Will payroll automation replace the payroll manager?

Automation is one of the top trends that spans nearly all areas of business, including HR and payroll. In fact, automating as many payroll tasks as possible to increase efficiency and save time has become a top priority for many businesses. But as the use of technology advances, the louder the voices become that worry that AI and robotic process automation (RPA) could ultimately replace the payroll specialist. 

Is there a real danger of payroll automation making payroll managers redundant? Read on as we discuss what parts of payroll can be automated and evaluate the risks of automation taking over payroll processing completely. But first of all, let’s look a bit more closely at the different tasks a payroll manager has to fulfill.

A payroll manager is responsible for coordinating and overseeing an organization’s payroll operations. The job description encompasses a range of different tasks and responsibilities, including:

• Managing payroll onboarding and offboarding

• Administering payroll changes

• Collecting timesheets

• Inputting the necessary data into the payroll software for calculating wages and salaries

• Verifying and validating payroll results

• Declaring and submitting payroll taxes

• Distributing payslips and issuing payments to employees

• Reconciling payroll data with the business’s accounting system

• Producing payroll reports for the upper management level

• Ensuring statutory payroll reporting requirements are met

• Guaranteeing compliance with payroll laws and regulations

• Maintaining payroll records and disposing of records that are no longer needed

• Supervising the payroll team (if there is one)

• Answering payroll-related questions from employees, other departments and management

• Staying up to date with regulatory changes in payroll

• Carrying out payroll audits

• Correcting payroll errors

• Adjusting the payroll management system to changing company needs

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The main idea behind an automated payroll system is to have technology take over tasks that are highly repetitive and monotonous—in other words, the parts of a payroll manager’s job that are very time-consuming yet don’t require any real skills.

The core element of payroll software is a payroll engine that runs the weekly, bi-weekly or monthly payroll calculations, which is why the actual payroll processing is the payroll task most commonly associated with payroll automation. But there are many more aspects in payroll that can be put on autopilot with the help of smart technologies, notably:

• Data input gathering for payroll (including basic employee and contact data needed for payroll, salary changes, employee timesheets, and more)

• Payroll onboarding and offboarding through payroll integration with the organization’s HRIS

• Employee time and PTO tracking and timesheet gathering

• Payroll report preparation (i. e. standardizing, consolidating and analyzing payroll data and using payroll analytics to gain detailed insights)

• Payment processing (i. e. payment information filled in automatically, leaving only the final authorization for the payroll manager)

• Payroll record keeping (i. e. automated creation and storage of payroll records in a centralized and secure database)

• Payroll calculations auditing (i. e. leveraging technology to facilitate the verification and reconciliation of payroll results)

• Tax filing and reporting through automated data transfers to the relevant authorities in predefined formats

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There are various parts of the payroll process that, theoretically, don’t require human intervention. In fact, the Global Payroll Association estimates that payroll specialists spend around 40% of their time on tasks that could potentially be automated. However, there is an area in payroll that technology won’t be able to replace, and that is skill and in-depth knowledge.

With repetitive payroll tasks being put on autopilot, payroll managers will have more time to focus on leveraging their payroll skills to create real impact within the organization instead of carrying out mind-numbing data entry tasks. Here are four key areas where the expertise of payroll managers will still be required.

Handling exceptions

Payroll is subject to a myriad of rules and regulations—and to make things even more complicated, legislation is constantly changing. And where there are rules, there are exceptions—exceptions that are too complex for robotic process automation and need to be addressed on a case-by-case basis.

In short, there will always be special cases and exceptions in payroll calculations that even the best payroll software won’t be able to process correctly without human intervention. That’s where the value of a payroll manager comes in, i. e. to handle exceptions and make sure the entire payroll operation is compliant.

Maintaining control of payroll

Payroll errors are very costly for businesses. Not only can they trigger hefty fines if the business fails to meet all payroll compliance requirements, but it also costs money to correct payroll mistakes. Plus, frequent errors in payroll can lead to employees leaving the company, which results in higher turnover costs. 

That’s why, no matter how good the payroll automation software a business uses, the whole system still needs to be under human control. Payroll software can automate payroll calculations, but it’s the payroll manager who ultimately needs to check and validate the results. 

After all, there’s always a slight chance that the software isn’t programmed correctly or that there’s a mix-up with the data input. In the end, it takes the expertise and knowledge of a payroll expert to evaluate the plausibility of the payroll results and protect the business from costly payroll mistakes.

Consulting and accountability

Payroll software is able to calculate wages and salaries and automate processes such as data entry and payroll reporting. What software cannot do, however, is answer payroll questions from employees and upper management, explain complex payroll topics, provide advice on payroll issues that are relevant for important business decisions and be held accountable for errors.

The accountability in payroll will always have to be on the shoulders of a payroll manager who remains the first point of contact for all payroll-related queries within the organization.

Increasing the value of payroll for the organization

If payroll specialists no longer have to deal with highly repetitive and monotonous tasks, they can dedicate their time to more important activities that can help increase the value of payroll within the business. This could include:

• Working on improving the payroll experience to enhance the overall employee experience

• Optimizing payroll systems and workflows to keep up with the latest payroll trends

• Aligning payroll and business strategy

• Leveraging the strategic potential of payroll by closely analyzing payroll data and patterns in payroll to inform business decisions