Payroll is being transformed by artificial intelligence, yet new research shows payroll teams are spending more time on spreadsheets, manual data entry and duplicated records.
Employers are investing in automation and looking to streamline pay processes, but many staff are still tied up with repetitive admin. Instead of freeing up time, new systems appear to be adding pressure.
The growing workload is raising concerns about errors, inefficiency and underinvestment in training and support. Payroll professionals say they are ready to embrace AI but lack the tools and resources to do so.
Manual work increases despite shift towards automation
In a Future Is Payroll report published to mark National Payroll Week this week, British HR solutions provider MHR found that spreadsheets used for payroll processing have more than doubled in the past year, rising from 30 to 63 percent.
 |
Get our essential weekday HR news and updates.
|
Manual data entry increased from 35 to 50 percent over the same period, and 55 percent of payroll professionals reported duplicated records across systems.
MHR’s chief executive, Anton Roe, said the rising workload was limiting the value payroll teams could deliver.
“Payroll is facing a paradox. Companies are embracing AI, yet employees are still spending hours on manual data entry,” he said.
“The increase in manual processes is draining time for payroll professionals and limiting what they can achieve. They’re calling for new ways of working. Business leaders are responsible for providing payroll teams with a fix to the admin-heavy processes they are currently working with, which has jumped to the top challenge payroll is facing this year.”
Skills and investment now seen as urgent
Payroll teams are keen to modernise, with 73 percent of professionals saying AI will have the biggest impact on their role over the next 12 months. More than half said AI had already made a significant difference to their work in the past year.
But many say they lack the training and systems to make best use of new technology. Sixty-four percent said developing AI and automation skills is their top priority for the year ahead.
Nearly nine in 10 respondents said their organisation must invest more in payroll technology to unlock its full benefits. Concerns remain around data security, noted by 48 percent, and a lack of training, cited by 38 percent.
Roe said firms should act now to improve systems and support.
“Business leaders must act now to champion unsung payroll heroes. They need to connect their people’s readiness for change with the technology and skills needed to untap the payroll sector’s full potential,” he said.
Roe added that firms “must remember AI is not a fix-all and consider improving ways of working and harnessing the full capability of their payroll investment” and that “[n]ew solutions must still be complemented with the human touch to sense-check data and have final oversight across such a critical function.
“By enabling the payroll function through a balance of the right solutions and training, leaders can empower people to work smarter.”
Sector-wide issues with outdated systems
Other studies support the findings. Research earlier this year by payroll services firm ADP found that 58 percent of UK employers are looking into AI-powered payroll tools, but only half have automated basic tasks like data entry or error checking.
HR provider SD Worx reported a rise in generative AI investment in UK firms, but said fewer than one in three employees have access to these tools. Many payroll teams remain reliant on spreadsheets or outdated platforms.
A separate survey by the HR Research Institute found just 25 percent of organisations operate payroll at a strategic level. Others are still working reactively, using manual processes that leave them open to mistakes and delays.
Integration is also a common problem. Research by CorPay found IT teams spend up to 25 hours a week managing payroll data across different systems. Without joined-up processes, even modern tools can create more admin.
Pressure rising on payroll teams
The rise in manual work is adding pressure to a function that already struggles to get attention or investment. A recent report by PayFit found that over a third of UK employees have spotted errors on their payslips, often due to human input.
Mistakes in pay can lead to frustration, complaints and loss of trust. Employers that rely too heavily on manual checks may also struggle to keep up with compliance changes or reporting requirements.
Payroll teams say the solution is not just more technology, but better support, training and planning. Most are open to new systems and automation, but warn that without investment, the risk of errors and burnout will grow.
Focus on the future
To coincide with National Payroll Week, MHR is hosting a series of webinars under the banner of PayFest ’25. Topics include the role of payroll in business performance, new legislation and the skills needed to succeed in the sector.
The company said it launched the week-long event to help organisations move beyond basic compliance and make payroll a more strategic function.
Its report is based on a survey of 250 payroll professionals in the UK and Republic of Ireland, all working at manager level or above in organisations with more than 100 staff.
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
