Why Your HCM Provider Isn’t Really an HR Provider (And Why That’s Ok)
The big weird world of payroll providers: The good, the bad, and the ugly.
When shopping for a Payroll / HCM (Human Capital Management) platform, you’re likely sold on warm promises of “HR Solutions” “HR expertise” and an “HR business partnership” perfectly ‘bundled’ into your payroll and benefits plan. It sounds like you’re getting a full-service HR team at your fingertips, doesn’t it?
Spoiler alert: you’re not.
Service titles like “HR Expert”, or “HR Business Partner” often make it into the sales pitch, but let’s dig into what that actually means. When they’re using those terms, It’s mostly marketing fluff 🤷🏻♀️. These HR titles are rarely backed by the kind of tailored, hands-on support you’re probably imagining. Instead, you’re often getting a 1-800 number staffed with enhanced payroll specialists who are trained to stick to compliance basics—not strategize with you on employee relations or your company culture.
The worst part? You don’t know what you don’t know, and those guys know that. So, you sign up for the bundle, and pay an arm and a leg for something you’re not really getting. Heaven forbid you’re talked into a pricey PEO solution, when workers compensation and employee benefits might be otherwise easily obtained. But you don’t know what you don’t know, and your sales guy or gal tells you this is the best, easiest, and most affordable way to ‘stay compliant’ without the hassle.
Don’t get me wrong— these services DO have their purpose (after all, I serviced these plans for a good chunk of my career) and depending on your industry, this might actually be a good solution for you. But (big but..) the big guys aren’t incredibly honest with you, and all too often small businesses are the ones taking it on the chin.
Buckle up: Here’s a few things that really grind my gears about HCM marketing:
HR Tech ≠ HR Services
HCM platforms are amazing at what they do: automating payroll, tracking benefits, and making sure taxes get filed correctly. The systems talk to each other so you’re not sitting in the middle of a data pile or mountain of paperwork. They’re tech wizards for the transactional side of people management. If you’re lucky, you’ve landed with one of the HCM’s that prides themselves on 1:1 customer service. But here’s the rub: Tech doesn’t build people strategy or solve your employee conflicts.
At their core, HCM platforms are tools, not solutions. They handle payroll compliance and provide robust tech systems, but they’re not going to:
Write a custom culture and risk aligned employee policies or handbook.
Coach your leaders through tough conversations.
Break up the personality conflict between two otherwise great employees.
Help you define a culture with a mission, vision, and values that keeps your employees engaged.
Remind you that you’re the freakin’ bomb for running a small business in today’s economic climate amidst a brief panicked spiral.
What Will They Do?
HCM platforms shine in areas like:
Automating payroll to ensure accurate tax filings and benefit deductions.
Providing templates for policies and forms.
Tracking employee time, attendance, and PTO balances.
Providing automated tools to manage employee performance.
Offering self-service tools for employees to access pay stubs or benefits information.
These are certainly valuable, but they’re transactional—they manage processes, not people.
To tackle issues like employee retention, workplace conflict, or crafting a strategic HR plan, you need more than software. You need real, customized guidance from someone who understands your business. These things fall under employer compliance and people strategy—and they require a real human brain, not an algorithm.
HR Analytics: A Tool, Not a Solution
HR analytics can be a powerful tool for collecting and interpreting data about your workforce, but let’s not overstate its abilities. The insights you get are only as good as the data you plug into the system—garbage in, garbage out. While large organizations might have the resources to optimize these tools, small business owners often find them overly robust, creating more headaches than efficiencies.
Even when the data is good, analytics alone won’t help you make culture- or risk-aligned decisions. Numbers can tell you what’s happening, but they can’t tell you why it’s happening or how to address it strategically. That requires a human touch—someone who can align data with your values and vision to make decisions that work for your people and your business.
