How Small Businesses Can Think About HR Integrations

This article originally appeared in HR Technologist.

The future of HR is in automation – more and more small employers are bringing HR administration online through technology, streamlining a wide range of tasks, such as onboarding, benefits administration, and time tracking.

There are more comprehensive human resource information systems (HRIS) on the market than ever before, which is particularly beneficial for small businesses. Unlike bigger companies, these organizations haven’t historically had the resources to adopt and manage multiple point solutions to address the full HR ecosystem.

Comprehensive systems provide several advantages for small organizations, including single-point data entry, one-stop support, and ease of use, but inevitably, these systems do also have to communicate with other business software and third-party tools.

Whether it’s how insurance carriers get the eligibility information they need or how the payroll company gets the new hire, deduction or demographic information it needs, HR administrators interested in adopting software likely have questions about what to expect when it comes to integrations.

Defining integration

At a basic level, integration is the movement of data from one system to another. For HR software, integrations apply to employee or company information, like names, Social Security numbers, addresses or benefits elections, among other data points.

This information needs to flow from the employee to the HR system to any other system that needs it, such as payroll, insurance carriers, and others.

Without an HR system, this information is still communicated from the employee to HR to third parties, it just occurs on paper, increasing the risk of manual entry errors.

Here are a few things to consider about HR integrations when evaluating the software.

Don’t get in the weeds

Often, software sales pitches will lean heavily on the “how” of integrations. It’s easy to get overwhelmed in comparing the alphabet soup of different integration options, such as application programming interface (API) or electronic data interchange (EDI).

But for the vast majority of HR teams, this much information isn’t necessary. Realistically, most HR administrators just want the software to work, and most systems use comparable integration methods.

Prioritize integrations by the importance

So how do you make sure it works? Not all HR integrations are of equal importance, and integration inquiries are best directed toward the most important integration needs your organization faces first.

There are two criteria to define an integration’s importance. The first is how much time you currently spend manually inputting the information into spreadsheets or other databases.

The second way to prioritize integration data is the risk associated with the error. In other words, what are the consequences if the information is not correct, either through manual-entry error or through the integration?

For most businesses, one key integration point is between benefits deductions and payroll. Below, we’ll dive deeper into why this integration matters so much.

Benefits and payroll

Benefit deduction errors can have ramifications that are more important than other errors. If a benefit deduction error goes unnoticed for months, there can be frustration when money needs to be recouped or refunded. The financial aspect of this makes this sort of error more serious than an employee’s phone number being incorrect in a given system, for example.

This is one reason why a benefits-centric HR platform often creates the best outcomes for small businesses. A platform with a robust benefits feature will likely have many payroll partners and may be supported by a benefits broker. Both of these factors minimize the risk of this sort of integration error for small businesses.

The above analysis can also be applied to other integration needs. Ultimately, consider which integrations are most important to your organization when evaluating HRIS functionality.