For CEOs and business owners who want to concentrate more on running their business and less on employee issues a professional employer organization (PEO) may be the way to go.

Outsourcing administrative tasks often makes tremendous business sense and brings financial rewards. A PEO model offers a wide range of viable solutions for business across many different industries. By outsourcing their non-productive administrative tasks, like human resources, benefits and payroll administrative tasks to a PEO, companies can take advantage of the PEO’s economy of scale and broad expertise, while saving money and resources.

Businesses exist to create products and services at a profit. They don’t exist to perfect payroll processing, e-verifying, drug testing, 401(k) management, COBRA administration, FMLA tracking, worker’s compensation claims filing, and on and on it goes.

Get the Right Fit

When considering making the change to a PEO, ask yourself four questions:

1. Do you value your employees?
2. Look at your current vendor relationships. Are you willing to consolidate to drive efficiency?
3. Are you looking for more time to properly manage and grow your business?
4. Are the increasing costs and regulation associated with employment hindering you ability to grow?

If the answer is “yes” to all four, then you should strongly consider using a PEO.

But not all PEOs offer the same services. All PEOs do at least the basicsL payroll processing, benefits administration and human resources support. Beyond that, each PEO approaches the details differently. Differentiation generally shows in available technology, employee benefits depth and pricing, risk and safety services, human resources.

Even with the basic services, needs can vary greatly from one client company to another. For example, for some businesses payroll is very simple, while others may need to manage numerous payroll deductions; department, job and government reports; a variety of pay types; and PTO tracking.

Employees benefits needs also vary. A PEO can expand available benefits for business with major medical, dental, vision, 401(k), life insurance, disability insurance, flexible spending accounts, health savings accounts, ect.

Due Diligence

Determining the right PEO for strategic partnership is critical. With any successful partnership, a little research and due diligence beforehand will help ensure a long-term, mutually beneficial relationship.

Business owners should consider the following:

• Assess your workplace and determine your human resource, benefits implementation, payroll administration and risk management needs. Make sure the PEO can serve and meet those needs.
• Ensure that the PEO is properly licensed and maintains the highest standards with the highest standards with insurance and business related practices.
• Make sure the PEO is licensed with NAPEO, the industry’s largest trade association, association, promoting educational, legislative and regulatory compliance for its members.
• Consider a PEO that utilizes technology to help increase efficiency. The proper usage of technology protects vital employee data, ensures 24/7 access anywhere internet access is available, and mitigates the need for redundancy in reporting and data collection.
• Consider interacting with those servicing your account, who will be administering services such as payroll, benefits and human resources. Ensure that the PEO’s service team is properly trained and certified to give expert advice and provide competent solutions to issues affecting your company. Certifications including SPHR, PHR, CPP, and receiving the best service possible.
• Check client and professional references. Ask if they have successfully worked with other clients in your industry. Are their clients satisfied?
• Find out if the PEO is compliant with all state requirements and federal regulations.