Small Business Opportunities - June 2000

Help Wanted
Is it time to outsource your human resource personnel activities?

By John Orth

It might be time to consider personnel management support for your business if:

• You’ve got so much paperwork piled on your desk that the custom oak finish is a rumor.
• You know the family histories of your office’s cleaning crew.
• Prospective employees tell you, "Don’t call me, I’ll call you" after hearing about your employee benefits package during the job interview.
• You’re juggling so many activities that you qualify as a circus sideshow.
• Your own family has come to expect the "good night" e-mail.

Running your own business doesn’t have to be such a nightmarish experience. Fortunately, there are several strategies that can help your biz grow while restoring balance in your personal life.

Outsourcing your business’ human resources functions to a Professional Employer Organization (PEO) is one such strategy upon which owners of small and medium-size businesses continue to rely. By delegating these responsibilities to a PEO, entrepreneurs can focus on their core competencies—knowing that trained professionals are handling the administrative and HR activities that often keep you up late at night.

Help Your Business Grow
A growing number of small and medium-size businesses are forming a relationship with a PEO to provide employees with HR benefits typically offered by Fortune 500 companies. These entrepreneurs have found that hiring and retaining good employees is made easier when a company can offer excellent medical and dental coverage, a 401 (k) plan, life insurance, an employee assistance program, credit union services, and several other benefits.

PEOs also make it easier administratively to provide employees with great benefits by removing the hassle business owners used to face when constantly reviewing and switching benefit plans.

In addition, PEOs handle payroll processing, tax reports and deposits, personnel records, benefits packages and help keep the business owner informed about changing personnel legislation. Also, business owners’ employee-related liabilities are reduced because the PEO assumes many of those responsibilities.

Some PEO offerings are even more extensive. For example, Administaff, one of the nation’s leading PEOs, provides professionals who write job descriptions, assist with pre-employment testing, help develop personnel policies and offer professional development training.

Of course, business owners still control their company’s daily core operations and make all the strategic business decisions. With the help of a PEO, they just have more time and resources available to do both. A great combination indeed, especially if buying a sleeping bag for the office almost seemed like a reasonable business decision!

Choosing the Right PEO
The PEO industry is experiencing rapid growth. To select the best PEO for your needs, be sure to do plenty of homework. NAPEO offers the following guidelines to companies considering a relationship with a PEO:

• Assess your workplace to determine your human resource and risk management needs.
• Make sure the PEO is capable of meeting your goals. Sales brochures and fancy proposals are easy to print. Meet the people who will be serving you.
• Check the firm’s financial background; ask for banking and credit references. Ask the PEO to show that payroll taxes and insurance premiums have been paid.
• Ask for client and professional references. Call them.
• Check to see if the company is a member of NAPEO and/or is accredited by the Institute for the Accreditation of Professional Employer Organizations (IAPEO). IAPEO accreditation is a good indication of PEO industry standing and reliability.
• Investigate the company’s administrative and risk management service competence. What experience and depth does the company’s internal staff have? Have any of the PEO’s senior staff been certified as Certified Professional Employer Specialist (CPES) or other relevant professional designations?
• Understand how the employee benefits are funded. For example, are they fully insured or partially self-funded? Who is the third party administrator or carrier? If required in your state, is their TPA or carrier licensed?
• Understand how the employee benefits are tailored. Determine if they fit the needs of your employees.
• Review the service agreement carefully. Are respective parties’ responsibilities and liabilities clearly laid out? What guarantees are provided? What provisions permit you or the PEO to cancel the terms of the contract?
• If your state requires a PEO to be licensed or registered, make sure the company you are considering meets all such requirements. The following states currently require licensing or registration: Arkansas, Florida, Illinois, Kentucky, Maine, Montana, New Hampshire, New Mexico, Nevada, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah and Vermont.

For more info – or before people start looking at milk cartons to find you – call NAPEO at 703-836-0466, or visit its website at www.napeo.org.

John Orth is Vice President of Sales for Administaff, which serves as co-employer with more than 4,000 small business clients representing more than 68,000 worksite employees. To contact the nearest Administaff office, call 1-800-465-3800, or visit the company’s website at www.administaff.com.

Reprinted with permission from Small Business Opportunities, June 2000.