A surprising paradox exists in payroll. As professionals navigate – and embrace – more change than ever before due to AI, manual processes are on the rise which is leading to costly mistakes and increased stress for payroll teams. In fact, recent research
has found that 89% of payroll professionals have made mistakes within their function in the last 12 months.
Errors, especially across a sector which dictates when people get paid, can chip away at employee trust, damage organisational reputation, and even lead to non-compliance fines. The increased reliance on outdated, error-prone methods also explains why admin-heavy
processes have emerged as the top challenge for payroll teams this year.
The potential of AI to revolutionise payroll is clear. It has the capacity to analyse data, identify compliance risks, and provide real-time insights for decision-making. But the path to full AI integration is not without hurdles. Concerns about data security
are prevalent, ethical considerations about AI’s role in decision-making and its accuracy in financial reporting are top-of-mind for many organisations, and a significant skills gap is growing.
This highlights a crucial disconnect between the eagerness for businesses to adopt AI and the practicalities of embracing it.
Bridging the skills gap and elevating payroll
To bridge this gap, the payroll professional’s role must expand beyond accurate payments and understanding payslips, to become a strategic asset for the business.
Payroll departments are a goldmine of data, and with the right analytical skills, they can play a vital role in scrutinising data trends and forecasting, from salary modelling to labour cost analysis.
Achieving this shift requires more than new technology, it requires continuous investment in skills development. The transition from manual to AI-driven payroll systems demands a new level of digital fluency, where a lack of investment in learning can lead
to burnout, high employee turnover, and a significant knowledge drain, burdening the entire organisation. But empowering payroll professionals through upskilling has the potential to make their roles more rewarding, and allows them to contribute more value
to the business.
Harnessing the potential of modern payroll
A multi-faceted approach is needed to evolve the payroll function. While technology is vital, it’s not a standalone fix. Businesses must invest to fully capitalise on new payroll technology, alongside supporting their professionals to maximise the benefits
of it.
Cost is not the only blocker for AI adoption. In people-focused functions like payroll, trust is paramount. Regular audits of AI systems, transparent communication, and opportunities for employee feedback are all essential to building a culture of responsible
innovation.
AI adoption can be daunting for leaders and professionals alike, but it doesn’t have to be all-encompassing. A more effective approach is to start small, focusing on specific, low-risk use cases that solve clear problems. By automating routine tasks or improving
data accuracy in targeted areas, organisations can gradually build trust in the technology while boosting digital literacy across payroll teams, before scaling.
By investing in automated, real-time payroll technology alongside the growth and wellbeing of their payroll professionals, organisations can streamline processes, avert costly mistakes, and free up their teams to become true strategic drivers within the
business. It’s about empowering people to work smarter to ensure a more financially resilient workforce.
