Payroll is undergoing significant transformation as businesses increasingly turn to automation, artificial intelligence and integrated systems to improve efficiency and enhance the employee experience.
A new global survey by ADP, a provider of human capital management (HCM) solutions, highlights the shifting role of payroll, with organisations moving beyond traditional transactional functions to a more strategic focus.
ADP’s annual report, The Potential of Payroll in 2025, surveyed senior payroll leaders from multinational organisations with over 1,000 employees. The findings reveal key trends shaping the future of payroll, including skills shortages, AI adoption, system integration and employee-focused innovations.
Payroll teams are expanding, with 83% of organisations increasing staff numbers. However, 61% report skills shortages that are impacting service delivery. More than half of companies (53%) struggle to find external payroll talent, prompting investment in upskilling and retraining existing employees.
AI and Automation Reshaping Payroll
Businesses are prioritising automation to improve payroll accuracy and efficiency. The survey found that 58% of organisations are exploring AI-driven payroll solutions, while 50% are automating manual processes. AI adoption is now the top driver of payroll transformation, with 32% of payroll leaders identifying it as a key priority.
System integration is also becoming a focus area, with 47% of businesses now connecting payroll with accounting and finance systems, up from 41% last year. IT teams are spending an average of 25 hours per week managing data flows between payroll and other business functions, highlighting the need for more efficient and streamlined processes.
Employee-Centred Payroll Innovations
Companies are increasingly focusing on payroll accuracy, pay transparency and financial wellness initiatives to improve the employee experience. Over 55% of businesses plan to introduce digital wallets or pre-payment cards, while 43% are considering more frequent pay cycles. Self-service tools, chatbots and easily accessible payslips are also being introduced to enhance employee engagement.
The survey findings indicate a shift towards payroll as a strategic function. Businesses investing in automation, AI and integration are expected to gain advantages in compliance, workforce management and employee retention.
“As payroll’s role expands, organisations need to embrace innovation to meet evolving expectations,” said Sirsha Haldar, General Manager of UK & Northern Europe at ADP. “With AI, automation and system integration at the forefront, payroll teams have an opportunity to transform business operations and improve employee retention, well-being and overall job satisfaction.”
