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How AI Is Transforming the Payroll Process for Companies Everywhere


AI and machine learning are everywhere today, including your HR department. Here’s how AI is transforming the payroll process for companies all across the globe.

For as long as I could remember, Human Resources Departments have been known as the “people office,” but if our modernizing workforce has shown me one thing, it’s that Human Resources aren’t as “human” as they once were.

HR practitioners are adopting new online and cloud-based technologies to help with talent acquisition, employee performance reviews, compliance and payroll.

Many of them are using the same kind of cutting-edge software that’s been a staple of Marketing and Sales Departments for years: artificial intelligence (AI) and machine learning (ML).

They’ve watched other departments reap the benefits of AI or ML, and now Human Resources is ready to streamline their processes with some of the best technology on the market.

The use of AI is particularly interesting to me, as I’m finding many Human Resources Offices revolutionizing the way they’re making decisions about payroll, keeping connected with their employees and staying on top of the ever-changing regulatory landscape. Here are a few of the ways I’ve seen AI transform the payroll process for businesses across the world:

Better Decision Making with a Streamlined Payroll Process

Payroll is data-driven, that’s a fact, and for too long real people have had to sift through piles of raw data to make informed decisions about employee raises, track expenses or determine any trends in worker efficiency.

The problem with manual input is that human error is common, and it often leads to costly mistakes and wasted time. Faux pas such as misclassifying employees, miscalculating overtime and tax deductions, or entering incorrect Social Security Numbers can be a headache for payroll managers.

According to Cloudpay’s Payroll Efficiency Index, the average rate of data input errors was 72% globally. The Americas had the highest error average worldwide at 75.4%.

Companies like help businesses through the payroll process by providing pay stubs online to employees as proof of income and for tax filing purposes. Their patented technology, developed by certified accountants, makes it easier for their clients to be consistent and avoid miscalculations.

Processing payroll through online or cloud-based software is cheaper, easier and more efficient for any business, regardless of their size. Rather than using the traditional Excel spreadsheet or outsourcing to a third party — which opens the door for human error — these services help save time and money.

Advanced payroll systems using AI or ML put companies in the competitive position of being more strategic with their decision-making. They finally have data working for them, and it can drive their decisions on employee raises and forecast potential issues down the road.

The global cloud-based payroll software market is booming. According to a report from Zion Market Research, it was valued at approximately $7,884 million in 2018 and is expected to generate around $13,374 million by 2026, at a compound annual growth rate (CAGR) of around 6.8% between 2019 and 2026.

More companies will likely get on board to cut back on human error, as well as save time and money.

Improved Employee Communication with AI Chatbots

Although it may not seem like it, a Payroll Office is a major communications hub. Everyone wants to get paid and that office is the first place they’ll call if there’s a problem with their paycheck.

Hundreds of employees could be contacting them every day inquiring about tax documents, direct deposits or withholdings. Historically, this high volume of queries has been handled by staff.

Implementing an AI-powered conversational chatbot can take some of the pressure off of staff and therefore increase their productivity in other areas. Commonly asked questions can be handled by the chatbot software, while more complex issues can still be sent to a human being when appropriate.

Servisbot recently discussed six examples of “What Chatbots Can Bring to HR” for companies considering the use of AI software:

  • Lowering costs via self-service and automation
  • Expanding HR services to 24/7
  • Creating consistent HR experiences company-wide
  • Improving search and information access
  • Frequent and proactive HR outreach
  • Improving employee retention

By using AI at your company, workloads can be reduced and employee satisfaction will be increased thanks to the self-servicing systems available any time of the day.

Remaining Compliant in a Dynamic Regulatory Landscape

Regulations for Human Resources and Payroll Offices are changing all of the time, which can be time-consuming and frustrating for staff.

Nearly half of employers surveyed in Littler’s 2018 Annual Employer Survey are using AI technology to help with recruiting and hiring. But it doesn’t end there. These technologies can also be used to identify discriminatory policies, legal pitfalls or litigation strategies.

A company’s hiring criteria, for instance, may inadvertently impact specific groups of people based on race or ethnicity.

In an article for the Society of Human Resource Management (SHRM), Lisa Nagele-Piazza, J.D., SHRM-SCP posited: “what if a recruiting tool may weed out candidates that are more than 10 miles away from the worksite? What if the neighborhoods surrounding the worksite are predominantly made up of affluent white families?”

The use of AI technology can analyze applicant data to detect these types of inconsistencies before they result in a lengthy and expensive lawsuit. It can also run predictive models based on how new legislation or changes to government policy can impact a company.

The Future of AI in HR

Nervous? Don’t be. Companies are only adopting online software, AI or ML to help with data entry and automation. At the end of the day, there still needs to be “humans” in Human Resources or Payroll.

There are many times when a chatbot or piece of software simply won’t cut it. Salary negotiations can only be done with a person sitting on the other side of the table, and employees will want to see a living, breathing human being to discuss sensitive topics such as conflict resolution or family illnesses.

If you’re a business searching for technological solutions to help improve your day-to-day operations and run more smoothly, read some of the other articles on Jack’s Advice, including “Using Automation to Make Your Business Run More Efficiently,” “5 Smart Ways to Boost Your Brand’s Online Visibility” or “How to Create a Website — The Beginner’s Guide.”

Pooja Kaintura
Pooja Kaintura is Managing Editor at TechGrits. Unconditional fan of technology and culture wants to share the knowledge acquired with everyone.

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