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Trinity Optical

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The Employee vs. Contractor Dilemma – Can You Afford to Be Wrong?

  
  
  

employee vs contractorWhile it may seem that converting traditional, full-time employees into contractors is an easy and cost-effective way to avoid the new costs of the PPACA, recent court decisions have made the decision very difficult indeed. In addition, there are some significant differences between an employee and an independent contractor that have tremendous ramifications on the employee-employer relationship.

With these facts in mind, here are some items that the small and mid-sized business owner should consider before retaining any “independent contractors.”

The Legal Lay of the Land

There is no doubt that “contract” employees cost a business less in the short term as they do not consume any benefits and also are less paperwork intensive. Still, large corporations such as Microsoft and CVS/Caremark have learned to their chagrin that they cannot just declare an employee as a “contract” employee.

Instead, the courts have ruled, in several disparate cases, that an employee that looks and acts like a full-time one must be treated as such, regardless of the designation by the company. Failure to act appropriately in these cases can result in severe tax penalties and also leave the company open to lawsuits from the affected employees.

The Internal Revenue Service has some strict guidelines as to what constitutes a contract employee. These guidelines are essentially absolute and can even transcend an agreement between the employer and the employee. In short, be sure that you are treating a contract employee in a manner consistent with the IRS rules.

Contractor Definition

The general rule of thumb as stated by the IRS is that, “an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.” In other words, the contractor must be able to control their own hours, schedule and process. If not, they are not considered a contractor no matter how they are compensated.

Limited Control

Concomitant with the IRS definition, an independent contractor does not serve at the pleasure of their client once a contract is signed. Instead, the business client cedes control of the project and must usually wait for designated milestones or total completion before providing additional input. In simpler terms, an independent contractor is paid to complete a task and not to simply report to work.

Competition Generation

In trying to complete a project in the most efficient and cost-effective manner possible, a business owner may reveal pricing, products and procedures that will give the independent contractor an advantage if they choose to compete with your company in the future. Non-compete clauses are far more enforceable against traditional, full-time employees than independent contractors.

Tax Issues

As mentioned above, misclassification of employees – even if done in good faith – by an employer may subject them to costly penalties from the IRS. In addition to paying the full amount of Social Security and Medicare taxes due, the IRS may also require you to pay the employees federal income tax withholding while still crediting the employee with the payment.

Employee Legal Issues

Insurance companies have never been accused of being generous and most of your policies will not cover independent contractors in any way, shape or form. Contractors hurt on the job will instead sue you for their damages. In addition, misclassified workers may sue you for lost benefits and OT not to mention any class action lawsuits if your firm has deep enough pockets.

The PEO Solution

Understanding the subtleties of an independent contractor relationship and the differences between them and other employees is a complicated task even when the legal landscape is not changing on a regular basis. Instead of dedicating in-house resources to the problem, many small and medium sized companies have chosen to use a Professional Employer Organization.

PEOs are experts at dealing with independent contractors and can guide you in avoiding many of the problems detailed above. The simple truth is that a PEO can save you money by streamlining your HR, avoiding issues with the IRS and lawyers and allow you to concentrate on building your business.

4 Critical Reasons to Consider Outsourced Human Resources

  
  
  

outsource HRHuman resources tasks like payroll, benefits administration, tax filing, and legal compliance can eat up huge chunks of time. As your business grows, the time needed to fulfill these responsibilities grows as well. At a time when creative strategy development is critical to the success of the company, HR responsibilities crowd it out. Outsourced HR offers a strategic solution to this universal problem, putting the oversight of business growth back at the top of your list.

