Behind Mercantile Bank's Payroll and HR Solution

Many of the world’s successful pairings—think peanut butter and jelly or Martha Stewart and Snoop Dogg—seem inevitable after the fact. 

In the world of community banking, one dynamic duo that has redefined $6.9 billion-asset Mercantile Bank in Grand Rapids, Michigan, is the combination of traditional business banking with a human capital management (HCM) offering for customers and non-customers alike.

MercForce HCM is an idea “that’s a little unconventional for a community bank,” says Jennifer Harris, CPP, senior vice president and director of HCM. But she says it makes sense given that Mercantile Bank aligns itself closely with the success of its commercial customers, and top-notch human resources is central to any flourishing business. 

From its inception in 1997, Mercantile Bank was created out of “an entrepreneurial place,” says Harris. The community bank initially turned to outsourced payroll solutions expecting increased efficiency and reliability, but was “struggling with managing the life cycle of its own employees.” According to Harris, leadership realized that the pain points they were experiencing were the same pain points that the community bank’s business customers were experiencing.

Benefits of Cloud-Based HCM for Commercial Bank Customers

Mercantile Bank devised a solution to its payroll outsourcing challenges that it then began offering to its business customers in 2001, originally known as Mercantile Payroll Services and now known as MercForce HCM. Today, MercForce HCM handles a wide range of functions, from HR and payroll administration to talent acquisition, electronic onboarding, expense management, taxes, benefits enrollment, learning management systems, performance reviews and philanthropic contributions.

Harris describes MercForce HCM’s purpose as “managing the [full] employee lifecycle from the moment of the job opportunity through hiring and then into the transition through retirement.” 

She says providing payroll and HCM services with a high-touch service model is also a way for Mercantile Bank to maintain its “rare breed” status and remain “very customer-based” even as the community bank continues to grow. 

“The bank is full of people who want to be able not to just look at a transactional relationship but to really scale that relationship,” says Harris. “We want to look at the development of that relationship across the organization.” 

The Great Resignation, or the rocky months when some Americans returned to work and others reconsidered their employment options after the worst days of the COVID-19 pandemic had ended, proved a daunting time for many of Mercantile Bank’s business customers. Hiring was a challenge as employees sought jobs and negotiated offers in new and novel ways, says Harris. 

During this time, MercForce HCM worked closely with clients on automating aspects of its talent acquisition process by accelerating the steps necessary to list on job boards and by adding an applicant tracking solution online. Thanks to MercForce HCM, Mercantile Bank’s business customers said that “after having struggled through a very difficult time, they were blown away by the volume of talent that came through the new applicant system with its built-in tools,” says Harris. 

Two keys to MercForce HCM’s success has been its abilities to build close relationships with bankers and learn and adapt quickly, delivering that experience to clients. While at first MercForce HCM relied on off-the-shelf software called Abra, and later transitioned to the service bureau solution PayChoice, the company soon realized that it needed a solution that was built to scale. In 2015, MercForce HCM became a certified network partner with iSolved, a cloud-based HCM provider.

Integrated Banking and HR Platforms for Business Customers

In its early days, MercForce HCM mainly served small businesses, but that, too, has changed. “As Mercantile and MercForce [HCM] have grown, the size of the businesses we can serve has grown, too,” says Harris. Today, MercForce HCM’s largest business customer employs 1,700 individuals working for multiple entities.

Technology is also evolving HCM as a service. Harris says AI is an area of keen interest for MercForce HCM. What’s more, she says that as the appeal of agentic AI grows, “a lot of the functional tasks we’re used to doing are becoming more automated and are accomplished a lot more independently.” At the same time, she says that humans remain essential in managing these activities, and it’s important to think about how the two can come together in the workplace.

About 17% of MercForce HCM’s customers are not currently banking customers of Mercantile Bank. Harris says MercForce HCM is “branching out” to market itself to non-bank customers. While banking with Mercantile is in no way a prerequisite for working with MercForce HCM, she does hope that non-banking customers might “someday join the Mercantile ecosystem.”

Harris is convinced businesses that bank with Mercantile and use MercForce HCM “see benefits from the consistency in relationship navigating.” She points out that a client who wants to upload Positive Pay, an automated cash management service offered by banks that is designed to prevent check and ACH fraud, will find doing so much easier because the systems were built to work together.

Harris also notes that because MercForce HCM’s 26 employees are also employees of Mercantile Bank, they understand “how many moves are required in the banking system” to transfer money to meet payroll or to speed up direct deposit processes.

Above all, Harris emphasizes the world of human resource management has grown infinitely more complex. While many companies view tasks and deadlines associated with payroll, benefits and taxes as time-consuming and administratively complex, mistakes in these areas can tarnish their reputation with current and future employees—and even endanger their standing with customers, partners and regulators.

“If you’re a business, at the end of the day, these processes affect your employees and their households,” she says. “You really want to make sure to get everything right.”

---