The promise of ‘zero touch’ payroll

If you talk about so-called ‘zero touch’, or highly automated, payroll, most people imagine a robotic or artificial intelligence system doing everything from A to Z, with no human interaction. But this is not necessarily the case.

Twenty years ago, people handled their payroll using bits of paper and a calculator. Today, most of the calculations are undertaken using payroll applications.

But human intervention is still required to verify that everything has been done correctly as most systems do not yet have this capability. Software can pick up data from an HR system, load it into payroll one and produce a report that identifies errors, but humans are still needed to look at the report, evaluate any issues and correct them if necessary.

For example, a simple verification report compares two columns and highlights any differences in yellow. The system is able to compare pay slips, confirm that salaries and commission are the same, or check expenses against a submitted expense report.

In other words, it can look at items A and B and tell you when there is a difference, but it cannot tell you why there is a difference. Humans are still required to deal with those exceptions.                                        

Nonetheless, there is a common misconception that software will soon put all payroll professionals out of a job – despite the fact there will always be exceptions that require human intervention.

Benefits and challenges

One of the key ideas behind the ‘zero-touch’ payroll model is that, because it automates repetitive manual activities, it should free payroll workers up to focus on higher value business tasks. If people only need to spend, say, half of their time processing payroll, the rest can go on strategic planning or activities to help the business move forward.

For example, if you are a payroll manager at a global finance company and headcount has increased by 20%, you would now have the time to consider what possible steps to take in light of your profit and loss situation. Understanding the situation here is important because the payroll of most international firms accounts for between 40% and 60% of their profits. This means that if a certain location has particularly high expenses levels, it is important to know why.

But ‘zero touch’ payroll systems can also help in bringing down error rates. Traditionally, for a manually processed payroll, the error rate is about 8%. When technology does the heavy lifting though, error rates tend to be reduced and with them, costs. 

As to how to get there, this can be quite challenging. The success or failure of any project here will depend largely on effective change management, which involves understanding the business environment, educating key stakeholders and standardising processes.

It is vital that employees understand what the proposed changes will mean, what their implications are and what benefits they will deliver for them personally. Otherwise, resistance will set in and the project is likely to fail. 

But once staff are clear about how ‘zero touch’ payroll can help them work more strategically and increase their personal value, they can then start thinking about how the new system could help them better achieve their personal goals. In some cases, it might even lead to the creation of new, higher-value and more interesting roles that could not have existed previously – and that has to be worth it.

Lee-ann Kilroy 

Lee-ann Kilroy is solutions support director at global payroll services provider, iiPay. She joined the company from a UK top 40 accountancy firm and has held key leadership roles in its operations, implementation and project management teams. Lee-ann works alongside the company’s enterprise team to provide custom solutions for all accounts.