Benefits of Outsourced Human Resources

By entrusting your HR operations to a competent PEO, your company benefits in several specific ways:

  1. Time Savings—Outsourced human resources provides relief for time-strapped business owners by removing the minutiae of payroll, taxes, and other HR responsibilities from your to-do list. Outsourcing these tasks frees your calendar for other pressing business matters.
  2. Cost savings—A PEO can negotiate better rates on workers’ compensation, reduce the cost of maintaining an HR department, and evaluate insurance claims for validity. By working more efficiently, a PEO can save you big bucks on most of your HR responsibilities while also eliminating costly mistakes that occur when employers become stretched too thin.
  3. Reduced Legal Liabilities—Employment regulations, labor laws, and other legal questions can create problems when businesses fail to remain up-to-date on the current requirements. Because these laws are subject to frequent changes, it’s easy to miss a compliancy issue that you could be held legally responsible for. One of the responsibilities of the PEO is to remain current on the laws that affect business operation and to make sure your company complies with each regulation. Outsourced HR can significantly reduce your risk of facing a lawsuit.
  4. Greater Efficiency—No one likes to spend time filling out tax forms, filing claims, and running background checks on potential employees. A PEO will handle these tasks for you, increase accuracy, and provide the benefit of the latest technology available to keep your business competitive.

Considering Your Options

A PEO offers full-service human resources solutions. This option will handle everything from payroll to taxes to unemployment claims. Not everyone wants to outsource the entire HR department, however. If you’re looking to retain some control but need help with daily administrative responsibilities, an administrative only services (ASO) package may be the right choice for your company. With this option, you can choose which services are right for your business while remaining the employer of record.

Outsourced human resources appeals to many companies who have found that maintaining an HR department in-house is too big a drain on time and resources. According to The Society for Human Resource Management, the trend toward outsourcing HR responsibilities is growing rapidly. The top three reasons business made the choice were to save money, focus on strategy, and improve compliance. Outsourced services most commonly include 401(k) administration, employee counseling, retirement planning, pension administration, temporary staffing, and background checks. Your PEO will handle all these tasks and more, lifting the burden of taxes, payroll, and administrative duties off your shoulders so you can turn your energies to the success of your business.

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6 Do’s and 6 Don’ts Following Your Job Interview

  
  
  

HiringJob search etiquette has some simple rules. Should you send a thank you note or an email? Should you make a follow-up call? When do you look enthusiastic versus aggressive? You really need to assess the situation while you are interviewing.

Some Do’s:

1. If you have been invited for an interview, it indicates that the employer has found something of interest in your resume and/or application. There must be some match for the employer’s needs that must be confirmed in person. So, at your first opportunity, ask the interviewer what skill, ability, or experience caught their attention. Accept the response and shift your responses to other questions to the target they have already labeled.

2. Assess the size of the process. Are there many people in the waiting room? How busy is the office? The largest employers delegate first phase interviews to a section of the Human Resources Department. Companies working with a PEO (Professional Employer Organization) often leave all the interviewing to them. The busiest environments can often ignore follow-up thank-yous.

3. Secure the information you need. At the end of the interview, remain seated until you ask for the business card of the interviewer. While you hold the business card, ask out right, “Can you explain what will happen now?” The interviewer is likely to be non-committal, but you can press by asserting, “Thank you for your time. May I follow-up with a call in (X number of days)?” This places you in more control than not.

4. Regardless of the employer’s size, send a brief formal email late in that same day. Address it to the interviewer’s email address, and place “Job Interview Follow-up” in the subject line. Thank the interviewer for the invitation and for his/her courtesy. Close by reminding the interviewer where you matched their advertised needs.

5. Mail a formal note the next day. Put it on professional stationery, not personal notepaper. Again, briefly express your thanks for the opportunity and their hospitality. But, remind the interviewer of that question you asked about the skills, abilities, and experiences that interested them. Reiterate your case for making that match.

6. Phone the interviewer no sooner or later than the wait time the employer suggested when you asked what the process would be. Simply ask if the employer has made a decision yet. If they have decided against your employment, thank them politely and move on. If the process is still under way, ask when it would make sense to call again.

Some Don’ts:

At this time, that is enough. Anything more seems aggressive overkill in a busy office.

  1. Do not call and press the interviewer’s staff or receptionist.
  2. Do not send gifts or flowers that impose an ethical problem on the HR function.
  3. Do not revisit the office unless invited because it will appear threatening.
  4. Do not phone other members of the hiring team. If others have interviewed you, you might send an email thanks, but the decision will lie with the Human Resources Department.
  5. Do not press a friend or relative who works for the same company.
  6. Do not close any doors or burn any bridges.

