Not everyone is a good candidate for a Professional Employer Organization (PEO)—at least not in our world. Your workforce is the heart and soul of your company. Along with management of this all-important resource, empowering your people is critical. When employees maximize their potential, their companies can in turn maximize profitability. Turning potential into performance should be a company’s top-line focus, and a PEO’s primary deliverable.
If this hits you where you live, check out the following checklist that defines the “PEO prime directives” on behalf of client companies:
1. Inspires and informs leaders to create a truly people-centric culture. For people thinking about it, it’s a want. For people who get it, it’s a need. Investing in your workforce requires a major investment and willingness to chart, then stay the course. That course includes consistent education, a commitment to training and offering benefits that will attract and retain the best people.
Besides benefits themselves, offering a variety of options and levels in such areas as a 401K is in itself a benefit. This is particularly true for companies with fewer than 10 employees, which may not be able to compete on salary. Robust benefits can make the difference.
2. Ensures best practices for complete compliance, and liability/lawsuit avoidance. PEOs are not created equal. There are many service levels, philosophies, practices and acceptable performance criteria.
Especially critical is ability to protect the client company from employee challenges and issues, and comply with all requirements in areas ranging from HR to taxes. Knowledge of and compliance with the often vast landscape of rules and regulations dictated by federal, state and local authorities can be mind-boggling.
As anyone who’s had to deal with an alleged infraction will attest, an ounce of prevention is worth many, many pounds of cure. Long, drawn-out battles can be highly costly, disruptive and potentially catastrophic to a company’s reputation.
Whether the PEO directly handles these areas, or works in tandem with the company as an advisor, this is the area where most companies get into trouble. For example, even when an employee is showing up drunk every day, there are specific guidelines and practices that must be followed to ensure that the employee doesn’t come back and file a claim against the company.
Companies with entrepreneurial mindsets, in particular, can be the worst offenders because of freewheeling management styles and dislike of bureaucracy. It’s important to remember that agencies overseeing workplace practices and reporting are generally incentivized to find problems—which increases the likelihood of being dinged on even minor issues. Ironically, entrepreneurial dislike of bureaucracy can wind up creating a substantial amount of red tape to resolve an issue.
And, as employee numbers increase, so does the scope of rules and regs. Solopreneur requirements go up sharply as employees come on board. So, at the very time a company is experiencing rapid growth, it may wind up contending with consequences of failing to adhere to everything mandated in multiple jurisdictions. For example, some states have unlimited paid-time-off (PTO) provisions, while others dictate strict limits. This gets especially complicated when companies operate in multiple states or even cities.
A certified PEO can be a lifesaver in these situations—addressing and handling all these issues so the company can concentrate on what it does best—becoming better, bigger and more profitable.
3. Becomes a committed partner to plan, implement tailor-made programs. “Tailor-made” is key here. The PEO should adapt to a client’s needs, not the other way around. In some cases, the owner maintains control of benefits and payroll, while HR functions are shared with the PEO. In another model, the owner may outsource payroll but maintains full control over their insurance needs. Or perhaps the primary need is training. Just about every model and level of need should be accommodated in tandem with a PEO partner.
Key to success in any engagement is ability to communicate across multiple generations so that everyone gets it, whatever “it” is. Ways of reaching millennials can be far different from communicating with baby boomers. From recruiting and onboarding to training and motivating, it’s vital to maximize opportunities by tuning into a variety of audience types, ages and mindsets.
4. Helps watch the store. The watchdog role extends beyond doing everything right to identifying and remediating what’s wrong. For example, companies regularly reimbursing employees for conference attendance need to make sure no one is taking advantage.
Another primary watchdog role involves keeping the employee handbook current and accurate. This becomes even more critical when the workforce is growing quickly because handbook deficiencies can impact larger numbers of people at the same time.
5. Makes HR both Human and Resourceful. Human Resources is where the rubber meets the road to develop, manage and enhance employee empowerment. As with other areas of PEO emphasis, adaptability and knowledge of every small-to-midsize business model is vital to success. Regardless of how proactive a 5-30-person company commits to being, the nature of the beast can be more reactive than anything else. In contrast, after hitting the 30-employee threshold, a more formal and focused strategic plan and policy are put into place.
Being able to understand both ends of the continuum and everything in between—and build systems to accommodate and scale as needed—is how that rubber meets the road.
Liza Antony is a Business Performance Advisor for Insperity, a $3 billion public company dedicated to delivering exceptional HR solutions to small and midsize companies. She focuses on helping Colorado entrepreneurs and small business owners. Having worked in Fortune 50 companies and other large corporations, Liza’s talents and passions found the perfect home in Insperity’s small-to-midsize-business model.