How Small Businesses Benefit from PEOs

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Iris Lee
8 years ago
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2 Meet Our Subject Matter Expert Jim Rogers Business Consultant, TriNet HR Based in Jacksonville, FL Joined TriNet in 2014 as a Business Consultant having spent the previous ten years with a competitor in Orlando. Currently leading TriNet s business development efforts in North Florida. Prior to that, Jim led Sales teams in Orlando for the Sprint Local Telephone Division. Focused on the connection between an employees discretionary effort and their employers total capacity in order to increase revenues. 2 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

3 How Small Businesses Benefit From PEOs Agenda Four Options for Handling HR What is a PEO and Co-Employment Advantages of Using a PEO Due Diligence When Selecting a PEO Q&A 3 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

5 Basic Option for Handling HR - #1 You can do it yourself or delegate the job to current internal staff. Advantages: Close control Inexpensive alternative Best fit for Friends and Family Disadvantages: Limited expertise Takes attention away from core responsibilities (up to 25%-45% of owner s time) Accountability, compliance and liability issues Difficult to scale 5 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

6 Basic Option for Handling HR - #2 You can hire additional administrative and HR staff. Advantages: Hire part-time staff or re-purpose existing staff handling HR Keeps control close Delays the inevitable Disadvantages: Adds cost to do it yourself option More tasks for you to manage Decentralizes decision making Fails to address growth or scale Hiring personnel with limited expertise Build an HR Department 6 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

7 Basic Option for Handling HR - #3 You can outsource to multiple vendors: one vendor for payroll, another for benefits, and so on. Advantages: Addresses some growth needs Buttons up and can create some efficiency Need-based Features and Benefits Disadvantages: Creates redundant tasks for HR Coordination issues Lack of scale: Premium pricing Nothing is built for small business No liability protection 7 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

8 Basic Option for Handling HR - #4 You can use a PEO as a single vendor solution under a co-employer relationship. Advantages: Flexible, scalable Access to Big-Company infrastructure and benefits Access to HR expertise Shifting and sharing of liability Disadvantages: Employers fear loss of control Proprietary system limitations It is NOT for every small business 8 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

10 What is a PEO? Definition: The term PEO stands for Professional Employer Organization. PEOs provide small-medium size companies with outsourced human resource services, specifically employment and HR management services. 10 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

11 What is Co-Employment? Definition: When working with a PEO for HR services, your company enters into a shared employment relationship called coemployment. The PEO becomes the "Employer of Record and is responsible for payroll and payroll tax compliance, benefits administration, workers' compensation and other HRrelated administrative tasks. Your company remains the "Worksite Employer" and continues to retain day-to-day control and direction of the worksite employees. 11 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

14 Advantage of Using a PEO - #1 Flexible, scalable Bundled HR solution covers you as you grow. i.e. Compliance changes based on # of employees HR platform to handle 5, as well as 500 employees Benefits offering scales as you do Ability to include value-added services as you grow (Time & Attendance, Performance Management, Expense Management, Applicant Tracking System), etc. 14 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

15 Advantage of Using a PEO - #2 Access to Big-Company infrastructure and benefits Level the playing field with large companies Mitigate the impact of the Affordable Care Act (ACA) small business face higher costs and fewer options. More health care benefits options for employees and their families mean: Attract high caliber talent in your industry Retain your best employees 401(k) and retirement planning Top-rated voluntary benefits and discount programs HR technology platform for administering benefit plans 15 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

16 Advantage of Using a PEO - #3 Access to HR expertise Support for payroll and employee needs HR and Human Capital consultants Benefits administration Employee issues Strategic HR planning > Interview training, > Performance management, etc. HR best practices Ensure HR compliance with local, state and federal laws Enhanced corporate culture 16 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

17 Advantage of Using a PEO - #4 Shifting and sharing of liability Workplace safety Workplace torts Employer Practices Liability Insurance Affordable Care Act New regulations 17 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

18 Financial offsets to PEO administrative costs Reduction in initial benefits cost and lower future rate increases Lower unemployment tax rates Reduction in Workers Compensation insurance cost Liability cost Legal expense for HR advice Payroll/HRIS expense Soft costs (redeployment of time, opportunity cost) 18 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

19 Disadvantages of Using a PEO Selecting the wrong PEO for your business Selecting a PEO for the wrong reason(s): should be considered a long-term strategy, not a short-term fix. Employers fear loss of control System limitations NOT a solution for every small business 19 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

21 Seven Tips for Selecting a PEO 1. Find a legitimate and stable PEO. 2. Find a PEO that is ESAC certified now and will be certified under the Small Business Efficiency Act (SBEA) when it takes effect. 3. Find a PEO that solves issues quickly and effectively. 4. Understand how you are being charged. 5. Look for better and lower cost benefits. 6. Verify the employee risk pool matches the employer s profile. 7. Ensure that the service provider meets all state regulatory requirements. 8. Find out how long it takes to transition to their services. 9. Check client references. 10. View a demonstration of the HRIS technology 21 Net-Net Webinar Series 2014 TriNet Group, Inc. All rights reserved. 5/28/2014

Welcome to PEO 101. Professional Employer Organization Guidebook ADP SMALL BUSINESS GUIDEBOOK

Welcome to PEO 101. Professional Employer Organization Guidebook ADP SMALL BUSINESS GUIDEBOOK Welcome to PEO 101 Professional Employer Organization Guidebook ADP SMALL BUSINESS GUIDEBOOK PEO Basics & Key Things You Need to Know Question 1 What is a Professional Employer Organization or PEO? Question