It really helps if you assess the employer’s process ahead of time.

  • Many employers now rely on or outsource phone interviews to qualify applicants before arranging for an in office interview.
  • Employers of all sizes support team interviews where the hiring authority may not be clear.
  • An increasing number of employers delegate their administrative process to their HRIS software, so keep in mind that all correspondence will be archived.
  • The employers who use PEOs will delegate the hiring process to the PEO, so follow-ups within the company do not carry much weight.

There is rarely an excuse for employers’ failure to notify applicants of the interview’s outcome. There is no reason not to phrase a brief email or even a pre-printed postcard to let candidates know where they stand. Nevertheless, employers have never done well at this display of good manners. Still, applicants are smart to follow up their interview - without going too far. Once you have politely closed the loop, move on.

Is HR Management even a thing anymore?

  
  
  

HR conceptSMB Human Resources Management – Adding Business Value

Does Human Resources Management mean a thing anymore? – or maybe it never did. For very small businesses, HR management principals, educators, and professional membership associations have stakes in continuing the belief that they are needed in organizations of every size. Some would re-title Human Resources Management functions and genuinely believe it has something to contribute of value. As HR Consultant Bernard Marr writes, “HR departments often portray themselves as a valued business partner for management and staff alike.”  Is this fiction or fact?  We say it’s a little of both.

No Value: SMB HR Management and Administrivia
For Small Business, Human Resources management is a payroll and benefits issue and many times not much more than that. Eventually, a business gets big enough to worry about compliance issues, and the management team and office manager attempt to corral the issues that result one by one.   

As a result, the reality of SMB Human Resources Management is many times reactive rather than being a creative and proactive approach to your human capital resources. Its tangible value in that case is in defensive response to negative stimuli. It does not manage people, product, or productivity and often the personnel in Human Resources, with all due respect, perform administrative, bureaucratic, and paralegal tasks. None of these tasks adds or creates value.

Adding Value: Outsourcing the HR Function
One way to add value is to simply outsource the HR administration. A Professional Employer Organization (PEO) will allow the SMB to outsource all administrative, bureaucratic, compensatory, and compliance duties. Those functions will run smoothly, efficiently, and accountably, while the business of business can be run without the ‘pull’ from HR administrative tasks.  According to Mindy Flanigan at Infiniti HR, “the PEO you are working with has a dedicated HR specialist or an HR service team member to explain in as much detail as you need, how the platform will support your business’s human resource management needs.” The PEO can also recruit, track, assess, and follow talent management with less bias and more respect for corporate operations and finance silos.

This shift of traditional in-house functions allows for the business to focus on its core competency.

Adding Value: Using HR Information: Big Data
A Staff Analytics function applies metrics to talent management. The analytics can develop profiles of performing employees, good recruits, and potential stars. It can identify talent gaps, compensation conflicts, and future needs. It would be singularly responsible for placing and developing talent where and when the business needed it. To do its job efficiently, the function should not only report to HR, but also to the shared interests of Operations and Finance. In small business, your outsourced HR service provider could help identify those key metrics and measurements which you could not get from an in-house HR team with limited resources.  

Conclusion: Think Big, Outsource Now
People are assets and value resources to the SMB, so there is a role in making sure they are happy in their work to the extent that it engages and satisfies their personal, family, and social needs. Diversity, sustainability, training, risk management, and Big Data – these are all things better handled by experienced experts with their own clearly defined roles. This frees up your management team, and quite possibly your one and only HR person to be strategic in determining those additional HR needs. This is where we fully endorse the professional employer management organization.  

Human Resources management is meant to eliminate the administrative chaos, and the sooner you outsource your employment, the better you are in handing the strategic human capital challenges.

The Hidden Costs of Poor Customer Service in the HCM World

  
  
  

human capital managementThere is a great debate in retail circles that the cost of great customer service outweighs the cost of doing just a marginal job in terms of gross sales and the bottom line. The retail arguments aside, I can attest that the substandard treatment of your employees by your HCM department will cost you far more in lost productivity and morale than delivering to them the best service around. Notice we did not call it the HR department - because we are talking about much more than that. Here are just a few relevant points:

Wasted Effort and Rework – Ask any location manager how much time and effort goes into resolving even the smallest payroll error. These difficulties are duplicated by your HCM department. It is far more efficient, less time-consuming and far less costly to ensure that your employees are paid accurately and on-time.

