Embracing AI, data, and skills development

1. Getting data in order

Many HR and payroll departments today still rely on outdated systems and manual processes. Critical knowledge often resides in the minds of individuals, leaving business processes vulnerable to staff turnover. It’s still commonplace to find 1990s-era systems and manual spreadsheets managing sensitive employee data.

For instance, our 2024 Company Payroll Complexity Report found that 51% of respondents still use spreadsheets to handle payroll processes while 19% use manual or paper-based methods. This outdated approach breeds inefficiencies, increases the risk of costly errors, limits scalability, exposes businesses to compliance issues, and creates potential employee retention challenges. The risk of getting it wrong is significant; for example, just two payroll errors are enough to prompt 49% of employees to start job hunting.

With only 37% of business leaders trusting the data and analysis provided by HR teams, it is crucial that HR leaders regain control of their data to win back C-level trust. Upgrading and globalizing HR and payroll systems can future-proof operations by enhancing accuracy and streamlining processes. By integrating data into a single source of truth, HR leaders can minimize errors, reduce tedious manual data entry, and make regulatory compliance easier. There’s between 500 and 1,000 unique pieces of data related to each employee, so bringing all this information together can reveal potential opportunities to fuel the company’s overall performance – something especially important as we move into a new year of challenges and transition.

2. Harnessing artificial intelligence

With centralized data establishing a single source of truth, HR and payroll leaders can leverage artificial intelligence (AI) opportunities that extend far beyond current applications. Those that have been using cloud-based solutions for years are in the best position to capitalize on AI developments. If 2024 was the year to discuss AI, 2025 will be the year to put it into action.

From streamlining recruitment and onboarding to optimizing payroll management and automating repetitive tasks, AI will act as a gateway for future strategic decision making. AI-driven analytics will also play a key role in identifying skills gaps and training needs, thereby supporting employee growth and productivity – a sure way to boost retention in a challenging labor market. In fact, our Bridging the gap: From good to great in Payroll report found that 95% of respondents recognize the value of AI in freeing up time for innovation, improving reporting, reducing errors, and adapting to change quickly. However, many businesses are still hesitant to implement AI, so the work to be done in 2025 is to equip HR and payroll leaders with knowledge, frameworks and the right tech stack so they can effectively integrate it within their organizations.

3. Emphasis on skills development

The rapid pace of technological change, like the rise of AI as part of day-to-day administrative tasks along with the influx of a new generation entering the workforce requires continuous skills development. HR and payroll departments will need to prioritize upskilling and reskilling initiatives in 2025 to stay ahead of the curve and foster a culture of continuous improvement and innovation.

As we look ahead to the ongoing evolution of the workplace in 2025, ensuring employees feel comfortable with change will be crucial. Their roles may look very different in the future, and as they navigate the need to upskill and reskill, providing support on this journey will be essential. This will help employees remain competitive and adaptable to new roles. For instance, training HR teams up in data interpretation to analyze workforce trends or leveraging AI tools for recruitment, payroll, and employee engagement will not only bring new benefits to the business but also enhance the personal development of HR and payroll professionals.

4. Pay transparency and equity

As we move into 2025, pay transparency will become a cornerstone of modern HR practices. Legislation across the globe such as the EU Payroll Transparency Directive and mandatory gender pay gap reporting, will further strengthen the need to remain compliant and ensure that data is trustworthy.

What’s more, employees will continue to demand greater visibility into compensation structures, driving organizations to adopt transparent and equitable pay practices. HR and payroll professionals will play a critical role in implementing regulatory changes and ensuring compliance, as well as fostering trust within the workforce.

Looking to a brighter 2025

Clearly, 2025 is set to be a transformative year for HR and payroll. By modernizing and globalizing outdated systems, organizations can unlock efficiencies, reduce errors, and future-proof their operations. These trends will guide HR and payroll professionals through the complexities of the future workplace, shaping strategy and ensuring that they keep their business ahead of the pack.

The powerful combination of empowered talent with integrated technology solutions will be a key differentiator for many businesses in 2025. HR leaders should embrace these trends and level up their infrastructure so they can focus on what truly matters – their people. By organizing data, integrating AI and automation, upskilling employees, and adapting to new compliance challenges, businesses can look forward to a brighter and more productive 2025.