The Bank Product Line –- March 2001

Administaff Provides Workplace Solutions You Can Bank On
Faced with an uncertain economy and the rising cost of employee benefits, when do banks have time to serve customers?

Banks are among the first businesses to be affected by an economic downturn. So when Newsweek reported on February 2, "If the U.S. economy were a patient in a hospital, its doctor might be admitting it for close observation," like other savvy executives, bank officers took note. In the face of such uncertainty, many banks are staying ahead of the curve by cutting costs and preparing for a slowing economy.

While cutting costs always creates tough choices, it is especially difficult with employee benefit plans. Benefit costs are rising, making it one of the most likely areas for budget scrutiny. However, while cutting back on benefits can save companies money in the short-term, it can cost much more in employee turnover in the long run. How can a bank keep the price of benefits under control while maintaining a plan that can attract and retain the best employees?

One solution is a Professional Employer Organization (PEO).

What is a PEO?
An increasing number of banks are turning to PEOs who offer benefits and more to employees. In addition, a PEO serves as an off-site human resources department, handling the burdensome administrative and human resources functions of running a business. This includes such chores as payroll and tax filings, unemployment and wage claims, workers’ compensation claims, a 401(k) plan, health benefit plan, and employer regulatory compliance. Management still makes all of the strategic business decisions and saves time by outsourcing various human resources projects and responsibilities to the PEO on an as-needed basis.

For example, the Texas Bankers’ Association (TBA) uses Houston-based Administaff to handle its human resources functions. "At TBA, we want to provide the best possible services to our members," explains Lenelle Freeman, TBA vice president. "That’s why we use a PEO."

Why Choose a PEO?
PEOs were born out of the frustration that many small-business owners experience when administrative work inhibits their ability to focus on their core business. To overcome that challenge, a business and a PEO enter into a "co-employment relationship," which enables the PEO to serve as the business’ virtual human resources department. However, unlike temporary agencies or employment firms, a PEO does not provide personnel. Instead, full-service PEOs like Administaff offer "value-added" assistance in the form of employee recruiting and selection, employee handbook and policy development, counseling, training, screening, and performance appraisal assistance.

A key benefit of utilizing the services of a PEO is its ability to use economies of scale to help control the cost of health insurance benefits, 401(k) plans and other employee benefits. A PEO enables the employees of smaller banks to have access to attractive compensation packages on par with those offered by larger institutions.

Who’s in Control?
Some banks might ask, "In a co-employment relationship, who’s really in charge of the employees?" Employees want to know who runs the daily business operations and presides over performance reviews. The answer is the bank is still in charge of the day-to-day activities, while the PEO takes care of the administration and compliance issues.

Mark Lovvorn, president of BankDallas, had not considered the PEO relationship until he was faced with hiring his entire employee base. He explored PEOs for a variety of reasons, including combating the high costs associated with hiring and training new employees. BankDallas signed up after Administaff thoroughly explained the PEO concept to the bankers and outlined the advantages of entering into a co-employment relationship. "One of the things the employees now have access to is an improved 401(k) plan; without Administaff, this wouldn’t be possible," said Lovvorn. "Once the employees realized this benefit, they were much more open to using a PEO."

To help employees understand and embrace the co-employment relationship, Administaff conducted an extensive "hands-on" orientation to ensure that everyone fully understood what the PEO’s function was at BankDallas.

"Administaff is the Cadillac of companies that provide these services," said Lovvorn. "They brought in experts on all facets of human resources management. When our employees saw that everything was handled in the same manner as a traditional employer relationship, they were comfortable, and frankly excited, about what they saw."

Why Administaff?
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). It ranks No. 615 on the Fortune 1000 list, and it posted 2000 revenues of $3.7 billion. With 32 sales offices in 17 major markets, the company also is included on Fortune’s list of "America’s Most Admired Companies" and on the Information Week 500 list of leading information technology innovators.

Simply put, Administaff offers banks a win-win opportunity: enhance productivity and efficiency while controlling cost and stress. By allocating employer-related responsibilities to Administaff, business owners can spend more time satisfying customers and growing their business. "There are some things that come up from time-to-time that you don’t plan for or expect," said David Bubier, president of Main Street Bank in Cleveland, Texas. "When they occur, you appreciate the fact that Administaff is there."

In fact, an independent research firm found that 96 percent of Administaff’s clients agreed that Administaff allows them more time to concentrate on running their business.

Before deciding to cut back on employee benefits in an effort to help control costs, be sure to consider the alternatives. While the direction of the economy is still uncertain, it is a good time to consider new approaches that can help contain overhead and retain the best talent. Choosing a PEO like Administaff can give small and medium-size businesses a competitive edge and help improve employee morale and productivity, which means happier customers. So while the economy is under observation, a PEO might be just what the doctor ordered.

For more information on Administaff’s comprehensive Personnel Management System, contact Rick Wilson at 281-873-2717 or 1-800-974-1466, ext. 2717, or by e-mail at rick_wilson@administaff.com

Reprinted with permission from The Bank Product Line, March 2001.