The future of payroll: Balancing automation and human expertise

The rise of AI has transformed many industries, and if it hasn’t impacted yours yet, it likely will soon. Payroll and accounting, essential components of business operations, are no exception. This message isn’t to cause fear or worry; rather, it invites you to embrace the opportunities ahead, writes Judy Barnett.

Editor’s note: This story first appeared on HR Leader’s sister brand, Accounting Times.

While automation offers significant potential to streamline and, in some cases, even aid processes, many payroll professionals are eager to understand how the intersection of automation and human involvement can enhance payroll outcomes.

Thus, striking a careful balance between automation and human expertise is crucial for ensuring compliance, fairness, and adaptability, particularly in a dynamic regulatory environment like Australia’s.

Automation’s role in modern payroll

The benefits of automation in payroll are undeniable, and we’re starting to see the immediate effects already. For example, AI-powered systems can swiftly process vast amounts of data, reduce manual errors, and often save significant time for management teams. Tasks like calculating pay, tracking leave balances, and managing superannuation contributions can now be executed with remarkable ease and speed. AI analytics can also be instrumental in anticipating payroll trends and helping businesses make informed decisions about workforce planning.

But here’s the critical caveat: automation can only be as good as the data it is fed and the parameters within which it operates. Payroll should never be a one-size-fits-all domain. In Australia, regulatory changes and specific leave entitlements create a layer of complexity that demands more than just technical precision. This is where human expertise continues to be indispensable. Regularly reviewing the system’s outputs critically and integrating human oversight is essential to verify compliance and fairness.

The human input: Ensuring compliance

Payroll involves much more than just numbers; it is closely linked to legislation, ethics, and employee wellbeing. While AI can automate calculations, it cannot solely interpret complex legislative changes or adapt to the context-specific needs of a business without human guidance.

Consider the evolving regulatory landscape in Australia. New regulations, such as the “right to disconnect” legislation, place a strong emphasis on employee rights. These changes require thoughtful interpretation and implementation. While AI can help identify compliance risks or suggest necessary changes, it is ultimately the responsibility of payroll experts to assess these suggestions, apply a nuanced understanding of the law, and ensure that policies are tailored to each organisation’s unique needs. One effective approach to achieving this is to establish regular cross-functional reviews between payroll teams and compliance officers, which will help align AI-driven insights with legislative priorities.

Striking the right balance

Automation excels at handling repetitive tasks and analysing data at scale, freeing up payroll and accounting professionals to focus on more strategic activities. For example, ADP Lyric HCM, our newly launched human capital management (HCM) solution, uses data-driven insights to suggest best practices and compliance measures. However, we’ve designed our systems with the understanding that humans should always have the final say. This ensures that decisions are not just correct but also contextually appropriate.

This balance is especially crucial in scenarios that demand discretion. For instance, consider payroll for employees on individualised agreements or working under unique contractual terms. AI can process the data, but an officer or accountant must ensure that the outputs align with both the letter and spirit of the agreement.

Data, security, and the ethical imperative

Another critical aspect of balancing automation with human expertise is data security and privacy. According to our recent Potential of Payroll study, 42 per cent of Australian businesses admitted to experiencing at least one payroll breach in the past year. As companies adopt AI, maintaining robust data security measures with human oversight is non-negotiable.

Moreover, ethical considerations must guide how AI is used in payroll. Automation should enhance fairness and transparency, not perpetuate biases or widen inequities. For example, if predictive analytics are used to identify pay discrepancies, organisations must ensure that these insights lead to corrective actions rather than reinforcing existing disparities.

The road ahead

My advice to those navigating this ongoing transition and support from automation is simple: start small and specialise. Remember that AI is a tool, not a solution – its true value lies in how effectively it supports human decision making. As we move forward, let us embrace the synergy between technology and human expertise. Together, they have the potential to transform payroll from a back-office function into a strategic enabler of business success.

Judy Barnett, operations director, ADP Australia.