New UKG and KPMG report finds companies are experiencing financial losses from payroll risk, operating in siloes, and struggling to turn data into actionable insight
Employee pay represents between 40%-60% of most large organizations’ operating expenses, yet global payroll remains highly fragmented, under-resourced, and poorly governed, with millions of dollars lost to waste and even potential fraud each year. That’s according to a new research report published by UKG, a leading global AI platform unifying HR, pay, and workforce management, and KPMG LLP, the audit, tax, and advisory firm.
UKG and KPMG surveyed more than 300 senior global leaders from large multinational organizations. Respondents were required to be either a vice president or C-level officer with direct payroll decision-making authority; have more than 10,000 employees at their company; and report a minimum of $5 billion in revenue. While nearly two-thirds of respondents (64%) operated in up to 34 countries, more than a third (37%) operated in up to 110 countries.
According to the research report, organizations lose 2-4% of total labor spend to the phenomenon known as “payroll leakage,” which refers to consistent, unintended financial losses due to inefficient processes, system limitations, and even fraud, among other sources of waste. Nearly 2 in 5 (38%) companies report $1 million-$5 million in annual payroll losses. The report shows that even 1% of wasteful payroll spending can cost up to $15 million in losses for a large enterprise.
Despite the financial scale of global pay, the research shows the function still lacks executive ownership and visibility when compared to other functional groups, like the finance or talent teams. Despite sometimes paying hundreds of thousands of people, only 33% of respondents reported having 50 or more full-time employees dedicated to payroll, while 23% say their employee pay team is comprised of 15-24 employees.
“Employee pay is one of the most powerful levers multi-national organizations 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 organizations that make the bold decision to modernize and empower their teams with new technologies.”
“The rapid evolution in how organizations manage pay presents a unique opportunity to transform complexity into clarity,” stated Dimitri Papageorgiou, leader of Payroll and Labor 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. With the emergence of new leadership roles such as the Chief Payroll Officer, forward-thinking organizations are leveraging AI, automation, and standardized 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.”
Additional Insights and Challenges Facing Organizations:
- AI’s operational friction and challenges
Only 47% of C-suite and senior executive leaders surveyed say they use AI in production payroll environments. Reasons for delaying AI in payroll include concerns about data accuracy (48%), integration gaps (34%), and lack of standardization. However, survey respondents expect that AI will improve accuracy and compliance (69%), enhance insights (68%), shorten payroll cycles (68%), provide visibility into future payroll trends (56%), and drive growth (47%).
- Data-rich but lacking insight
Companies are drowning in employee pay data but don’t have the right insight into risk, cost, or workforce trends. Nine in 10 (89%) respondents say they use automated payroll comparison tools to compare current and previous payroll cycles, and 69% track payroll accuracy. However, only 35% measure first-time-right payroll, and fewer than half track cost per payslip or processing cost, the metrics most indicative of leakage and ROI. Without the right data visibility, organizations cannot make the business decisions necessary to propel forward.
- Global payroll strategies remain fragmented
Nearly all respondents (92%) say they have a global employee pay strategy, but only 33% operate a truly standardized global model. Three-quarters (74%) of respondents say that they use more than two vendors to manage global payroll, and an additional 34% use three to four vendors to streamline the management of external resources, hindering a true cohesive, global strategy.
Supporting Resources:
- For more information, interested parties can:
- Register for a webinar on April 28, 2026, at 1pm EDT, moderated by Dimitris Papageorgiou, leader of Payroll and Labor Strategy & Transformation at KPMG, with Matteo Busanic, Director, Human Capital Advisory at KPMG, and Richard Limpkin, General Manager of Global Payroll Solutions at UKG.
- Listen to and watch a podcast recording featuring Papageorgiou and Julie Develin, Sr. Partner, HCM Advisory & Human Insights at UKG.Explore Hrtech Articles for the latest Tech Trends in Human Resources Technology
