4 Reasons Your Payroll Company Shouldn’t Be Doing Your HR

by Feb 3, 2020

As an HR consultant, I’ve met hundreds of small business owners over the years, many of whom told me they didn’t need my HR consulting services because their payroll company provided them. It makes me cringe, and I fear for them and their businesses. 

Here are four ways a payroll company puts you at risk when doing your HR. 

For payroll companies, HR is a sales tool and not an area of expertise.

Payroll companies are experts in payroll (hopefully) and many of them offer HR as a means to get your business – it’s either offered for free or upsold as an additional service. 

With the amount of laws employers must keep track of, getting your compliance advice from someone who does it as a sidebar should scare you. Too many businesses are being taken down by I-9 audits and wage and hour issues such as misclassifications, missed breaks, and failure to pay overtime.

For example, this restaurant probably could’ve avoided being shut down if someone had done an I-9 audit. But payroll companies don’t offer that service. 

Payroll companies usually provide a customer service rep, not a designated HR professional.

There may be exceptions to the rule, but most big payroll companies offer a customer service rep to provide high-level information, like how to download their handbook template. So you’re not actually getting HR guidance and counsel.

HR consultants, however, learn your business and its particular struggles and needs and provide advice and counsel accordingly. 

Human resources shouldn’t stop at handbooks and payroll taxes – it should extend to humans.

Due to reason number two, many employers don’t turn to their payroll’s HR service when human stuff happens, like conflict. Although having a compliant handbook is important, not resolving conflict is what’ll get employers into legal trouble. This is a great example of the difference in services you’ll receive from payroll versus an HR consultant.

Given that HR stands for human resources; that conflict, emotions, and miscommunication happen all the time at work; and that there isn’t a downloadable document to guide you to resolution, a HUMAN resources professional is needed to help you manage the human stuff.

Not having an active HR presence is a risk factor for toxic culture. 

Without HR around, who’s managing the culture? While culture comes from the top, HR is the keeper of the processes and programs that perpetuate it. 

We have definitely been contracted to work with clients due to cultural issues, such as high turnover or low morale, and through our work together discovered that not having an HR presence was part of the problem. This is due, in part, to the fact that employees don’t have a designated person to speak to when something bad happens. 

Sure, you’re a small business, you don’t have enough humans on your payroll to warrant a person focused on human resources. 

This is where fractional HR comes in. Civility Partners is a full-service HR consulting firm offering services ranging from a one-hour project to serving as your go-to HR dept. Let us take over your HR so that you can focus on what you’re good at – running your business. 


Catherine Mattice Zundel

About Catherine Mattice

Catherine Mattice, MA, SPHR, SHRM-SCP is President of consulting and training firm, Civility Partners, and has been successfully providing programs in workplace bullying and building positive workplaces since 2007. Her clients include Fortune 500’s, the military, several universities and hospitals, government agencies, small businesses and nonprofits. She has published in a variety of trade magazines and has appeared several times on NPR, FOX, NBC, and ABC as an expert, as well as in USA Today, Inc Magazine, Huffington Post, Entrepreneur Magazine, and more. Catherine is Past-President of the Association for Talent Development (ATD), San Diego Chapter and teaches at National University. In his book foreword, Ken Blanchard called her book, BACK OFF! Your Kick-Ass Guide to Ending Bullying at Work, “the most comprehensive and valuable handbook on the topic.” She recently released a second book entitled, SEEKING CIVILITY: How Leaders, Managers and HR Can Create a Workplace Free of Bullying.

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