More “Touches” Per Employee – The same logic applies across the whole gamut of employee/employer interaction - whether finding new hires, delivering benefits or terminating an employee – less “touches” by the HCM staff means less cost. The only way to accomplish this goal is to deliver the best possible customer service to your employees so that they do not have to make a return trip or phone call.

Reduced Turnover – If finding and keeping the best customers is the mantra of retail, then finding and keeping the best employees should be the one of HCM. Still, many HCM departments do not see it this way. Instead, they look to impose a series of rules and regulations that not only weed out the worst but also drag along a significant number of worthwhile employees. Excellent customer service from HR will encourage the maximum number of employees to stay while eliminating only the very worst.

Your HCM Staff – No one, not even those in the seemingly secure position of dealing with internal issues, wants to fix problems on a daily basis. It is stressful – even abusive at times – and very rarely gets a “thank you” when the problem is fixed. This situation defines the whole “HCM/customer service” issue in a nutshell. HCM must provide flawless service as “fixing” a problem is not really appreciated... and if they cannot provide superlative service for the employees, the company will ultimately lose.

The Outsourced HCM Solution
If HCM is not your forte and you don't want to build the infrastructure necessary to provide superior customer service to your employees, consider the services of an outsourced human resource vendor (HRO or PEO).

HROs are specifically created to be the experts in all administrative and procedural aspects of human capital management. Not only can they ensure that your payroll is done right and on time, they can also administer your benefits as well as handle all your recruiting, hiring and termination activities.

In short, HROs are the answer to any busy executive team that wants to concentrate on the most pressing needs of a business but still understands that his most important asset is his people.

Small Business Recruiting Trends - What's Your Plan?

  
  
  

HR recruiting plansSocial media offer small business owners unprecedented convenience and reach. They find social technologies indispensable for building brand, networking, and marketing. Chasing all these tasks is time-intensive, can be distracting, and sometimes even seems to reduce the convenience. But, if you are not ready to follow developing social recruiting trends, you had better come up with a plan.

Itty-bitty business!

If your small business is a micro-business, say, with fewer than 25 employees, recruiting by social media may be nothing more than using word-of-mouth. This works sometimes, but it is very risky. The idea of trusting a relative for a recommendation of someone who knows someone who is looking for a job – that is just not in your best business interest.

If you run a micro-business, you would do better to trust to your network, like employers who understand your business and your needs. A few well-place phone calls may produce more than prowling social media.

Truly small business!

If you have more than 25 employees but less than 250, you are a genuine small business – as distinct from the theoretical definition put forward by the SBA. Depending on your product or service, your business segment or profession, your business may suffer more seasonal or higher turnover than some other businesses. Your business may have several locations like a chain of beauty salons or it may have mobile sites like a construction company.

Employer recruiting differs from candidate job finding, so try to differentiate them in your head and process. When recruiting, you want to use social media to put your company and needs within convenient sight of those who are looking:

1. Sell your brand: You want potential hires to recognize you and what you do. That takes more than an email or a call.

  • Script and produce a YouTube video presenting people, logo, and business personality. If you are not comfortable with executing a professional grade video, you can present a slide presentation on YouTube and SlideShare.
  • In addition to the Home, About Us, and other tabs on your website, you should have a readily accessible tab for Jobs or Employment.
  • Just as your website needs clear and complete copy under its prominent tabs, your business page for Facebook or like social venues should be consistent with your YouTube and Website visuals, including a tab for Job Opportunities.

2. Exploit your employees: The Aberdeen Group reports that Employee Referral Programs are the highest ranked source of hires with a 3.44 score out of 5. Use your business social media to encourage employees to recruit candidates. Your employees are your best reference to potential candidates.

