AI And The Future Of Payroll

Payroll is indisputably the most data-intensive aspect of Human Resources (HR). Every payroll cycle demands hundred percent accuracy, timeliness and seamless coordination of every payroll process – from updating employee bank records and salary data to disbursement of wages to employees.

This has driven many organisations to invest in HR technology solutions, automating mundane and administrative HR tasks such as salary calculations and recording employees’ working hours through punch cards. Today, payroll software are capable of managing complex HR processes such as collating the organisation’s payroll data, calculating the correct wages for each employees including tax deductions and overtime as well as generate detailed payroll reports for analysis.

While there are several facets of HR that would still require a human interface, there are still process automation in other HR areas such as HR analytics and compensation and benefits. Essentially, automation and analytics have transformed HR from an administrative facilitator to a strategic business partner within the organisation.

Following automation and analytics of HR processes, robots – or Artificial Intelligence (AI) – are considered the future of HR. As mentioned by Infosys’ executive vice-president and head, HR, Richard Lobo, AI is "slowly making inroads into HR and one of the forerunners are chatbots". Broadly defined, chatbots are programmed to conduct online conversations with users via auditory or textual methods for various purposes including customer service helpdesk or information acquisition.

In the HR context, these chatbots are ideal forms of technology that serves to provide a better employee experience. These chatbots can help address basic employee HR requests instead of having a physical HR personnel present, allowing the HR department to save on time and resources.

On the other hand, there are rising concerns that AI might very well take over the entire payroll process. According to a white paper title The Future of Employment: How Susceptible Are Jobs To Computerisation?, the probability of payroll and timekeeping jobs being computerized is a high 97 percent.

While technology is suited to circumstances whereby the inputs and outputs are known and clear, there are two distinct aspects that AI is completely unsuited to – unexpected and data.

Technology, regardless of how sophisticated and brilliantly designed, will not be able to respond well to sudden changes and spikes in demand. Humans, on the other hand, have the advantage of responding quickly and adapting to unforeseen circumstances.

For instance, should there be the need for ad-hoc salary payments outside the typical salary cycle, human HR professionals will be able to act outside standard procedures to ensure that the software is able to cater to the unexpected circumstances.

Outputs of payroll software and technology is also heavily reliant on the data provided. Payroll software might have difficulty interpreting any data that is outside of the specified programmed examples.

One example is that wrong payroll entries made by payroll staff into the system will result in employees not being paid accurately or on time. The payroll system is unable to pick up minor errors as such. Human HR professionals, however, are able to interpret payroll data with the context in mind and make appropriate judgement on the validity of the data. Simply put, the payroll software can only identify what is right or wrong – whether the decision fits the context of the situation is ultimately decided by the HR professional.

Finally, one thing that technology lacks is the good old human touch. When employees have queries regarding something sensitive such as payroll, employees will want to talk to a real person. Even sophisticated chatbots cannot replace the "human" element of HR.

Despite growing wariness on the complexity of payroll software, HR professionals should regard it with positivity nonetheless. AI, when well used, can work harmoniously to achieve HR goals for both employees and the organisation.