The Benefits of Integrated HRIS and Payroll Systems (+ 5 Use Cases)

Companies today use dozens of employment applications to manage their workforce. They have their systems of record, like HRIS and payroll systems, and then everything else — applications to administer benefits, keep employees engaged, run financial analyses, and so on. Keeping the data in these applications up to date poses a challenge — and that’s where integrated HRIS and payroll systems come into play. 

When an employer’s applications integrate with their HRIS and payroll systems, information can easily and automatically flow between the central database and the applications that need it. For employers, that means less administrative work and higher ROI from their technology. For the applications, that means easier, more efficient access to critical census and pay data. 

What are integrated HRIS and payroll systems?

When two systems are integrated, they’re connected in the background and able to “talk” to each other. Applications that are integrated with HRIS and payroll systems are able to seamlessly share data, so the information is always matching and up to date. For example, if an employee’s salary is updated in the payroll system, their salary will automatically be updated in the other integrated systems, like a 401(k) platform or compensation management tool. 

HRIS and payroll integrations let employers automate time-consuming tasks and reduce the risk of error. Because HR administrators don’t have to manually input data or make changes to multiple systems, they can focus on more strategic tasks. 

Related: The Ultimate Guide to Payroll Integrations (Updated for 2024)

Benefits of integrated HRIS and payroll systems

For employers, there are a lot of benefits to integrated HRIS and payroll systems. They’ll save time and have more streamlined operations when they don’t have to maintain employee information in multiple products. They also eliminate the potential for human errors that can happen when data is manually entered.

HR technology providers also benefit from integrations. First and foremost, they’re able to provide a far easier onboarding process and better user experience to their customers — one where employers realize the full value of the product because they’re not bogged down by data maintenance.

But integrations also make it much easier for these providers to collect the data they need to provide services to the employer—like census and pay data for 401(k) providers, for example. HRIS and payroll integrations let these providers securely access their customers’ data straight from the source, reducing the risk of inaccuracies and noncompliance with state and federal regulations.

In short, HRIS and payroll integrations allow data to flow seamlessly between platforms so employers and applications can focus on the value of the product, rather than moving data around between systems.

Related: The Ultimate Guide to HRIS Integrations (Updated for 2024)

5 use cases for integrated HRIS and payroll systems

Integrations sync relevant data from the employer’s system of record. Employee information like the employee’s legal name, employment status, social security number, address, and birth date provide workforce insights to external apps. Payroll data such as pay period, taxes, and gross and net pay ensure that benefits and deductions are calculated correctly and written back to the payroll system. Data from both HRIS and payroll systems can keep employers and providers compliant with laws and streamline reporting.

Here are a few specific ways HR technology products can benefit from integrated HRIS and payroll systems. 

1) 401(k) plans

401(k) administration is still laden with manual processes and SFTP connections, which can take weeks to set up and don’t scale well. The employer has to shoulder the burden of routinely sending data to their recordkeeper with each pay cycle or to their TPA at year’s end. The recordkeeper to TPA then has to painstakingly check that the data is accurate and reformat it to match their system’s conventions. 

Related: Common SFTP Errors When Sending HRIS Data (And How to Fix Them)

With payroll integrations, plan administrators can connect directly to each sponsor’s payroll system and receive the census and pay data they need automatically — and in a standardized format. They can manage contributions and deferrals for each employee, ensuring that payroll deductions for participants are accurate for each pay period. 360° payroll integrations also automate enrollment for eligible employees and can manage employee contribution changes, seamlessly writing data back to the payroll system. 

401(k) management can be a burden for overworked HR teams and may feel overwhelming for SMBs — even those that may want to offer 401(k) benefits to their employees. Recordkeepers and TPAs who demonstrate a streamlined user experience and straightforward plan management will draw in more clients in a competitive retirement market. 

Related: Challenges of Small Business Retirement Plans: A Plan Administrator's Guide

2) Employee benefits

Employee benefits can be tricky to manage between pre- and post-tax deductions, new benefits enrollment, election changes, and other events that impact an employee’s net pay. Applications managing employee benefits need to write the changes back to the employer’s payroll system so they’re reflected on the employee’s paycheck. 

Payroll integrations are critical so that the payroll data is accurate and timely. By allowing benefits providers to connect to their customers’ payroll systems, integrations allow benefits providers to pull in relevant data and write changes back. They can also automate eligibility checks for benefits with specific enrollment periods. 

3) Employee engagement

While employee engagement applications can automate perks like welcome swag, birthday gifts, and performance-based rewards, managing such systems shouldn’t add additional work to HR teams. If employers feel like an external application is “one more thing” to manage, they may simply opt not to do anything extra for their employees. Or, alternatively, they may opt for applications that can integrate with their HRIS platform. 

Employee engagement applications, rewards programs, and gift-giving rely on employee data, such as start date, location, and manager. Such programs are less effective with out-of-date information, which can quickly become problematic for companies with a large number of employees. The value of these applications is significantly decreased if employers have to upload employee data manually.

With HRIS integrations, the data connection is continuous and syncs employee information to the application. With access to reliable employee data, applications can let employers focus on the employee experience, rather than employee data management. 

“If employee data isn’t being updated in real-time, then you're going to miss the low-hanging fruit of recognition moments that are really going to make the employee experience a lot better and a lot more meaningful within an organization.” — Spencer Linsley, Executive Director of Partnerships at Awardco

4) Employee onboarding and offboarding

Some applications provide critical new employee management functions, such as background checks or company training. The same is true in reverse for offboarding and ensuring that all offboarding tasks are completed. Without access to HR systems, these applications lose some of their value proposition, since employers might miss steps when an employee joins or leaves.

HRIS integrations provide access to census data, allowing these applications to add new employees and contractors automatically. Employee onboarding also impacts benefits providers and employee engagement applications that need to rely on timely access to new employee data. Applications can pre-fill forms with company data, creating a more streamlined experience for their customers’ employees. 

Similarly, when an employee is terminated, HRIS integrations can help to ensure that the employee’s access to important systems is revoked and that they’re offboarded from benefits.

5) Financial modeling

For many companies, employees are the largest expense. They may struggle to build projections or forecast future resources on their own and instead turn to external applications for financial modeling. 

However, such models rely heavily on employee data. Budgets, hiring plans, and scenario planning need to know the total costs in order to provide strategic insights. Without HRIS and payroll integrations, these applications may rely on uploading files or manual data entry — making them not much better than a fancy spreadsheet. 

Integrations pull in employee data and the associated payroll costs, allowing companies to examine metrics like department costs, revenue per employee, and more. Synchronized data gives companies an accurate picture to help them with financial planning. 

Robust HRIS and payroll integrations with Finch’s Unified API

Integrations are more than a nice-to-have for employment technology: they’re essential for maintaining accurate employee data and providing the most value to employers. When exploring potential solutions, most companies would consider such integrations critical.

Yet, for applications, building integrated HRIS and payroll systems is resource-intensive. With hundreds of products on the market, it feels like a tradeoff. Providers need to either devote development resources to creating integrations to a significant number of products, or pick and choose which product integrations they’ll support. Beyond the initial development, providers have to maintain the integration and make updates as systems change.

Alternatively, employment technology applications can use Finch’s Unified API. Rather than build integrations to individual HRIS and payroll systems, providers need to build only one integration to Finch. Our API connects with hundreds of HRIS and payroll systems, covering nearly 90% of U.S. employers. 

Any application relying on employee data needs to put accuracy and efficiency at the forefront. Employers expect integrations, and providers need to deliver. To learn more about Finch, you can try it for free or schedule a call with our sales team.