KPMG, UKG: Only 47% of Executives use AI for Payroll

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

As a result, millions of dollars are lost each year to waste and potential fraud.

Organisations were found to forfeit 2-4% of total labour spend to “payroll leakage” – consistent, unintended financial losses driven by inefficient processes.

The report further notes that 38% of businesses incur US$1 million–US$5 million in annual payroll losses, while, for large enterprises, just 1% in wasteful payroll spend can translate into as much as US$15 million.

UKG and KPMG surveyed more than 300 senior leaders globally, all at Vice President or C-level with direct payroll decision-making authority, employed at large multinational organisations with more than 10,000 employees and a minimum of US$5 billion in revenue.

For senior leaders, the findings elevate payroll from a back-office function to a strategic control point – making a compelling case for end-to-end integration, stronger governance, and data-driven oversight to reduce leakage and risk.

AI’s impact on payroll

Despite AI’s rapid impact on the workforce, only 47% of executives surveyed report using AI in production payroll environments. 

The primary barriers: concerns about data accuracy (48%), integration gaps (34%), and a lack of standardisation.

Even so, leaders are optimistic about AI’s potential in payroll: 69% expect improvements in accuracy and compliance; 68% anticipate enhanced insights and shorter payroll cycles; 56% want better visibility into future payroll trends; and 47% are looking for additional 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

While 92% of respondents report having a global employee pay strategy, only 33% have achieved a truly standardised global model.

Most organisations still rely on a patchwork of external partners: 74% use more than two vendors for global payroll, and 34% work with three to four. This fragmentation complicates governance and makes it harder to execute 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,” said Dimitri Papageorgiou, Leader of Payroll and Labour Strategy & Transformation at KPMG. “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 leaders use automated payroll comparison tools to assess current versus prior cycles, and 69% track payroll accuracy—yet just 35% measure first-time-right payroll. For senior executives, closing this measurement gap and consolidating vendor ecosystems are pivotal steps toward standardisation, stronger controls, and improved financial outcomes.

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."