Embracing the Future: How AI Can Redefine Payroll

Artificial intelligence can support payroll professionals and will not replace them in any way, shape, or form, a payroll expert said March 17.

The payroll industry still requires a human touch, said Michael Francis, director of global payroll at SBA Communications. However, he warned that payroll professionals must enhance their skills in AI adoption to remain relevant in an evolving landscape.

Why AI – The Current State of Payroll
Payroll processing is a time-consuming process, Francis said at PayrollOrg’s Capital Summit. Payroll professionals spend a lot of time performing manual data entry and reconciliation processes, making it difficult to keep up with compliance, he said.

“There is so much information that we collect and analyze that we don’t get to share with leadership because we are too busy trying to ensure that paychecks are correct. We don’t have the option of being incorrect,” Francis said. Still, 20% of employers suspect that there are payroll errors within their systems, he said.

“Payroll is evolving beyond just operations into strategic workforce management,” Francis said. Integrating AI into payroll addresses many of these challenges and concerns, he continued. “AI is not just automation. It’s a tool for payroll professionals to take on leadership roles in financial strategy, risk management, and compliance.”

The Future State of Payroll
Payroll has an aging workforce, and the industry needs to attract a younger generation of workers, Francis said.

“We are the engine that drives this economy,” he continued. “Without our collecting and remitting taxes, this economy would suffer. We must figure out how to make the payroll profession attractive to younger generations. That way, we can future-proof the industry.”

Incorporating AI technology into payroll processes would make the payroll industry more appealing to the younger generation, he said. AI can help automate compliance, optimize workforce costs, reduce payroll errors, and enhance the employee experience through predictive analytics and self-service tools.

“We need to change our perspectives in a lot of ways. We know that AI has its issues, but as payroll leaders we must consider how we can adopt AI to help with payroll,” Francis said.

Employers will need to transition from a work plan approach to a strategic plan approach, which puts AI at the forefront, he said. A strategic plan approach allows payroll professionals to use AI-driven tools in payroll processes to improve efficiency.

Call for Action
Payroll professionals should embrace AI and learn to integrate it into their workflows, Francis said. Employers can help by building AI literacy among employees and investing in training.

AI has potential issues, such as data breaches and accuracy concerns, he warned. Employers should adopt robust fair AI governance policies to mitigate these risks.

A good place to start with AI integration in payroll is by working with an organization’s cybersecurity department, an attendee at the conference added. “They are already using AI, so you simply need to join the conversation. They can assist with its automation.”

Seasoned payroll professionals should collaborate with AI-savvy young workers to integrate AI into their systems, Francis said.

“We should see AI as a tool and augmented intelligence rather than something that is going to replace us,” he explained. “AI is not going to replace payroll professionals. However, those that understand AI and payroll may replace those that don’t.”