Smaller payroll firms risk being left behind by automation

New research from people management and payroll platform, Employment Hero, shows smaller payroll providers in the UK risk being left behind thanks to a distrust of AI and automation.

The survey of 495 payroll providers – including accountants, bookkeepers and outsourced payroll firms – found just one in five (19%) thought automation of their work would ‘significantly increase’ in the next year.

And many did not see the prospect of automation as massively appealing. Asked what aspects of payroll they wanted to see automated over the next year, just 24% responded ‘all of them’.

Smaller firms more wary of automation

Smaller firms were the most likely to be wary of automation: Only 16% of firms with 1-30 employees were keen to see ‘all’ aspects of payroll automated, compared to 35% of firms with more than 100 staff.

These smaller players were also the least open to an automated tool promising to cut down their payroll processing time to ‘minutes’. Forty percent of firms with 100 or more employees said this would be ‘extremely appealing’ compared to 29% of firms with fewer than 30 staff.

Smaller firms believe greater automation is less likely to happen this year 

Smaller firms were the least likely to anticipate a significant increase in the use of automation over the next year – just 14% of firms with 1-30 staff thought this compared to 23% of firms with 100 or more staff.

This wariness towards automation is surprising given the same survey found 76% of pay runs take a day or longer – far longer than pay runs in Australia and New Zealand.

Kevin Fitzgerald, UK MD of Employment Hero, said:“Our data shows a reluctance among many British firms to fully automate payroll, which is leading to longer pay runs with more errors that have to be painstakingly fixed by hand. We believe that this boils down to a lack of trust in AI and a worry that it will be used to replace payroll professionals.”

“The reality couldn’t be more different. Embracing automation for the more tedious tasks does not detract from your role as a financial profession – it enhances it. It frees up precious time, allowing you to engage more deeply with clients and provide the personalised, nuanced advice that only a human can deliver. Technology and personal service are not at odds but are complementary forces. Employment Hero is here to bridge this gap and help SMEs build trust in technologies that will inevitably transform their businesses for the better.”