3. Prioritize your social options: LinkedIn remains the most effective tool.

  • With 92% of employers (of all sizes) using social media to recruit, 93% of them are using LinkedIn. It has a serious about business look and feel about it without the flash and sparkle of Facebook and Twitter.
  • Facebook has potential beyond the mindless chatter that you often find there. You can use it to present a company Facebook page that uses photographs and content to present your story, culture, and job opportunities. In addition, you can encourage users to like and share your presentation.
  • Twitter’s strength lies in its brevity and immediacy. You can start conversational threads about job vacancies and the excitement you see in the opportunities.

Bigger small business!

A business with more than 250 employees is likely to rely on Human Resources to recruit and place. They can pursue the same avenues or explore media tools like The Resumator, LinkedIn Talent Pro, and JobVite. Or, you can consider the cost-effectiveness of the emerging software solutions to leverage your social media connections.

Your take-away

All these options are useful, effective, and increasingly innovative. On the other hand, they are very time intensive, adding to your HR labor burden, and increasing in cost as the venues improve. From the small employer to the larger small business, the smart option is to shift all these problems and solutions through a partnership with a proven Professional Employer Organization (PEO). A quality PEO takes pride in its successful and cost-effective recruitment. Let them worry about how to use and maximize results in social media recruiting.

Sources:
How Social Media Recruitment Can Strengthen Your Company Brand
What Is Your Most Effective Source of Hire?

 

Break the Mold in Your Questioning to Find the Best Job Candidates

  
  
  

InterviewingDespite their ever-increasing responsibilities, most successful managers fall into the rut of asking the same interview questions regardless of the candidate's qualifications or of the position being filled. This can be a hazardous undertaking as most reasonably prepared interviewees are well-versed in the standard formulaic questions and have pat answers – good ones at that! – prepared for them.

With those thoughts in mind, here are some questions to help you distinguish the wheat from the chaff when interviewing potential employees. First the usual ones, then the tougher ones:

The Standards with a Twist

There is nothing wrong with these questions but they should be followed up with a second question to see if the candidate can “think on their feet” so to speak.

  • Have you ever taken a risk professionally? What was the outcome?
  • Describe your work as a team leader in a particularly difficult situation. What was your role? Did the deadline and the needs seem to be too arduous?
  • Walk me through your thought process on a complex problem that you once had to solve. A brute force approach is OK.
  • Now, tell me about a creative way that you worked around an issue.
  • Influencing your coworkers and subordinates is incredibly important. Tell me about a time when you had to win someone over to your way of thinking. How did you accomplish this?

Some Tougher but More Enlightening Ones

These questions may seem a little odd at first but they really give the interviewee a chance to be creative and to reveal quite a bit about their personality.

  • There are a lot of super hero movies out today. If you could choose a super power, what would it be and why?
  • If you prefer a more traditional approach, ask them about which historical figure would make the best dinner guest and why?
  • If all your obligations - financial or otherwise – could be met for the next six months, what would you do with your time?
  • Or, if you are less optimistic in your outlook, ask them what they would do if they only had six months left to live.
  • What would you do with a financial windfall of $20 million?

One Final Thought

Obviously, the point of these questions is not really the answer that is given but the aplomb with which it is given and the insights it gives into the interviewee. If you do decide to ask these questions, don't interrupt. Just give the person free rein for two to five minutes. It's amazing what you will learn about them.

For more on hiring the best talent, you may want to read our article, Finding Diamonds in the Rough or download our featured white paper, Hiring the Best.

Small business uncertainty following mid-term elections

  
  
  

describe the imageNovember’s mid-term election decided contests throughout the nation. A first glance shows results favored the Republicans who threaten to wield their mandate with a big stick. For small business interests, this means yet another “wait and see.” Small business hates uncertainty, but more may follow despite promises to reform. Here’s one take on the small business uncertainty following this year's mid terms.

  1. More of the same. The new Republican majority does not take office until 2015. At that time, members of both parties will jockey for position and committee assignments. Until there is something on paper in front of that majority, you can expect more of the same Washington paralysis. Even then, the 2016 Presidential election will determine the legislative and executive priorities. This allows time for you to plan your 2015 with some confidence that Congress will not affect your business behavior.

