REWARD
Ellis Rees ChFCIPPdip, CIPP Schools Engagement Project Lead, examines some of the techniques payroll professionals can use to ensure they’re considering the ever-changing external environment and how it impacts their roles
P ayroll is an essential component of business operations, and its role has undergone significant evolution over the years. As payroll professionals, we recognise the paramount importance of payroll for the organisations we serve, encompassing companies, bureaus and software houses. Accurate and timely payroll payments are paramount to prevent legal repercussions that safeguard companies’ most valuable asset: their workforces. Historically, payroll was regarded as a support team within a broader department, with limited influence on business objectives. However, over time, payroll has assumed a more strategic role as a collaborative partner within businesses. Traditionally, payroll was a back-office function responsible for processing pay information, calculating taxes and National Insurance contributions, while also processing payments via cash, cheque or credit transfer. Changes in employment rights, Government legislation and policies have introduced evolving requirements for regulations and processes, including statutory leave,
and the escalating cost of living. These factors have profoundly impacted payroll processes and responsibilities. The payroll department has comprehensive data on employees, including fundamental employment information and financial data. This data is paramount for forecasting and reporting, and has gained prominence due to alterations in reporting legislation, such as equal pay reporting. STEEPLE analysis As payroll professionals, we should be aware of potential factors which may influence our department and company goals. An industry-standard methodology is to carry out a STEEPLE analysis. Originally developed from the PEST analysis framework, the STEEPLE analysis serves as an environmental scanning framework for businesses, enabling managers to understand the impacts of external conditions to support strategic planning. This method facilitates the analysis of environmental factors, enabling businesses to prioritise effective strategies for addressing them. While not exhaustive, the areas shown in the table below may be covered by the STEEPLE analysis. During a recent lecture to Level 3 business students, I presented the application of this method. We examined the fluctuations in the exchange rate between GBP (£) and USD ($) and their potential impact on payroll costs. This aspect falls under the ‘economic’ STEEPLE category. For instance, if there were a 5% change in exchange rates over a year, and payroll payments were made in USD, the costs of $40,000,000 would increase by $2,000,000 annually. The payroll team should lead the analysis of such data, with
companies interested in understanding how they absorb these costs. Another recent issue which has gained widespread attention is the cost-of-living crisis. This is having a direct impact on most households. In STEEPLE analysis, this falls under an ‘economic environmental impact’. For business recruiting and retaining staff, this can be a real challenge. For example, a business competing for a workforce against another business in the area can find this challenging if the terms and conditions offered by that other local business are more favourable. Employees are more likely to ‘jump ship’, adding to additional costs to recruit for their replacement. In a 2022 survey conducted by the CIPP, 20% of members expressed interest in adjusting the frequency of employee pay to meet cost-of-living challenges. This represents one potential solution to address employee financial challenges. Another viable approach is to provide employees with ‘early access’ to their earnings, employing third-party software and solutions. The analysis of the ‘environmental’ factor along with the recommendation, which is data-led, is what payroll should be striving to achieve and deliver to its organisation. It’s crucial for modern payroll managers to regularly conduct STEEPLE assessments and collaborate with business leaders to develop effective strategies, which proactively address these challenges. Although the future trajectory of the payroll profession remains uncertain, it’s evident there’ll always be a demand for payroll professionals. However, the landscape may evolve significantly over time. Although we don’t have a crystal ball, we do, as an industry, have a willingness to prepare and adapt to change. n
benefits and interdepartmental communication / integration.
Technological advancements, such as automation, have further developed the payroll role. Payrollers now occupy a pivotal leadership position in this domain. Shirley Chisholm once said: “If they don’t give you a seat at the table, bring a folding chair.” Rising to the challenge In the current era, our teams encounter various challenges, including evolving Government policies, information technology development, acquisitions
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T
E
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P
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Social
Technological
Economical
Environmental
Political
Legal
Ethical
1. Population growth. 2. Growing age. 3. Lifestyle.
1. Technology incentives. 2. Automation. 3. Research and development activity. 4. Technological changes. 5. Technological awareness.
1. Economic growth. 2. Exchange rate. 3. Interest rate. 4. Inflation.
1. Weather. 2. Climate change. 3. Environmental policy.
1. Government policy. 2. Political stability. 3. Tax policy. 4. Labour law.
1. Discrimination law. 2. Antitrust law. 3. Employment law. 4. Health
1. Bribery. 2. Intellectual. 3. Property. 4. Reputation.
5. Cost of living. 6. Employment rates.
5. Business ethics. 6. Confidentiality.
and safety law.
Steeple analysis table. Source: https://ow.ly/N44W50X24jJ.
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| Professional in Payroll, Pensions and Reward |
Issue 115 | October 2025
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