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5 Problems with Splitting Benefits and Payroll Services (and Their Solutions)

November 10th, 2023 | 5 min. read

By Patrick Sanders

Integrating benefits and payroll systems isn't just a matter of convenience; it significantly impacts any business's operational efficiency. For those who have ventured down the road of managing these services separately, the journey is often marked by hurdles that seem insurmountable, barriers that impede the smooth flow of human resources processes. This path, while well-trodden, is ripe for change.


PaydayHCM has spent over three decades refining the tools and techniques that simplify these complex processes. Our approach isn't just about combining tasks — crafting a system that moves with the rhythm of your business, one that aligns with your company's heartbeat: its people. We understand the pain points of disconnected systems and build our solutions around them, offering an elevated experience that mitigates the friction points of human capital management.


Let's peel back the layers of these challenges to understand the core issues at hand and, more importantly, uncover the solutions that can transform these problems into opportunities for growth and efficiency. 


With the right approach, the tangle of separate benefits and payroll providers can be unraveled, leading to a more streamlined, integrated management system that enhances your business's overall performance. We will go through 5 main challenges and provide you with solutions. This is what you are about to learn:


  • The Complication of Coordinating Benefits and Payroll Deductions
  • The Year-Round Marathon of Benefits Administration
  • Juggling Multiple Carrier Portals and Communications
  • Manual Enrollment Processes for Benefits
  • Reconciling the Information Given to Payroll and the Carriers


1: The Complication of Coordinating Benefits and Payroll Deductions

Problem: The Maze of Payroll Deductions

For HR professionals and business owners, payroll deductions are recurring tasks requiring perpetual vigilance. From ensuring new hires are added in time for payroll processing to adjusting deductions during annual open enrollment periods, each step is critical


It's a juggling act that involves keeping ahead of changes in employee status, managing varying deduction amounts, and staying compliant with tax laws and benefits regulations. The complexity is compounded when these tasks are spread across multiple platforms, each with its rules and interfaces.


Solution: HCM Solution to Deduction Disarray

The ideal resolution to this disarray lies in a unified HCM system, where benefits management and payroll deductions harmonize under a user-friendly platform. Imagine a world where the once tedious process of managing deductions becomes streamlined, reducing the hours spent on manual data entry and cross-referencing between different systems. 


An HCM service offers a centralized solution where these tasks are automated, ensuring deductions are accurate, timely, and fully compliant with regulatory standards. This not only simplifies the administrative workload but also provides peace of mind that the financial aspects of benefits management are handled with precision and care.


2: ​​The Year-Round Marathon of Benefits Administration

Problem: HCM Endurance Test

Benefits administration is similar to an endurance test stretching beyond the horizon of open enrollment. It's about maintaining a steady pace through the constant flux of employee life events. The birth of a child, a marriage, a resignation — all these events trigger changes in benefits that must be handled with sensitivity and efficiency. 


And as your company evolves, with new talents coming in and others moving on, the administrative load only intensifies. This change cycle demands a system that can keep up and handle the ebb and flow of employee movement with grace and agility.


Solution: Crossing the Finish Line with Ease

Using HCM services equips you with the tools and support to confidently navigate this marathon. It provides a platform where employees can self-manage their benefits within your policies, guided by clear, intuitive prompts. 


For HR managers, it means no longer having to micromanage every change but instead having a bird's-eye view of the process, with the ability to intervene and assist when necessary. This kind of system doesn't just make the process manageable; it turns it into a well-oiled machine, ensuring that the administration of benefits is not a test of endurance but a showcase of efficiency and employee empowerment.


3: Juggling Multiple Carrier Portals and Communications

Problem: Puzzle of Carrier Relations

Juggling multiple carrier portals can feel like trying to complete a jigsaw puzzle with pieces from different boxes. Each carrier's portal has its own interface, set of tools, and communication channels, requiring HR professionals to become adept at navigating various systems


The complexity is compounded when you consider the need to maintain updated contact information for each carrier's representatives, a task made more difficult by the inevitable turnover. This fragmented approach can lead to increased opportunities for miscommunication and data discrepancies, which can have ripple effects throughout an organization.


Solution: Crafting a HCM Unified Communication

Weaves all these separate threads into a cohesive tapestry with an HCM. Instead of managing multiple logins, interfaces, and contacts, HR professionals can work within a single system that streamlines communication and data management. Benefits coordinators act as liaisons, interfacing with each carrier and ensuring that information flows seamlessly from one entity to the next. 


