AI is reshaping payroll, but it will always need people

December 6, 2024

How will AI impact payroll in future?

The biggest — and most visible — changes will be in key areas such as compliance, particularly in regard to payroll tax and labor law changes.

For example, in many countries, tax updates occur continually throughout the year. Currently, they need to be manually updated. Soon, it will be commonplace for these updates to be automated through AI and machine learning, with little overhead. Plus, the technology will be able to help and guide users to manage these changes — especially those that might not be payroll experts.

Despite these advancements, the human element in payroll will remain irreplaceable. Organizations will still need people to interpret that information within the context of their wider business strategy and culture, which requires a nuanced level of understanding.

With AI, the leadership focus may shift, too. Payroll has historically been the primary domain of the chief human resources officer (CHRO), but it's likely to shift more into the domain of the chief financial officer (CFO). This transition underscores how payroll data will become a cornerstone of business intelligence, potentially influencing broad organizational decisions.

Businesses will be able to use AI to generate key information, and then bring in their tax experts and say, ‘we should hire someone in this location because it’s more advantageous for us, but we should also hire these people in this location.’

It will give businesses flexibility at scale, which is vital when scaling.

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What about job losses?

Understandably — as in many roles and industries — the rapid advancement of AI is creating concerns about job displacement. In reality, though, it’s the roles that will change. Rather than erasing roles, they’ll likely be redefined in some areas.

Of course, this will require professionals in the payroll sector to adapt and develop new skills, and organizations should be enabling that. This will likely mean a shift towards analytical and strategic functions, such as managing AI systems and interpreting complex data for better decision-making.

But while AI and machine learning will enable us to do more things — and to do them more quickly and efficiently — the need for human expertise will not disappear.

This is especially true for multinational companies who run global payroll. With the variations in laws and practices across multiple jurisdictions, there will always be elements that need review by people. AI may standardize and automate many aspects of payroll processing, but the local and specific applications of these processes — and their alignment with organizational goals — will still need human oversight.

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Adaptability and AI as an aiding tool

You can automate calculations and updates, and that’s great, but it’s people within payroll departments that will have the personal understanding of an organization, and its dynamics.

Instead, the key to success in this new era will be agility and adaptability. To keep pace, companies will need to invest in training and development to equip their payroll professionals with the skills needed. They should view AI as an enhancement that can lead to more strategic, fulfilling, and beneficial roles — not as a replacement of their human workforce.

Ultimately, the narrative that AI will replace people is a simplistic one, and overlooks the complexities of business operations. The successful integration of AI in payroll will depend on our ability to balance technology with the irreplaceable value of human judgment and thinking. In this way, AI is not a replacement, but a partner.

Jonathan is the GM of Payroll for Remote. He has over 20 years of experience managing strategy in global HR and payroll businesses as both a practitioner and an executive.