  2. Immigration reform. President Obama’s Executive Order on the status of illegal immigrants puts a big ball in the court of the new Congressional majority. Dealing with the Executive Order or coming up with an alternative approach will consume early Congressional energy. Because it represents a priority with 2016 implications, it will dominate the media. But, if your business complies with current employment law, yours is not threatened by any change in immigration practices.

  3. Business taxation. Unbiased analysis shows that jobs have grown in number and unemployment has declined during the Obama administration. However, there is no cause and effect here; the progress may correlate with much larger economic forces. Both Republicans and Democrats can claim support for the little legislation that favored small business, but Republicans do promote an agenda that includes changes on treatment of first year expensing depreciation, S Corporation tax deductions, and the definition of “employment status” under the Affordable Care Act. Congressional paths are in place to proceed with this agenda, but none of these changes, if enacted, will have profound impact on doing business, and most are unlikely to be effective before 2016.

  4. Healthcare Repeal. While you may be smothered in rhetoric regarding repeal of the ACA, small business is not likely to see any significant impact in the near future. For one thing, the insurance industry has stepped up and designed flexible responses to employee needs. High deductible low premium plans, for example, serve those in generally good health who have been subsidizing coverage for others in the past. The newly insured but previously uninsured will not give up their insurance easily. People apparently really like the pre-exiting conditions and plan mobility features. And, the resistant States will have to deal with inevitable court challenges. So, you see, much of the Act has already become an “entitlement.”

  5. ACA Reform. Strategies to repeal the ACA could stall reforms to the language and provisions that have proved problematic since the Act’s passage. For example, individual agents and brokers stand to work harder and lose more under the ACA. Similarly, the tax treatment of medical devices will likely change. Their lobbyists are likely to secure favorable thinking about repairing their situation. But, such adjustments are largely administrative with little impact on small business healthcare programs under the ACA.


One certainty that arises amidst the post-election uncertainty is that small business will see little pressure – positive or negative – in 2015. Newly elected Congressional members will not be positioned to speak or act with power, and senior members do not appear to share the same agenda. You should find relief in the new situation and enjoy the time to plan your own growth amid any small business uncertainty following the mid-terms.

Download our free guide detailing a three-step process for understanding and navigating Healthcare Reform: Requirements, Responses and Resources.

What’s the quid pro quo in a PEO deal?

  
  
  

describe the imageMuch has been said about when and why you need a Professional Employer Organization (PEO) in your corner. But, once you make the decision to act, you will confront a scenario that anticipates your start. As you close in on your agreement you will meet with your vendor to exchange points of interest. Each of you will present administrative needs and solutions to qualify for and facilitate the plug-in. Each has a quid pro quo to deliver, and the following is a PEO decision checklist.

Your job -

The vendor needs data to “underwrite” your interest. In order to protect its own integrity, the PEO does not want to take on your problems, so it will audit the data to see how well it fits their model. At a minimum, they will be asking you for the following information:

  • Name of the PEO, if any, that you currently have in place with its Federal ID number.
  • The current rate for the employer of record.
  • A copy of the most recent payroll report with employees identified as full- or part-time.
  • Current Workers’ Compensation data with Employees assigned to Class Codes along with the annual wages paid to employees in that code.
  • The Worker’s Compensation Policy Declaration Page as well as the Loss Runs and OSHA Logs for the last three years.
  • Copy of the declarations page from your General Liabilities policy and a Schedule of Benefits for your current Healthcare Plan.
  • The employee census without the names and personal identifiers of that current employer of record’s existing healthcare plan.

Vendor's job -

You should have the same concerns about the risk presented by doing business with the provider. As the professional employer organization becomes the “employer of record,” you need the assurance that it is right for you, your employees, and your compliance obligations. The PEO should provide for you the following:

  • A statement of all fees, including set-up fees.
  • A review of all Billing Rate services in detail and in print.
  • A detailed description of the transition process, schedule, and training.
  • A clear understanding of how the provider will communicate to the employer when interacting with you and your “co-employees.”
  • Description of the provider’s customer service structure.
  • Description of the payroll service in detail to confirm that it meets your business’s standards and needs in quality and performance.
  • Available group benefits plans with demonstration that they are qualified, funded, and experienced.
  • Clarify the role of Human Resources and Risk Management as accountable or advisory.
  • Provide certificates of insurance for provider’s workers’ compensation, general liability, and other pertinent protection.
  • Submit copies of all licenses and certifications, including those offered by state agencies, professional associations, and company officers.


