Report: Leader Perspectives on Innovation and Unified HCM

Survey reveals innovation gap in HR and payroll technology 

Too many organizations are stuck with platforms that overpromise and underdeliver, leaving HR and payroll teams wrestling with disjointed systems instead of focusing on their people. 

To uncover the biggest frustrations and must-have features, we partnered with Qualtrics to survey over 500 HR and payroll decision-makers across the U.S. We asked about usability, integration, innovation, and outcomes to reveal what’s working, what’s broken, and what’s needed in today’s human capital management (HCM) technology. 

In this report, we’ll look at the capabilities and features that matter most to HR and business leaders. You’ll gain a clear understanding of where current platforms fall short, what a truly unified system should deliver, and how the right technology can transform your workflows.  

Whether you’re evaluating your options or planning your next move, this report will equip you with insights to choose a solution that empowers your team and drives real results. 

87% of HR decision-makers want an all-in-one HR and payroll solution. 

HR leaders know exactly what they need, and they’re tired of compromising.  

An overwhelming 87% say they want a single, all-in-one solution to manage both HR and payroll, yet 66% are thinking about switching to a new provider.  

That means two out of every three HR leaders believe there are better options than what they’re currently using. They’re also willing to take on the task of implementing a new system and onboarding a new provider if it means finally having the tools they need to succeed.  

Just as importantly, an all-in-one solution integrates securely with other systems, services, and providers, offering unlimited flexibility and customization. 

For HR and payroll solutions, that can mean integration with: 

• Applicant tracking systems and job boards. 
• Benefits, 401(k), and retirement providers. 
• Point of sale and specialized scheduling systems. 
• Background checks, skills tests, and assessments. 

Finance and expense functionality could include: 

• ERP connection for real-time spend data, accurate forecasting, and budget analysis. 
• General ledger integration to reduce manual entry and errors. 
• Connected requisition flows to integrate spend, payroll, and HR data. 

Consolidation and integration are the secrets to making work flow. With systems that talk to each other, data silos are eliminated, making it easier to get the insights that produce real organizational impact. This is the comprehensive promise HR and business leaders expect today from an all-in-one solution. 

76% of decision-makers want providers to incorporate client feedback. 

The world is changing fast and leaders expect technology providers to keep up. 

But innovation has to serve a purpose — 87% of decision-makers expect their HR and payroll software to be a strategic tool that helps achieve business goals, not just perform transactional functions. However, only 36% strongly agree their provider introduces meaningful and beneficial innovations. 

What’s more, 76% believe it’s important for vendors to incorporate client feedback into their product development. A majority also think technology providers need to adapt to future changes and be considered an industry innovator. Nearly a third are looking for innovation that enhances security, leverages cutting-edge technology, and offers AI-driven insights.  

How do business leaders define innovation when it comes to HR and payroll software?

Innovation may be an overused word, but decision-makers have high expectations for technology providers to continuously enhance their products with clear purpose. Or, as one survey respondent put it: 

“Innovation in HR/payroll software means taking something that’s usually stressful and complicated, like running payroll, managing benefits, or tracking time off, and making it simple, accurate, and pleasant.” 

86% of leaders believe AI can significantly improve HR and payroll processes. 

Almost half the decision-makers surveyed strongly agree HCM software can leverage AI and automation to improve efficiency, while another 42% agree with the statement. 

Once again, business leaders make it clear innovation should simplify processes with new tools that make work easier, faster, and error-free. That means HCM solutions must use AI to drive business value. 

Some technology providers have thoughtfully woven AI throughout their platform specifically to streamline processes for HR and payroll teams, syncing with Finance and IT to keep operations running smoothly for both the business and employees. Leaders in forward-thinking business are using AI to: 

• Automate repetitive tasks to save time and reduce errors, allowing teams to focus on strategic initiatives and employee engagement. 
• Use predictive scheduling to forecast staffing needs based on historical data and business goals, streamlining workforce planning.
• Leverage insights to identify at-risk employees and implement tailored retention strategies that improve employee satisfaction. 
• Simplify benefits enrollment with automated announcements and personalized plan recommendations for employees. 
• Accelerate recruiting by generating compelling job descriptions and offering competitive compensation insights using market data. 
• Enhance decision-making with real-time, actionable insights and recommendations tailored to organizational goals and challenges. 

AI's disruptive impact is undeniable, but its potential to drive meaningful change is even greater. By applying AI purposefully, HR can transform workplaces into environments that are both highly productive and deeply fulfilling for employees. 

33% of HR leaders prioritize ease of use vs. 15% of other business leaders. 

Innovation for its own sake is not the solution, but it can be powerful when combined with other key factors that influence vendor selection.  

Data security and compliance rank as the most important factor when purchasing HR and payroll software, with reliability and integration readiness also placing high on the list. Interestingly, HR workers — who spend their day-to-day in the software — are more focused on ease of use, while other business decision-makers make streamlining workflows a higher priority. 

Here are the top factors HR and non-HR leaders are taking into account when they evaluate HCM providers. 

Your due diligence when choosing an HCM provider will pay off in stakeholder buy-in and confidence that you’ve made a well-informed decision. Check reviews from verified users to see how the software performs in real life and ask for client references or case studies that match your needs. 

Of course, the best way to determine if a solution is right for your priorities is by viewing a demonstration. 

Paylocity helps teams work smarter, collaborate seamlessly, and adapt when needed.

Innovation isn’t just in our products — it’s in our DNA, woven into the way we partner with our clients to co-create solutions that meet today’s most pressing business needs and anticipate tomorrow’s challenges. Our implementation and service experts ensure a fast path to ROI and a partnership that lasts.

Methodology 
To understand perceptions of HR and payroll software, Paylocity partnered with Qualtrics to survey 501 HR and business leaders in the U.S. in September 2025. Respondents were primary decision-makers or those who participate in the decision-making process when choosing HR and payroll software vendors at their organization.