KPMG, UKG: 69% Expect AI to Improve Payroll Accuracy

Employee pay accounts for 40%-60% of operating costs in large organisations, yet global payroll systems remain fragmented, understaffed and poorly governed, according to new research from UKG and KPMG. 

Millions of dollars are therefore being lost to waste and potential fraud each year.

Organisations were also found to lose 2-4% of total labour spend to “payroll leakage” – a term referring to the “consistent, unintended financial losses” that result from inefficient processes. 

The report also highlights that 38% of businesses experience $1 million-$5 million in annual payroll losses, with large enterprises experiencing up to $15 million in losses for just 1% of wasteful payroll spending.

The report by UKG and KPMG surveyed more than 300 senior leaders across the globe who held either a Vice President or C-level position. Each leader had direct payroll decision-making authority and was employed at a large multi-national organisation with more than 10,000 employees and reported a minimum of $5 billion in revenue. 

AI’s impact on payroll

Although AI is rapidly reshaping the workforce, only 47% of executives surveyed reported using AI in production payroll environments. 

This was primarily found to be due to concerns about data accuracy (48%), integration gaps (34%), and a lack of standardisation. 

However, respondents did express optimism about the integration of AI, with 69% expecting it to improve accuracy and compliance, 68% foreseeing enhanced insights and shortened payroll cycles, 56% wanting to provide visibility into future payroll trends, and 47% hoping for extra growth.

“Employee pay is one of the most powerful levers multi-national organisations have to strengthen their financial health, elevate the employee experience, and operate with confidence on a global scale,” said Richard Limpkin, General Manager of Global Payroll Solutions at UKG. 

“Payroll teams sit on a wealth of actionable insight that leaders can use to guide smarter, faster decision-making. The opportunity ahead is immense: global payroll is a rich source of workforce intelligence for organisations that make the bold decision to modernise and empower their teams with new technologies.”

Fragmented payroll models are holding back global pay maturity

92% of respondents reported having a global employee pay strategy, yet only a third (33%) have achieved a truly standardised global model. 

Most organisations still rely on a patchwork of external partners: three‑quarters (74%) use more than two vendors for global payroll, and a further 34% work with three to four vendors. This fragmentation makes it harder to build a cohesive, end‑to‑end global pay strategy.

"The rapid evolution in how organisations manage pay presents a unique opportunity to transform complexity into clarity," Dimitri Papageorgiou, Leader of Payroll and Labour Strategy & Transformation at KPMG, shared. 

"Our research indicates that when leaders elevate payroll to a strategic function, they gain enhanced visibility into workforce trends, financial performance, and operational resilience.”

Additionally, 89% of those surveyed admitted to using automated payroll comparison tools to compare current and previous payroll cycles, and 69% track payroll accuracy. Yet just over one-third (35%) reported measuring first-time-right payroll.

Concluding, Dimitri explained: “With the emergence of new leadership roles such as the Chief Payroll Officer, forward-thinking organisations are leveraging AI, automation, and standardised global processes to unlock new value, while addressing risk and compliance concerns in an ever-changing world. 

“A function that was once perceived as a back-office function subordinated to HR or Finance is swiftly becoming a catalyst for broader enterprise insights and operating expense management."