Employers can benefit from partnerships with PEO’s (Professional Employer Organizations)
A PEO partners with an employer to provide HR compliance, Payroll, Worker’s Comp, 401 K, Group Insurance Benefits, etc., and assume tax & additional liabilities while the client (employer) maintains the responsibility & control of the workforce management on a day to day basis. The client employer continues to handle hiring, firing, reprimands, job descriptions, etc.
According to Wikipedia:"The value proposition to client companies is that the use of a PEO saves time and staff that would be used to prepare payroll and administer benefits plans, and may reduce legal liabilities or obligations to employees that it would otherwise have. The client company may also be able to offer a better overall package of benefits, and thus attract more skilled employees. The PEO model is therefore attractive to small and mid-sized businesses and associations…." Sloan, Julie. "Cure Your HR Ills". Fortune, March 28, 2007
There are variations on the PEO; some offer minimal (included) services with payroll, some charge fees for adding each employee, background checks, I-9 verification, etc., and some have very inclusive services and only charge additional fees for certain services.
With many businesses feeling the effects of a reduced workforce, employers are tasking employees with more & more duties. Unfortunately, when you have one person wearing many hats other facets of your business may suffer.
In 2001, while working with a growing manufacturer in No. Georgia, I found myself in a position where I managed the A/P, A/R, Benefits, Payroll & payroll taxes, Customer Service, handling review of vendor services, worker’s comp, liability, invoicing, collections, travel arrangements, ad design, inside sales and many other daily business duties. I was often at the office until 7 pm in order to get all of my invoices & marketing packets mailed after the phone stopped ringing & the employees had gone home.
Finally, we realized that the amount of time & energy that I was spending on payroll & taxes, worker’s comp management, HR & benefits was reducing the amount of time I was able to spend on revenue generating activities like sales, invoicing & collections.
When we were offered a very reasonable quote for PEO services mid-year which alleviated my responsibility of filing 940-941 taxes, payroll processing, benefits & worker’s comp management at a rate much lower than we had been paying one of the largest W/C carriers in the country, we were amazed! After checking references of the PEO with local clients comparable to our size, we jumped on the opportunity and my former employer still utilizes their services. Note: Always check references because all PEO’s are not created equal!
In order to receive a quote or proposal, we had to provide some information regarding payroll, worker’s comp codes, & loss run history from our then current worker’s comp carrier. Some worker’s comp carriers will try to tell you that you are "locked in" for a year with them. This is not true; it just makes their jobs a little more difficult because they have to prorate your audit & refund the money you may have overpaid them already. But once you are working with a reliable PEO, your worker’s comp is generally at a greater discount (especially when utilizing the buying power of hundreds of companies combined) & it is pay as you go, rather than an annual premium or 25% down & quarterly payments. This allows you to keep more cash in your business throughout the year.
The amount of time saved & the reduced W/C costs allowed me to put more time & energy into sales & other revenue generating activities.
The last quarter of the year is the perfect time to review your current costs in these areas. With the economy in its current state, we all need to save wherever we can while maintaining the best quality of service.
If you have an employee who could be more productive for your business by focusing more on income producing activities, it’s time to consider the benefits of a PEO partnership.
READ MORE: http://elrodandassociates.spaces.live.com/?_c11_BlogPart_BlogPart=blogview&_c=BlogPart&partqs=amonth%3d9%26ayear%3d2009
