What is it about a PEO that makes them desirable to some small companies and start-ups?
There appears to be three main reasons that are cited time and again: they can help attract and retain talent by providing access to a competitive HR/benefits platform, they can help keep your HR compliant, and they can save you time through handling of administrative tasks and vendor consolidation.
But is that enough to make them the best choice for your business? Keep in mind these 7 questions when considering if a PEO relationship is right for you.
Can I Rely On Their Qualifications And Expertise?
Be sure to question their adherence to the industry’s professional performance practices, including responsible financial management of their business. Their financial statements should be audited by an independent CPA.
Additionally, their risk management, operational, and ethical practices should be certified and licensed as required by state PEO licensing and registration laws.
Will Their Benefit Options Meet My Employees’ Needs?
Having a competitive insurance benefits program is crucial for attracting and retaining good talent. Ask about their offerings. Determine if the benefits offered fit the needs of your employees and whether those plans are customizable.
Find out if you’ll have access to multiple insurance carriers and networks. Remember while price is important, do not underestimate the value of a partner who can offer the proper strategy that fits your company.
Are There Hidden Costs?
Does the PEO provide full disclosure invoicing? Some PEOs charge a flat fee for packaged services, while others charge a la carte per service and employee. Ask for an itemized breakdown of all charges. Take the time to read the fine print and speak up if something doesn’t sound right to you.
Will I Lose Control Over My HR Functions?
A PEO acts as a business partner to the client company and therefore may make suggestions and recommendations on how best to run the business. You have to determine whether the potential cost savings of not having an in-house HR person outweighs the fact that you may have to give up some control.
Do They Provide The Level Of Customer Service I Desire?
Try to determine the level of service they provide. Ask to meet with the service support team and lead contact. Ask about turnover, how long it takes them to answer a call, and about their staff support ratio. Do they provide support 24 hours/7 days a week? Even better, ask if they could provide you with customer references.
Can They Handle It All At The Level I Expect?
If all that they are offering sounds too good to be true, it may. How many different services do they provide? Do they have the resources and skilled staff to deliver on all that they promise? The last thing you want is a PEO that’s “a jack of all trades, master of none.”
Will My Business Really Benefit From A PEO?
Determining whether or not a PEO relationship is right for you is a big decision and there are many factors to consider. Take the time to do your research and don’t hesitate to ask questions. After all, you want to have peace of mind knowing you have done what is in the best interest of your company and employees.