Contemplating the Surprisingly Near-Future of AI in Payroll

Thursday December 14th, 2023

Estimated time to read: 2 minutes, 45 seconds

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At some point in an organization’s approach to human capital management (HCM), HR’s relationship to HCM changes. There is growth, and with that growth comes an eventual pivot. As HCM becomes streamlined, more automated, HR shifts away from survival mode—fixing problems, babysitting operational processes and just generally making sure nothing goes wrong—and turns its attention to building better HCM: “thrival” mode. Put differently, HR moves from making sure nothing goes wrong, which could hurt the employee experience (EX), to adding to the EX to make it ever better.

It is a fundamental, profound change in focus, and artificial intelligence (AI)and other innovations in HCM can be of great help to HR departments as they conquer the details once and for all and train their eyes on the big picture. And payroll is as good of an example as any to illustrate this.

Payroll expert Pete Tiliakos, Principal Analyst, Advisor and Managing Partner at the industry research firm 3Sixty Insights, recently joined Amberly Dressler, Vice President of Brand & Customer Marketing at isolved, for a webinar: “Perfect Payroll – A.I. in the Workplace”—now available on-demand. Having once been the payroll leader for The Walt Disney Company, for example, Tiliakos drew on his extensive background and experience to discuss how AI is poised to impact not only payroll processing, but also remuneration’s very relationship to EX.

Payroll: Source of Risk and Opportunity

Fifty-five percent of employees cite payroll mistakes as a negative HR experience that would prompt them to look for a new job. That’s according to isolved’s third-annual Voice of the Workforce, results of a survey of more than 1,100 full-time employees. This finding is understandable in any scenario. It’s also unsurprising in today’s economic climate with high inflation affecting the prices of essentials.  Just one glitch in their pay is apt to send many employees into a financial tizzy challenging to overcome. Perhaps not so coincidentally, the same percentage of employees—55 percent—are living paycheck to paycheck.

Furthermore, it is crucial for all HR departments that have yet to reach that pivot: spending an inordinate amount of time every pay period to help ensure that payroll processes smoothly, without problems that would diminish EX. As is so often the case, operational HR—which this is—affects employees  at the very core of why they work: to make a living. “We all come to work for pay,” said Tiliakos.

But what is the payroll-related imperative post-pivot? This is where forward-thinking payroll comes into play. The same survey finds that 52 percent of employees would like their employers to offer on-demand pay—also called earned wage access (EWA). Still about survival for staff, EWA is nonetheless also an inescapable evolution in their thinking around their relationship to their pay. And, worrisomely, only one-third of employers have plans to invest in EWA, according to isolved’s third-annual HR Leaders Report based on findings of a survey of 500 HR decision makers.

Some of these HR departments must lack the resources to implement EWA, whereas others must lack the will. And what comes after EWA? In the end, “payroll cycles are heading for extinction as payroll calculations become continuous,” said Tiliakos.

Payroll: Strategic Asset

Tiliakos noted that modernization of HR and payroll is no longer an option, but a strategic imperative. Yet payroll operations are largely immature and often do not meet the needs of the organization, shared Tiliakos, pointing to research from Sapient Insights. At the same time, “Payroll is curating some of the richest data in the organization, and not activating that data puts the organization at a tremendous disadvantage competitively.” This is not to mention the value of plain old properly processed, transactional payroll being at the heart of the strategic imperative to attract and retain top talent.

AI, Perfect Payroll and Optimism

“There’s optimism in AI among payroll, benefits and HR leaders. It’s not a tomorrow or ten years thing. It’s a today thing,” said Dressler during the webinar when introducing Tiliakos, who said, “We may be living in the very beginnings of the golden age of payroll,” a step beyond automation to augmentation. A big part of this augmentation is AI and its kissing cousin, machine learning (ML). More than any others, these two factors greatly accelerate payroll’s evolution into something that transcends the challenges of mere automation.

Autonomous processing is in our future. Closer to the present will be prescriptive guidance, and generative AI will spare HR the “manual” work of providing employees with elaborations on the details of their pay slips. And, already, AI and ML have brought about what isolved calls perfect payroll: payroll systems that make sense of related, complex regulatory landscapes and learn how to reconcile anomalies, freeing administrators from the inefficient workarounds they must otherwise conduct.

Want to learn more? View the full on-demand webinar, where Tiliakos shares his foresight and insights into the promise of innovation in payroll technology.

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