Automation, AI and robotics - the impact
12 January 2018
This article was featured in the February 2018 issue of the magazine.
Professional in Payroll, Pensions and Reward invited several industry luminaries to participate in a virtual roundtable articulating their views on the issue of artificial intelligence (AI): how automation is affecting payroll and the profession
Vince Ashall MSc FCIPP, proprietor VA Payroll Services
Julie Hodgskin BSc (Hons) ACIPP FMAAT PGCE EQA, technical material author, CIPP policy team; and provider of services to micro employers
Dianne Hoodless MSc FCIPPdip FHEA, EMEA payroll manager, Hyperion Insurance Group
Karen Thomson MSc FCIPP FHEA, director of Payroll Services, Armstrong Wyatt LLP; and board director CIPP
Automation has over the years transformed payroll. Do you think there is much scope for further transformative automation in payroll?
Vince: Being of a certain age, I can remember moving from data being ‘processed’ by comptometrists, to entering data on paper sheets that were then keyed into the computer by data entry clerks, to direct input via visual display units. So transformative automation isn’t exactly new. Probably most parts of payroll, the transactional elements, have already been subjected to transformative automation.
Perhaps the question should be, to what extent have organisations adopted transformative automation in order to benefit from the cost savings that accrue from transformative automation?
What tends to be forgotten is that not all processes are suitable for automation. For instance, what about checks and balances, separation of duties and so on? This may appear a bit blasé, but most areas that can be automated have been; areas that are ‘black and white’ and which have rules that can be readily codified and incorporated into computer programmes.
Julie: I don’t use much automation at present.
Dianne: All computer systems will continue to develop therefore payroll systems will have to use up to date technology.
Improved technology will be faster and easier to use, so yes there will be further scope but who knows what the next ten years will bring.
Karen: I believe more can be done. Over the last few years the payroll knowledge required has increased substantially due to changes in legislation and/or practices. Payroll is still a transactional process in as far as the actual calculations; however, the expertise required to ensure what is to be processed is where the big change has happened.
What parts of payroll can be further transformed?
Dianne: In my opinion the ease of use, report writing, changes to benefits, interaction with other systems and the ability to ‘inhouse support’ day to day and annual changes.
Karen: I would like to see the more mundane, transactional processes further automated; self-serve input, verification automated and even processed automatically, leaving the payroll specialist to concentrate on the business requirements, key performance indicators, compliance etc.
Vince: If it hasn’t already happened, the area of expenses and benefits appears ripe for automation. With the payrolling of benefits, the taxable value of benefits in kind could be automatically fed through into the payroll system. This could include company cars since all the necessary details to calculate the benefit need to be input to the payroll system for inclusion in the full payment submission.
One complication of course is where optional remuneration arrangements are in place. A means of indicating that such arrangements are in force, and what their value is, would need to be put in place.
Do you think automation is good for payroll professionals and what might be the impact?
Karen: I do believe more automation would be beneficial to allow the payroll professional to concentrate on the business and the employees, but leave the transactional processing to the computer. Obviously, I would always be an advocate of knowing what the computer is doing, so knowing the technical ‘stuff’ will always be vital. However, the data at our fingertips is immense but so little time to dissect it and put it to good use. As we are seeing with the apprenticeship levy, gender pay gap, equal pay, etc, payroll could be supporting the business better by analysing these kinds of data.
Vince: Automation can be good for removing the boring, repetitive jobs that nobody likes doing. This could have a beneficial impact, leading to a ‘happier’, more productive payroll team. Payrollers will be freed up to concentrate on the more strategic aspects of payroll.
One possible impact could be increases in pay to reflect the increased knowledge, skills and awareness that those in payroll will require; or an incentive to accept change?
Overall, automation is good for payroll professionals and the payroll profession. However, the doomsday scenario, where payroll professionals will not be needed – and payroll will, literally, be processed at the ‘touch of a button’ – is a long way off yet, in my view.
Dianne: For any organisation other than the very small employer payroll automation is a necessity. However, increased automation will always raise the question ‘will there be job losses?’
Increase automation should allow payroll professionals to provide a more efficient and comprehensive service to their customers than would be possible using more manual processes.
If AI was available in your work, how would you and your employer utilise this?
Vince: Being currently self-employed, the employer part doesn’t apply. However, my last employer was in the retail sector, so opportunities to use AI were limited. But it does illustrate the continuing need for some form of human input. How many of us have experienced the ‘unexpected item in the bagging area’, which cannot (yet?!) be sorted by AI.
As with any form of automation, I would expect some redundancies to occur. Isn’t that part of the rationale behind automation? The human element of an organisation’s workforce, as well as it being the organisation’s ‘most valuable asset’, is also it’s costliest.
Julie: As a micro (accounting and) payroll agent I find that my clients will want to talk about a range of topics in one sitting; some so diverse that one minute I am calculating the total cost of taking on another member of staff, the next I could be reviewing their five-year plan with them, and then discuss the merits of training and apprenticeship for their child, so unless the AI was interactive (and I can’t afford that), it would not be suitable.
Dianne: To apply automated interpretation or a ‘common-sense’ element to data analysis which currently requires human input.
Further development of robotic software will allow payroll professionals to concentrate on added value items and process improvements by removing many of the team’s routine data and audit tasks. It should also improve customer service and reduce costs.
Do you envisage AI making payroll professionals redundant?
Dianne: There may be some payroll team reductions resulting from increased payroll automation, but ever-increasing legal and compliance requirements that currently may require an increase in the size of a payroll team may be reduced or avoided.
Karen: I don’t see AI making people redundant, but I do see it changing the role the payroll professional has to play. Years ago, human resources – or ‘personnel’ as it was known then – used to deal with contracts, terms and conditions, etc; now this is more the administrative and transactional processes, leaving them to look at diversity for the business, recruitment strategies and much more. Payroll could do the same; utilise the data after AI has processed it.
Vince: Undoubtedly, some payroll professionals will be made redundant, illustrating Darwin’s concept of the survival of the fittest. Those who remain will be fully conversant not only with the payroll, National insurance and auto-enrolment pension regulations etc, but also with the latest developments in information technology.
Quis custodiet ipsos custodies (translated as ‘who guards the guards’)? People will still be required to ensure that the AI is performing as expected. A good analogy is the payroll contract overseer who is retained to ensure that payroll outsourcers provide the expected service and that the organisation’s statutory responsibilities are met with regards, for example, to making pay as you earn payments on time.
Has your payroll/HR software supplier been in touch to seek your views on any planned automation developments in their product and service? Are you likely to adopt these developments? And, if so, do you know the planned availability date and any indication of the additional cost for the enhancement?
Karen: No, they haven’t. However, if they were to I would be very interested in understanding what was on offer and the impact it could have. If there were additional costs for development, they would need to demonstrate the true benefits to the business and, in my case, to clients before I would consider paying for it.
Vince: The short answer is no, but a trawl through the payroll/HR software supplier’s website doesn’t reveal anything on the horizon. Perhaps it’s commercial confidentiality?
The payroll system does encompass some automation, for example accepting data imports via csv files and having statutory payment modules that take the manual graft out of checking entitlements and calculating the payments due. What you would expect really.
Julie: My current software provider is not developing the software any further, so I am currently looking at other providers.
Dianne: No, not at the moment, but I am sure it will come. Will have to see what they are and take it from there.