What it Means to Use AI Early and Often in Payroll
Brent Skinner, Director of Product Marketing, isolved
Artificial intelligence is transforming HR. Nowhere will this transformation be more absolute than in payroll. It is the most fundamental aspect of the employee experience, so this transformation can’t happen soon enough. Here’s why.
When HR people at smaller businesses spend more than 15 percent of their time every pay period wrestling the payroll process to completion, HR struggles to become strategic, finds industry research firm Sapient Insights. And that is just for regular day in, day out reliance on a clunky system. An emergency or huge mistake with the payroll process could grind a company to a halt. And this operational inefficiency can fuel challenges with retention, as noted earlier in this report.
And, with payroll-related mistakes, the consequences for retention and the employee experience can be dire. It’s the bedrock of employment. In a survey of 1,100 employees across many industries, including finance and banking, 55 percent of employees cited mistakes in payroll, the bedrock of their employment, as a negative HR experience that would prompt them to look for a new job, according to isolved’s Third-Annual Voice of the Workforce.
This is why HR leaders take payroll so seriously. Fifty-four percent of them report that they’d like to see payroll streamlined, according to isolved’s Fourth Annual HR Leaders Report (which will publish by early March). These and other findings from isolved’s research shed light on why HR should begin using AI early and often for payroll specifically. Payroll is usually the very first system put into place for employment, after all, so it only makes sense for HR to apply AI to payroll first. With it, payroll gets better for the EX, not to mention more streamlined for HR.
There may in fact be no better way to create an EX that matters than evaluating, enhancing, and extending payroll. For example, AI can be trained to recognize and correct mistakes in payroll on its own, before they occur. How else does AI apply to payroll? It can look like a personalized gross-to-net calculator helping employees estimate take-home (net) amount after taxes and benefits are withheld based on their elections. It can help to facilitate earned wage access (EWA), also known as on-demand pay—helping employees make ends meet and employers retain staff. AI can make it easier to verify pay. This mitigates regulatory-related risks for employers and provides peace of mind to employees. And, with AI behind it, payroll can be processed from anywhere, a boon to HR staff no longer tethered to the main office till everyone’s pay is correct and processed at the end of every payroll period.
In all these ways, AI points payroll in the direction of perfection and immediacy, the goal of any payroll process—as well as individualization, an objective AI extends. The best part is HR departments needn’t fret over deciding whether to deploy AI. With the best modern platforms for HCM in place, the AI is ethical and baked right into the payroll software and, thus, gets to work right away.
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