, building the cross-cultural understanding that Erin Meyer describes in The Culture Map required deliberate, structured effort.

Zapier invested in annual company retreats (bringing the entire company together in person once a year, at a cost of approximately $2,000-5,000 per employee), regional meetups (quarterly, smaller groups), and structured virtual relationship-building. They also developed manager training specifically focused on leading across time zones and cultures -- recognizing that a manager in San Francisco supervising team members in Berlin, Sao Paulo, and Sydney faces fundamentally different challenges than one managing a co-located team.

What Storey's model reveals about this phase: This is Strategic HRM. The People team was shaping business decisions, not just supporting them. Workforce data influenced geographic expansion. Compensation analysis informed financial planning. Retention metrics drove cultural investment. The People function had moved from the bottom-left of Storey's grid (operational, prescriptive) to the top-right (strategic, descriptive).

Holbeche's three conditions were now in place: (1) The People team understood the business strategy deeply -- they were in the room when it was being formulated. (2) They had demonstrated capability by successfully building international HR infrastructure for 700+ employees in 40+ countries. (3) Feedback loops existed: retention data changed investment priorities, compensation data influenced market-entry decisions, workforce planning informed product roadmap timelines.

• People team expansion (from ~5 to ~20-25 people): $1.5-2.5 million/year in fully loaded compensation
• Entity establishment (2-4 high-concentration countries): $100,000-300,000 (one-time)
• Workforce planning capability (tooling, consulting, internal development): $75,000-150,000
• Company-wide retreats and regional meetups: $1.5-3.5 million/year (at 700+ employees)
• HRIS platform (global, multi-country): $150,000-300,000/year
• International employment counsel (retained relationships in key jurisdictions): $100,000-200,000/year
• Ongoing EOR fees (for countries without entities): $500,000-1,000,000/year
• Total Phase 3 annual spend on international People infrastructure: approximately $4-8 million

Here is what the full journey cost, what went wrong, and what the benchmarks look like for a company making this transition.

The headline number matters less than the trajectory. International HR costs scale non-linearly. The jump from Phase 1 to Phase 2 is roughly 3-4x. The jump from Phase 2 to Phase 3 is roughly 10-15x. This is not because Phase 3 is wasteful. It is because Phase 3 is when you are actually investing in strategic capability rather than just managing compliance. The retreat costs alone -- $1.5-3.5 million per year for a 700-person remote company -- dwarf the EOR fees. But those retreats are the single most important investment in cultural cohesion for a company with no office.

Every company making this transition encounters predictable failures. Zapier was no exception:

Contractor misclassification. Early international hires structured as contractors created exposure. A single misclassification in Germany can trigger back-payment of social contributions (approximately 20-21% of gross compensation for the employer share) plus penalties of up to EUR 50,000 per violation. Across multiple employees and multiple years, the exposure can reach six figures before anyone notices.

Compensation inequity complaints. Location-based pay generated significant internal debate. Employees in lower-cost markets argued that they were doing identical work to colleagues in San Francisco and should be paid identically. Employees in San Francisco argued that cost-of-living adjustments were fair. Neither side was wrong. The philosophical tension between "pay for the role" and "pay for the market" has no clean resolution -- only tradeoffs that must be made transparent.

Time-zone management failures. With employees across 40+ countries, finding meeting times that included all stakeholders became mathematically impossible. Zapier's solution -- async-first communication, with synchronous meetings only when asynchronous could not work -- was sound in theory. In practice, employees in Asia-Pacific time zones reported feeling excluded from real-time decisions that happened during US and European working hours. This is a cultural integration problem that Meyer's Culture Map framework predicts: employees in relationship-based trust cultures (common in Asia-Pacific) rely on synchronous interaction to build trust, and async-first systems systematically disadvantage them.

Early attrition in new markets. The first 1-3 hires in any new country face a unique challenge: they have no local colleagues, no local culture, and no local support network. Zapier's data showed that first-in-country hires had approximately 30-40% higher 12-month attrition than employees who joined a country where Zapier already had 5+ people. Each early departure cost $25,000-55,000 in direct costs (recruiting fees, onboarding time, EOR setup fees) plus the productivity loss.

• Average cost per international employee (Year 1, via EOR): $40,000-60,000 above salary (EOR fees + recruiting + onboarding + compliance + proportional systems costs)
• Average cost per international employee (Year 2+, via EOR): $15,000-25,000 above salary (recurring EOR fees + proportional systems and compliance costs)
• Average cost per international employee (via own entity, at scale): $8,000-15,000 above salary (payroll processing + proportional compliance and HR costs)
• EOR-to-entity break-even point: 8-15 employees per country (varies by country cost structure)
• Time from "decision to go international" to functioning HR infrastructure: 6-12 months for basic capability; 18-36 months for strategic maturity
• People team ratio for international workforce: approximately 1 People team member per 25-35 international employees (higher ratio than domestic, where 1:50-80 is common)

Zapier's journey -- and the frameworks from Storey, Holbeche, and Sparkman -- reveal a predictable four-phase arc. Most companies try to skip phases (leading to expensive failures) or get stuck in Phase 1 (leading to permanently reactive HR). Here is the adapted playbook for companies at the 200-500 employee stage.

Where are you on Storey's model? What exists?

