Outsourcing HR to a professional employer organization (PEO) is becoming more and more popular as small- and medium-sized businesses struggle to wrap their heads around new employer regulations, like the Affordable Care Act. PEOs do a lot more than just handle employee health benefits. They can also manage payroll, recruitment, termination, retirement benefits, workers’ compensation, and more.
The kinds of companies who use PEOs usually aren’t large enough to have their own dedicated HR staff — the average PEO client has just 19 workers. Most PEOs allow their clients to customize HR outsourcing packages according to their preferences and needs. But it’s important to choose the right PEO for your organization — in fact, choosing a PEO can be one of the most important decisions a small business owner faces.
What should you look for in a PEO? The PEO you choose should be a reputable company that can offer you affordable benefits packages and great customer service. Your PEO should have experience working with businesses in your industry, it should keep up with changing regulatory requirements, and it should make it easy for your workers to get their hands on benefit information.
Look Into Your PEO’s Reputation
Before you sign a contract with a PEO, investigate its reputation. That means more than just asking for testimonials from other clients, although that’s important, too. Find out if the PEO you’re considering is accredited by the Employer Services Assurance Corporation (ESAC) or check for membership in the National Association of Professional Employer Organizations (NAPEO). These organizations can also help you with any additional information.
You should also check out a PEO’s financial health. You can do this by requesting quarterly financial statements. Organizations that belong to NAPEO must adhere to a set of ethical, financial, and operations standards.
Consider Benefits and Customer Service
When it comes to benefits like health and life insurance, different PEOs’ rates may vary depending on the health of the business’ employees in their respective pools. You may want to shop around for the best benefits package rates. Look for a PEO that will offer you a variety of different insurance plans and carriers to choose from. That way you’ll be more likely to find plans that will meet your employees’ needs.
Customer service is another key aspect of working with a PEO. When you or one of your employees has a question or concern, you want to be able to pick up the phone and speak directly to an actual person. You don’t want your employees to fall into a voicemail limbo of unreturned calls or difficult-to-navigate automated calling systems. Ideally, the PEO you choose will dedicate a single employee to fielding your customer service inquiries and offering you and your employees personalized service. One of the best ways to test a PEO’s dedication to customer service is to simply call the customer service number and see whether a live person answers the phone, or, if you must leave a message, how soon you receive a call back.
Similarly, a good PEO will make it easy for your employees to access their benefit information. These days, the Internet makes it easy for companies to make payroll and benefit information available to employees around the clock by putting this info in the cloud. Look for a PEO that offers remote access to benefit information on a mobile-friendly portal.
Choose a PEO That Can Work Within Your Industry
A PEO is a business partner, so it’s important to consider how well your two company cultures mesh and whether or not the PEO has any experience working with businesses in your industry. This way you’ll know that the services your PEO is offering will meet the needs of your business. Most PEOs allow you to customize your HR solutions package, picking and choosing services according to your needs.
Prioritize Regulatory Compliance
Regulatory compliance is a big part of why many small companies choose to work with a PEO, so you should make sure the PEO you choose has staff dedicated to monitoring legislative changes that might apply to your business. Not only should a PEO help you comply with regulations new and old, but it should offer a strategy that helps you make the best decisions for your business within the regulatory framework.
Choosing a PEO is an important decision — one that can make or break your small business. Make sure you’re taking the right approach. Look for a reputable PEO that’s qualified to handle your business’s needs. With just a little homework, you can find a PEO that truly takes your company’s best interests to heart.