By Gregg Kell, Founder and Editor
What Sets H2R-Solutions Apart From the Household Names in Payroll
The answer is a category distinction, not a feature list. H2R-Solutions is a payroll service company. It is not a payroll technology company. That single sentence explains most of how the Austin, Texas firm operates and who it serves.
Karen Halladay, SPHR, SHRM-SCP, CCP, CTM, is Founder and CEO of H2R-Solutions. She spent years on the operational side of human resources before founding the firm. That work included a role as AVP of Human Resources at York Risk Services Group. When she explains what her company sells, she does not open with a platform demo.
Halladay states the distinction plainly:
“What sets H2R-Solutions apart is that we are a payroll service company, not a payroll technology company. We are not trying to sell you our software. Our value is the expertise and service behind your payroll, making sure it runs smoothly, accurately, on time, and in compliance.”
That framing runs against the grain of an industry that spent the last decade selling logins. Most buyers comparing full service payroll companies are shown interfaces. Halladay wants them looking at who answers the phone when the interface does not cover the situation.
Why the Technology Alone Does Not Close the Gap
Software adoption in human resources is now close to universal. Effective use of that software is not. The evidence on this point is consistent and unflattering.
Research cited by SHRM found that the average human resource information system is actively used by only 32 percent of employees. Nearly one in four organizations report that their HR technology rollouts fail to meet adoption expectations. Gartner has placed the broader failure rate for ERP and HRIS projects between 55 percent and 75 percent.
The picture gets worse when buyers rate the projects themselves. A separate SHRM report on implementation pitfalls cited Sapient Insights Group survey data. In that survey, 32 percent of respondents felt their implementations fell short on user training. Another 28 percent found knowledge transfer unsatisfactory. Only 13 percent believed the project exceeded expectations in any area at all.
Halladay does not read those numbers as an argument against technology. She reads them as an argument about what surrounds it.
“There are many excellent payroll technology platforms available today, and we can help clients implement the technology that is right for their organization. But technology is only as effective as the people and processes behind it. Payroll still requires expertise, attention to detail, problem solving, and someone who understands what needs to happen when something does not go according to plan.”
The Cost of the Gap Shows Up in the Numbers
Payroll accuracy is where the gap becomes measurable. An Ernst and Young study, reported by Paycom, found that one in five payrolls in the United States contains errors. Each error costs an average of $291 to correct.
The frequency is the part most finance leaders underestimate. HR Dive reported that the average company runs an 80 percent payroll accuracy rate and makes 15 corrections per pay period. The most expensive single error category in that analysis was sick time that never made it into the system, at $705 per instance.
Compliance exposure follows accuracy problems. An analysis of the same Ernst and Young data found that 14 percent of businesses faced litigation or compliance issues tied to payroll errors within the prior twelve months. Companies spend roughly 120 hours a year resolving those matters.
Federal penalties compound the problem. According to SurePayroll, the IRS assessed more than 4.4 million employment tax penalties totaling nearly $26.9 billion in fiscal year 2024. Paylocity notes that the failure to file penalty starts at 5 percent of unpaid tax per month and climbs to a 25 percent ceiling.
None of that is a software defect. All of it is a service and expertise question.
How Midsize Companies End Up in the Wrong Bucket
Most payroll buying decisions get framed as a binary. On one side sits a platform the company administers itself. On the other sits a professional employer organization that takes on co employment. The choice looks clean on a comparison chart.
It rarely stays clean in practice. A company that picked its platform at 40 employees is a different organization at 140. The compliance surface widens. Multi state withholding enters the picture. ADP notes that penalty exposure grows alongside business size and complexity, which is precisely when internal capacity is thinnest.
The default response is to shop for better software. That instinct is understandable. It is also the reason so many companies run a second implementation two years after the first one.
Halladay describes the alternative as a matter of who owns the work, not who owns the login.
“We become an extension of your team and take responsibility for the work of payroll. Our clients get experienced payroll professionals who understand their organization, proactively identify issues, help them navigate compliance requirements, and make sure payroll gets done right.”
Who Gets the Most Value From a Full Service Payroll Partner
The company that benefits most sits in a specific and often overlooked band. It has grown past a basic do it yourself payroll platform. It has not decided it wants a professional employer organization.
Halladay describes the profile:
“Our sweet spot is a growing or midsize organization that has reached the point where payroll and HR have become too complex to manage with a basic do it yourself solution, but they do not necessarily want, or need, the PEO model.”
That band is larger than most industry coverage suggests. NAPEO, the trade association for professional employer organizations, reports that roughly 14 percent of all employers with 20 to 499 employees use a PEO. NAPEO research released in October 2025 put the total at more than 230,000 US businesses. That is roughly 15 percent of employers in the 10 to 499 employee range.
