State of Manufacturing - Winter, Vol. I, Iss. 4

Ship Your HR Needs to a PEO Equals More Time, Resources, and Peace of Mind

By Bill Clements

It's no secret that in manufacturing, companies that consistently hone their productivity output and efficiency levels can greatly enhance their chances for success. While it might be reasonably easy to discover time – or cost – saving opportunities in such areas as production, packing, shipping or receiving, a growing number of manufacturers nationwide are learning that outsourcing their human resources duties can also yield significant rewards.
Examining your company's human resources and administrative activities might not be an obvious avenue to explore when looking to boost manufacturing productivity. However, consider the time and money it takes your company to deal with these important issues:

• Processing payroll
• Administering the health insurance plan
• Keeping up with the myriad workplace regulations
• Handling workers' compensation issues
• Training and maintaining existing employees
• Recruiting new employees
• Developing workplace policies
• These tasks and many others can drain precious time and resources from focusing on the actual business of manufacturing products.

PEOs Help CEOs Better Manage Resources, and Manufacture Profits
Professional Employer Organizations (PEOs) help small and mid-sized manufacturers concentrate more on their core activities by assuming responsibility for many of their human resources and administrative functions. Key activities include:

• Payroll administration and related tax filings;
• Processing unemployment and workers' compensation claims;
• Sponsoring a 401(k) plan and health insurance administration; and
• Ensuring employer regulatory compliance, among several other tasks.
• In addition, full-service PEOs offer "value-added" assistance in the form of employee handbook and policy development, counseling, training and screening of employees, and performance-appraisal assistance. Of course, business owners still make all the strategic decisions.

Perhaps of even greater interest and appeal to manufacturing companies is the notion that PEOs can help small businesses compete more aggressively - even with much larger companies – for talent. PEOs use economies of scale to bring 401(k) plans, health insurance plans and employee assistance programs to affordable levels, thus presenting sought-after employees with a more attractive offer.

Another PEO benefit manufacturers appreciate is having the ability to reduce their employer liability exposure. When a client enters into an agreement with a PEO, a "co-employer" relationship is formed. This gives manufacturers a new ally to help them better manage liability for employee accidents or other workplace situations - as long as the manufacturer is willing to follow the instruction of human resource specialists, safety consultants and workers' compensations specialists furnished by the PEO.

Changing the Face of Employment in America
PEOs have been growing at more than 25 percent annually for the past three years, and Wall Street analysts project this rate of growth can be maintained for five to 10 more years. In short, the way in which companies employ their people will continue to experience unprecedented change.

According to the National Association of Professional Employer Organizations (NAPEO), PEOs have enjoyed such tremendous growth because of three primary factors:

• During the past 20 years, small businesses have been bombarded with a substantial increase in regulations at the federal, state and local levels.
• Business owners are under increasing pressure to attract and retain superior workers by providing access to quality health care benefits and retirement plans.
• Businesses are seeking help in managing and reducing the cost of mandatory benefits like workers' compensation and unemployment insurance.
• Today, manufacturers can choose from more than 2,000 PEOs of all sizes. To help select the best one, NAPEO has compiled a list of guidelines on its Web site (http://www.napeo.org) that companies should address before making a firm decision.

Administaff: A Preferred PEO
Administaff is one of the nation's largest and most well-respected PEOs. Founded in 1986, Administaff has helped nurture the PEO industry's boom, and is the only PEO listed on the New York Stock Exchange (ASF). The company, which has 25 offices and 15 markets nationwide (including offices in Orlando), earned recognition in Fortune magazine's 1999 "Most Admired Companies" list and in Forbes "Platinum 400" list, among other prestigious accolades.

Administaff is known for its comprehensive Personnel Management System, which has led 96 percent of its clients to say in an independently conducted survey that Administaff allows them more time to concentrate on running their business. Moreover, 99 percent of Administaff's clients say they would recommend the company to other business owners. In fact, the Florida Manufacturing Technology Center is an Administaff client and a member of the company's Centers of Influence network.

"Administaff really allows us now to continue focusing on growing our business," said Edward M. Loke, president of Texel, another Administaff client. "We have grown an average of 20 percent for the last three years. We are not about to stop now. We just do not have the people or desire to take on all of the employment issues ourselves."

Bill Clements is the District Manager for Administaff's Orlando office. If you are interested in learning more about PEOs and how Administaff can help your manufacturing company, please contact Administaff at (800) 465-3800. Additionally, please feel free to visit Administaff on the World Wide Web at http://www.administaff.com

Reprinted with permission of State of Manufacturing in Florida.