Hopefully, you will not approach the PEO decision casually. The first vendor you meet should not be the last one you consider. The move to a professional employer organization demands a pacing on your part, a calendar that will allow you to shop carefully, assess fully, and meet frequently. As you approach your decision event with a short list of vendors, you have to assemble a package in request of service. Having done so, you will meet with the choice vendors with your PEO decision checklist, your quid for their quo exchange of packages.

View our PEO Directory for a list of qualified vendors to begin your research.

Creating and Sustaining Identity in a PEO Relationship

  
  
  

brandingA corporate brand is much more than its name and logo. A successful organization’s brand is a function of its employees’ identity. Either brand identity lies in employee DNA or it does not. According to Americus Reed, II of the University of Pennsylvania’s Wharton Business School, “It is the social glue that creates a community of human talent, but that also flows down to end users and/or customers.” The challenge lies is cultivating and sustaining identity in a PEO relationship.

Consideration #1: Corporate Brand
Marketing gurus would have us all believe that brand consists of the public appearance a company makes – the looks, the lingo, and the legend. There is truth in this if that message carries a record of quality product, promises delivered, and customers satisfied.

But, these are each delivery processes accomplished by people. If there is a gap between what the leadership understands by “brand” and what its employees and customers think, there is a real problem. Considering that corporate values – good or bad – will run downhill, Human Resources provides “the main channel and conduit” to align corporate and employee engagement. The need to create and sustain that connection identifies a new accountability for finding the talent and shaping the mindset in which employees “view what they do as more of a calling than a job.

Consideration #2: Employee Brand
The makers and providers often have a different take on the business brand than does the executive leadership. It was one reason Henry Ford paid employees well enough to buy a Model T. It literally put them into the brand. It raised morale by valuing employee participation, and they in turn internalized the values. So, it takes more than good communication.

If employees do not patronize the brand, they have not bought into it. Other negative signs will appear in poor product quality, untimely delivery, and increased employee turnover because these are easier ways for employees to articulate their brand identity crisis.

Consideration #3: Cloning the DNA
When HR focuses on employee advocacy or compliance burdens, it fails to link the corporate identity with the employee’s identity. Without the engaging and energizing employee loyalty, HR misses the chance to breed and replicate the brand DNA. This requires understanding, compassion, and cloning the best in business practices and performance participants.

Making it work with a PEO
A business’s relationship with a PEO can present a challenge to this branding. When employees are co-employed, there is a risk that they may not be clear who they work for, let alone what brand deserves their loyalty.

You solve the problem of creating and sustaining identity in a PEO relationship when you make certain moves:

Move #1: You must buy into a PEO in for the right reason. If the organization treats the co-employed as replacement workers or with the disinterest of temporary employees, you already have a loyalty problem. You must respect, recognize, and reward the talents and values of shared and onboarding employees without regard to their PEO employment.

Move #2: You must know and protect the corporate identity. The brand must be personally important to Human Resources leadership if it is to sell the story fully and authentically. Any pre-contract discussions, continued communication, or contract language with the PEO must make brand identity clear and its continuation certain.

Move #3: It takes frequent and deep audits to sense the sensibilities of employees. You must communicate constructive and supportive messages linked to brand. And, you must collaborate with the PEO liaison in recruiting, training, and developing co-employees to the brand DNA.


A PEO provides the business with a mechanism to achieve its goals. It is profoundly in the interest of the PEO to help the business do so. However, it needs an active internal partner to help it see the way and to warn it when things go awry. The key to creating and sustaining identity in a PEO relationship lies not in wishing Human Resources away, but in clearly communicating the brand’s message and incorporating that into the employees’ identity.

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