The Compliance Conundrum: Payroll vs. Employment Law Compliance
One of the biggest myths is that HCM providers can keep your entire business “compliant.” Don’t tell anyone I told you this, but it’s nearly impossible – especially in highly regulated states like New York and California – to be 100% compliant. Let’s break it down:
Payroll Compliance: This is where HCMs got it goin on. They ensure that paychecks go out accurately, taxes are withheld, and benefit deductions happen as they should. They might even go as far as to limit actions that may put you at risk for underpaying an employee, or skipping a meal break.
Employment Law Compliance: This is where most small businesses stumble. This includes everything from employee classification (1099 vs. W-2), FLSA adherence (minimum wage, tips, hours of work, report pay, uniform requirements, permitted deductions), leave management (time off and state-mandated benefits), and anti-discrimination policies (disability and unfair treatment considerations).
HCMs might offer templates or tools, but they’re not going to navigate the legal and ethical nuances of your business for you. If you’ve ever been told, "Our HR service will keep you compliant," ask yourself: compliant with what? Because it probably isn’t the full picture.
A Dedicated Strategist? Or a Generic Help Desk?
Here’s what they don’t tell you upfront:
You might not get your own dedicated HR strategist who understands your business.
Even if you get one, they might not be permitted to give you situational specific advice.
You’re more likely to get access to a call center with compliance-focused generalists.
These folks can be helpful for transactional needs—like explaining state-specific paperwork requirements—but they’re not there to sit down with you and unpack the nuances of your situation.
For example, when you’re dealing with a sticky employee termination, a real HR partner might say:
“Yes, we support terminating this employee. Here’s your risk, and here’s how to mitigate it.”
Or, “No, we don’t recommend termination based on what you’ve shared. Here’s the risk in proceeding, and let’s talk about an alternative path.”
What you’ll typically get from an HCM?
‘Here are the documents you need to terminate in your state.’
If you’re really lucky: ‘It’s a good idea to write down some things before you send these papers out.’
(Insert THE HEAVIEST of eye rolls.)
That’s not HR strategy. That’s not risk evaluation. That’s a glorified document finder.
Why We Partner With HCMs (And Why You Should Too)
Let’s be clear: HCM providers aren’t the villains here. In fact, we partner with them all the time because they’re amazing at payroll, benefits, and tax compliance.
Think of it this way:
HCMs are the tech you need to automate repetitive processes.
ConsciousHR is the strategic partner you need to navigate people challenges and compliance gray areas.
ConsciousHR does not:
Process payroll
File your payroll taxes
Sell benefit plans
Maintain your HRIS
ConsciousHR does:
Give you a really great recommendation for local payroll or HCM solutions based on your location, industry, employee count, and demanded service level.
Refer you to our favorite benefits brokers for 1:1 honest options for yourself and your employees.
Give you real advice on your uber-specific employment questions, issues, and conflicts. All with a risk evaluation.
Create, manage, and maintain a people strategy that acts as the foundation for all future business decisions.
Freakin LOVE being all in with our clients. We’re people-people first and process-people second.
Together, we’re a powerhouse. But only if you know what each of us brings to the table.
Stop Falling for the “HR in a Box” Myth
Before you sign up for an HCM thinking you’re getting comprehensive HR services, ask these questions:
Will I get a dedicated HR strategist, or just access to a hotline?
What questions will my HR person ask me if I need help terminating an employee?
What types of advice will you give me? What won’t you?
How far will your support go in helping me navigate employee terminations or workplace conflicts?
Do you work directly with employees or no?
Will you help me assess and mitigate risk, or just provide paperwork?
If the answers sound vague, they probably are.
At the End of the Day…
HCM platforms are great tools. But that’s all they are—tools. They’re not your fractional HR team, and they’re not built to be.
At ConsciousHR, we fill that wide gap between technology and strategy. We don’t just hand you a checklist or a template; we walk with you through the messy, human side of managing people. Because let’s face it—businesses aren’t built by software. They’re built by people.
Keepin’ it conscious around here, always.
Ready to see the difference a real HR partner can make? Let’s chat.