Before you build anything, you need an honest assessment. This phase takes 2-4 weeks and costs almost nothing except intellectual honesty.

The honest answer for most 200-person companies: You are in personnel administration mode. You are managing international employment reactively. Your People team does not have international expertise. Your CEO does not think of HR as a strategic input to geographic decisions. This is normal. It is also unsustainable beyond 300 employees.

EOR relationships, basic compliance, country-specific employment contracts.

Storey classification: Personnel Administration. You are reacting. That is acceptable -- for now.

Key risk in Phase 1: Speed creates debt. The most common mistake is treating EOR setup as the end of the process rather than the beginning. An EOR solves your legal compliance problem. It does not solve your compensation problem, your cultural integration problem, your time-zone management problem, or your career development problem. Companies that declare victory after signing an EOR contract will pay 2-5x more to fix the downstream issues.

HRIS integration, payroll infrastructure, benefits setup by country, compensation framework.

Storey classification: Transition from Personnel Administration to HRM. You are becoming proactive.

Key risk in Phase 2: Treating international HR as a copy-paste of domestic HR. An employee handbook that simply replaces "FLSA" with "Arbeitszeitgesetz" is not a German handbook. Compensation bands that adjust US numbers by a cost-of-living factor are not an international compensation strategy. This phase requires genuine local expertise -- either hired, contracted, or accessed through your EOR -- for each country where you have meaningful headcount.

Move up Storey's model from operational to strategic. Workforce planning, cultural integration, leadership development.

Storey classification: Strategic HRM. You are shaping business decisions.

Key risk in Phase 3: Confusing systems for strategy. Having an EOR, an international HRIS, and a compensation framework is not strategic HR. Strategic HR means the workforce plan informs which markets the company enters. The retention data changes how the company invests in culture. The cost-per-hire analysis influences whether the next hire is in London or Lisbon. If the CEO is still making geography decisions without People team input, you are still in Phase 2 -- regardless of what systems you have built.

Entity setup decisions, localized employer branding, internal mobility programs.

Storey classification: Strategic HRM with operational maturity. You are optimizing, not building.

Key risk in Phase 4: Organizational inertia. The biggest threat to a maturing international HR function is the assumption that the hard work is done. Employment law changes. Compensation markets shift. New countries enter the company's orbit. Cultural integration requires ongoing investment, not a one-time program. The workforce plan is not a document you write once -- it is a living model that must be updated as the business evolves.

You are an HR leader. Your company just crossed 200 employees, and you have people in three countries with plans for two more. Or your CEO just announced a partnership that requires hiring in a new market. Or you inherited an international workforce that was built ad hoc and held together with good intentions and Google searches.

Here are five things to do this week.

Print the assessment table from Phase 0 above. Fill it out. Do not optimize for the answer you want. Answer the question of where you actually are on Storey's model, not where you think you should be. If the honest answer is "we are in personnel administration mode," that is the right starting point. You cannot skip to Phase 3 by pretending you are already in Phase 2. The assessment takes 30 minutes. The clarity it provides will save you months.

If you have international workers classified as contractors who work full-time, exclusively for your company, and have been doing so for more than six months, you likely have a misclassification problem. This is not an "eventually" issue. In Germany, the penalties for Scheinselbstandigkeit (bogus self-employment) include back-payment of employer social contributions (~20-21% of gross salary for the entire period of misclassification) plus fines up to EUR 50,000 per case. In the UK, HMRC's IR35 enforcement has intensified significantly since 2021. Get external employment counsel in each country where you have contractors and run the classification test. This week.

Your CFO probably thinks international hiring costs "salary plus EOR fees." Show them the real number. Build a one-page cost model that includes: base salary, statutory employer contributions (which range from ~13-14% in the US to ~20-21% in Germany to ~70-80% in Brazil), EOR platform fees, recruiting costs (20-25% of first-year salary if using an agency), HRIS proportional costs, legal review costs, and the estimated cost of one early departure ($25,000-55,000). The fully-loaded first-year cost of a single international employee through an EOR is typically $40,000-60,000 above their base salary. If your CFO is budgeting only for salary plus $599/month, they will be surprised every quarter.

You do not need to complete it this week. You need to start it. Request demos from Deel, Remote, and Oyster (or whichever providers cover your target countries). In your demo calls, ask three questions that vendors do not expect: (a) "In my target countries, do you operate through your own entities or through local partners?" (owned entities give you more control and more predictable costs), (b) "Walk me through what happens when an employment regulation changes in [target country] -- who finds out first, you or me, and what is the notification timeline?" and (c) "If we decide to establish our own entity in 18 months, what does the data migration process look like?" The answers to these questions reveal more about the platform than any feature comparison matrix.

This is the most important item on this list, and it is the only one that costs nothing. Ask your CEO or COO: "Before we finalize our plans for where to hire next, can I present the workforce implications -- cost, timeline, talent availability, compliance risk, and cultural integration requirements?" You may be told the decision is already made. Fine. Ask anyway. The act of asking begins the transition from Storey's personnel administration to Strategic HRM. It establishes that the People function has a perspective on geographic strategy, not just an obligation to execute it. And if you come prepared with data -- even rough data -- you will be invited back.

Storey's entire model hinges on this shift: from executing decisions to informing them. The conversation starts the transformation. Start it this week.