This simplifies the administrative process and ensures that employees receive consistent and reliable information regarding their benefits. With a single point of contact and a unified system, the dance of benefits management becomes less about keeping pace with complex steps and more about moving to the rhythm of a well-composed choreography.


4: Manual Enrollment Processes for Benefits

Problem: Outdated Enrollment

Manual enrollment is stressful, prone to mistakes, and frustrating for employees who expect a more contemporary approach. The process of filling out paper forms, submitting them for processing, and manually entering data into multiple systems is time-consuming and fraught with the risk of data entry errors


These inefficiencies can lead to a lack of confidence in the benefits system, employee frustration, and a significant administrative burden on HR departments. In a time where immediacy and accuracy are paramount, the manual enrollment process is a glaring misstep in an organization's quest for operational excellence.


Solution: Modernizing Enrollment with Technology

The revolution of enrollment processes lies in automation and digital transformation. Businesses can leap into the modern age, allowing employees to enroll in benefits with a button. This technology-driven approach replaces paper forms with digital interfaces, streamlining the process. Employees can make their benefits elections using computers or smartphones, guided by intuitive software that ensures they understand their options and the implications of their choices. 


This means less time for HR departments on data entry and more time on strategic initiatives. Automated reminders and notifications keep everyone in the loop, ensuring no deadline is missed, and no form is lost. This transition to a digital enrollment process is not just a change in how data is collected — it's a transformation in the employee experience, enhancing satisfaction and engagement while aligning with the digital proficiency that modern workers expect.


5: Reconciling the Information Given to Payroll and the Carriers

Problem: Tightrope of Data Accuracy

Ensuring data accuracy between payroll entries and insurance carriers is a meticulous task. It requires constant vigilance and an unyielding attention to detail. The stakes are high; errors in this process can result in incorrect benefit deductions from employees' paychecks, leading to dissatisfaction and a lack of trust in the system. 


Additionally, inaccuracies can cause significant compliance issues, putting the company at risk of violating complex healthcare regulations and tax laws. This reconciliation process is even more complicated when dealing with multiple carriers, as each may have different requirements and reporting standards.


Solution: Collect Data with HCM Precision

Integrating an HCM service can be the answer that balances this act. By facilitating a seamless flow of information between payroll and benefits carriers, an HCM system can prevent the discrepancies that lead to errors. Benefit coordinators within the HCM framework play a critical role in reviewing and auditing the data to ensure accuracy


With advanced HCM software, manual audits are complemented by automated checks that flag inconsistencies, ensuring that the information aligns before it is submitted. This dual approach of human oversight and technological accuracy provides a robust safety net, ensuring the balance is maintained and the high-wire act of reconciliation is performed flawlessly.

Achieving the Path to Simplified HR Management

The constant back-and-forth, the tracking, the manual entry, and the relentless follow-up. Each of these tasks, while important, can be streamlined to free up your time for more strategic tasks. You can avoid the pitfalls of segregation, ensuring a smoother operation that benefits everyone in the organization.


An HCM service offers a unified approach, resolving the complexities by bringing all aspects of benefits and payroll under one roof. This integration simplifies your operations, increases accuracy, and improves compliance, enhancing the employee experience and supporting your organization's growth.

Are you ready to step out of the shadow of fragmented systems and into the light of integrated HCM solutions? The path to simplified benefits and payroll management is clear. You embrace a future where operational harmony is the standard and strategic growth is the focus. It's time to take those next steps and read how Payday HCM could simultaneously benefit your organization in both areas.

Patrick Sanders

Patrick has worked for Payday HCM since 2012, with a career that has spanned multiple responsibilities in the sales arena. He now maintains a 300+ client portfolio with a 98% retention rate. Patrick works diligently to determine the optimal utilization of our software, manages ongoing quality assurance, and brings best practices to Payday HCM’s clients. Patrick graduated with a Bachelor's in Business Administration, with a concentration in Finance, from the Anderson School of Management at the University of New Mexico. Having spent the decade since graduating meeting and partnering with entrepreneurs throughout New Mexico, Patrick firmly believes Payday HCM brings national Fortune-500 level service and technology to the New Mexico marketplace.