Read the other direction, that leaves roughly 85 percent of midsize employers outside the co employment model entirely. Those companies still have payroll. They still have compliance obligations. They simply chose not to hand their workforce to a third party employer of record.
The Person Inside Those Companies Who Calls First
There is usually a specific individual behind the inquiry. Halladay has a clear picture of who that person is and what their week looks like.
“Often, they have an HR or finance leader who is spending far too much time managing payroll, troubleshooting systems, dealing with compliance questions, or coordinating multiple vendors. They need better technology, but technology alone is not going to solve the problem.”
Staffing benchmarks explain why that leader is stretched. SHRM data from its Human Capital Benchmark Report puts the average HR staff to employee ratio at 1.7 per 100. At a company of 120 employees, that is roughly two people covering recruiting, benefits, employee relations, compliance, and payroll coordination at the same time.
Halladay’s answer is not to add headcount to the client’s payroll. It is to add capacity from outside it.
“Those organizations get tremendous value from H2R-Solutions because we can become an extension of their internal team. We bring the payroll expertise, HR knowledge, technology, and operational support while allowing the company to maintain control of its employees and its business.”
That last clause matters more than it first appears. Control is the line that separates this model from the PEO alternative. The client stays the employer.
Austin as the Backdrop
H2R-Solutions operates from Austin, Texas, in a state that carries unusual density in this market. The NAPEO October 2025 research identified Texas as holding 13 percent of PEO clients nationally, second only to Florida.
Density like that shapes what a founder hears. Halladay built the firm in a market where midsize employers are actively fielding pitches from the co employment side and from the software side at the same time. The middle option gets described to them less often.
The leadership team reflects the service model rather than a product roadmap. Levi Taylor serves as COO and brings a background in HCM technology and implementation. Autumn Knight, a senior payroll specialist on the team, carries roughly 35 years of payroll operations experience across large and multi facility environments.
Why Halladay Built the Firm This Way
Founders tend to build against the frustration they know best. Halladay spent her career inside HR operations rather than selling into it. She has carried payroll through mergers, system changes, and compliance deadlines from the client side of the table.
That vantage point shapes what she considers a real deliverable. A configured system is not the finish line. A payroll that runs correctly for years afterward is.
Her credentials point the same direction. SPHR, SHRM-SCP, CCP, and CTM are operational and compensation designations rather than technology certifications. They reflect a practitioner background in the mechanics of paying people accurately.
The result is a firm organized around expertise rather than around a product catalog. Clients buy access to people who have done the work before.
Why the Framing Holds Up
Categories in this industry tend to be drawn by vendors. Buyers inherit them. A company shopping among full service payroll companies is usually handed two mental models, the platform and the PEO, and asked to pick.
Halladay’s version resists both. The technology processes the data. The service layer produces the outcome. She returns to that formulation when asked to compress the whole proposition into a sentence.
“The difference is simple: the technology processes the data. H2R-Solutions provides the payroll expertise and service that gives our clients confidence in the outcome.”
For a midsize employer weighing options, that sentence functions as a diagnostic. If the current problem is that nobody knows what to do when payroll behaves unexpectedly, more software will not fix it.
Frequently Asked Questions
What is the difference between a payroll service company and a payroll technology company?
A payroll technology company sells software that processes payroll data. A payroll service company provides the expertise, oversight, and hands on management that make payroll run accurately. That work happens regardless of which platform is in use. H2R-Solutions describes itself as the second type.
Is a full service payroll company the same thing as a PEO?
No. A PEO operates under a co employment arrangement, becoming a legal employer of record alongside the client. A full service payroll and HR partner delivers payroll, HR consulting, and technology support while the client company remains the sole employer of its workforce.
What size company is the right fit for H2R-Solutions?
The firm focuses on growing and midsize organizations, generally in the range of 20 to 250 or more employees. These are companies that have outgrown basic payroll software but do not want a co employment model.
How common are payroll errors at midsize companies?
Ernst and Young research found that one in five US payrolls contains errors. The average cost is $291 per error. The typical organization makes 15 corrections per pay period.
Why do HR technology implementations fail so often?
Industry research points to change management and process issues rather than software defects. Gartner has estimated ERP and HRIS failure rates between 55 percent and 75 percent. Sapient Insights Group survey data shows only 13 percent of buyers felt their implementation exceeded expectations in any area.
Where is H2R-Solutions located?
H2R-Solutions is based in Austin, Texas, and serves midsize employers with payroll management, HR consulting, fractional HR support, and HCM technology services.
Who founded H2R-Solutions?
Karen Halladay, SPHR, SHRM-SCP, CCP, CTM, founded the firm. Her background includes serving as AVP of Human Resources at York Risk Services Group before building H2R-Solutions around a service first model.
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