The Value of Benchmarking Payroll Salaries and Conducting Salary Reviews

Originally featured in Professional magazine, Issue November 2025 – The official publication of the Chartered Institute of Payroll Professionals (CIPP)

Failing to keep your payroll team’s salaries aligned with the wider market carries hidden costs that extend far beyond recruitment budgets. In the UK’s evolving employment landscape, payroll professionals remain in consistently high demand – making regular benchmarking and structured salary reviews an essential part of effective people strategy.

Why Benchmarking Payroll Pay Matters

1. Attracting and Retaining Payroll Talent

The payroll recruitment market in the UK has become increasingly competitive. Employers who rely on outdated assumptions or generic pay frameworks risk losing top candidates to businesses with better-informed compensation strategies.

Benchmarking against trusted, UK-specific data, such as insights from the Portfolio Payroll Salary Guide 2025/26 ensures your offers and pay structures reflect current market conditions across regions, industries, and levels of seniority. This helps you present packages that are both fair and compelling, reducing time-to-hire and improving offer acceptance rates.

Once payroll professionals are on board, maintaining salaries that track with market trends is equally critical. When employees feel confident that their pay reflects both their contribution and the external value of their role, they are far more likely to remain engaged and loyal.

2. Reducing Turnover and Protecting Organisational Knowledge

Replacing experienced payroll staff doesn’t just incur recruitment costs, it risks losing valuable expertise around compliance, systems, and internal processes. Payroll teams often hold specialist knowledge of HMRC regulations, pensions, RTI submissions, and workforce nuances that take time to rebuild.

Regular benchmarking enables you to identify when pay has drifted below market rates, allowing you to make targeted interventions before dissatisfaction builds. Salary reviews grounded in accurate market data demonstrate respect for your team’s expertise and send a clear message that you value their contribution.

3. Building a Fair and Transparent Pay Structure

Benchmarking also plays a vital role in internal equity. When organisations rely solely on ad-hoc pay adjustments, discrepancies inevitably emerge between long-serving and newly recruited employees. These gaps can damage trust and motivation.

By benchmarking salaries regularly, you can design structured pay bands that align with both internal hierarchies and external market conditions. This not only supports fairness and transparency but also provides a clear framework for career development and progression within your payroll function.

4. Informing Your Total Reward Strategy

While salary remains a primary driver for most candidates, total reward is increasingly influential in the UK market. The Portfolio Payroll Salary Guide 2025/26 highlights how non-financial benefits – such as flexible or hybrid working, enhanced pensions, wellness support, and professional development – are becoming essential factors in attracting and retaining payroll professionals.

Benchmarking helps you understand where your organisation stands, not just in pay levels, but in the wider value proposition. Even if budgets are constrained, a well-structured reward package that balances salary with flexibility, growth opportunities, and wellbeing support can remain highly competitive.

5. Supporting Workforce Planning and Business Strategy

Benchmarking provides valuable insight beyond recruitment and retention. It allows leadership teams to model future workforce costs, plan for organisational growth, and anticipate the financial impact of structural changes.

By grounding pay reviews in market intelligence, you ensure salary decisions are evidence-based and aligned with business priorities. This data-driven approach supports sustainable budgeting while protecting your organisation from sudden wage inflation or talent shortages.

How to Conduct Effective Benchmarking in the UK

1. Use credible, up-to-date data sources
   Choose benchmarking tools that reflect the UK market, such as the Portfolio Payroll Salary Guide 2025/26, which captures regional and sector-specific variations across the country.
2. Review salaries at least annually
   Conducting yearly reviews, supported by mid-year check-ins where necessary, helps your pay structures keep pace with market movement and inflationary pressures.
3. Evaluate total reward, not just pay
   Consider pensions, benefits, flexibility, and career development as part of the overall package. These factors are increasingly decisive for payroll professionals choosing between employers.
4. Communicate clearly and consistently
   Transparency around benchmarking processes builds trust. Share how pay decisions are informed, how market data is applied, and what criteria determine movement within pay ranges.
5. Turn insight into action
   Benchmarking is only valuable when it drives meaningful change. Use the findings to adjust pay bands, refine progression frameworks, and inform budget planning for the year ahead.

The Strategic Advantage of Benchmarking

Organisations that treat benchmarking as an ongoing process rather than a one-off exercise, develop a clearer view of their competitiveness in the employment market. This proactive approach allows them to anticipate change, rather than react to it.

For payroll teams, where accuracy, confidentiality, and compliance are paramount, feeling valued and fairly compensated has a direct impact on performance and retention. Benchmarking and salary reviews are therefore not just HR formalities; they are strategic tools for protecting and empowering one of your most business-critical functions.

Final Thoughts

In a labour market where payroll expertise is both highly specialised and increasingly sought after, maintaining fair and competitive pay is key to long-term organisational success.

Grounding your pay reviews in trusted, UK-specific benchmarking data ensures your decisions are informed, fair, and sustainable.

Regular benchmarking isn’t simply about staying competitive; it’s about recognising and rewarding the people who keep your business running smoothly every single pay cycle.