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1 Mercer Single Source 1 Outsourcing Human Resources: PEO vs. HRO December 16, pm Eastern Sponsored by Mercer Single Source 1 Presenters Michelle Lockhart, PHR, Vice President Michelle has worked in the human resources field for the past 10 years. Her roles have included HR Management, HR Generalist and Training. Michelle joined Mercer Single Source 1 in Her responsibilities include the management of Mercer Single Source 1 operations as well as its sales and marketing. Prior to joining Mercer, she spent 12 years in the telecommunications industry where she held positions in sales, human resources and sales training. She received her BA in Marketing from the University of Northern Iowa and holds a PHR certification. Mercer Single Source 1 1

2 Presenters Micah Zirnhelt, SPHR, Assistant Vice President Micah has worked in human resources for 11 years in roles includes HR Generalist and HRIS/Payroll Management. He worked primarily in the manufacturing and distribution industries with companies ranging in size from 60 to 5,000 employees. Micah also worked for several years in the non-profit sector in marketing, fundraising and membership development roles. Micah joined Mercer in 2005 in the role of an HR Administrator for Single Source 1 where he provided daily support to clients in a variety of industries. He has been in his current role as a Sales & Implementation Specialist since Micah is also the primary technical liaison between Single Source 1 and the HR Benefits Advantage programming staff. Micah holds a BFA from the Boston Conservatory and holds a certification of SPHR from the Human Resource Certification Institute. Mercer Single Source 1 2 Agenda Outsourcing Human Resources Define PEO and HRO Differences between PEO and HRO Which outsourcing solution is best for your association? Mercer Single Source 1 3

3 Polling Question #1 How many employees do you have? Mercer Single Source 1 4 What is HR/Benefits Administration Outsourcing? HR/Benefits Administration outsourcing enables a organization to transform its Human Resources function from a traditional administrative intensive environment to a more strategic, valueadded function. It is the process in which a organization uses the services of another organization to take care of some or all of its HR/Benefits Administration functions. Mercer Single Source 1 5

4 Polling Question #2 Are you in an HR outsourcing relationship now? Yes, PEO Yes, HRO No Mercer Single Source 1 6 Who is outsourcing HR/Benefits Administration? Organizations of all sizes HR administration responsibilities are assigned to an individual wearing multiple hats Limited HR resources HR with a desire or need to focus on strategic components of the organization No HR Information System Mercer Single Source 1 7

5 Why are organizations outsourcing? According to a recent study by the Society for Human Resources Management (SHRM) 75% of HR Executives said they had more time to concentrate on achieving organization goals by outsourcing some of their HR administrative functions. More than 50% said it helped them save money and control legal risks. Other reasons included: Gaining access to vendor talent Streamlining HR functions Offering services that they could not without outsourcing Allowing the organization to focus on core functions Quick time-to-value Mercer Single Source 1 8 What is the cost benefit? The average cost of turnover is estimated at 30% - 150% of terminating employee s annual salary - Cornell Univ., Mercer, Saratoga Inst. Small organization owners spends 7%-25% of time handling employee-related paperwork Small Business Administration Companies with fewer than 500 employees spend annually $5,000 per employee for regulation, compliance and paperwork requirements Small Business Administration Mercer Single Source 1 9

6 The Time to Get Strategic Tasks Regulatory Compliance Data Input & Record Keeping Premium Reconciliation Carrier Reporting & Interfaces Maintain HRIS software and vendor Field employee calls on benefits Tracking Leave of Absence Process change of address Mail Benefit Confirmations $ Bottom Line Expense Outsource the tasks and use that time to get strategic Contribute to Top Line Revenue $ Strategic Recruiting Top Talent Retention Rewards & Recognition Performance Review Process Health & Benefit plan design Training and Development Wellness Program Mercer Single Source 1 10 Polling Question #3 Which tasks would you like to outsource? (Check all that apply) Compliance & Policies Record Keeping Benefit Administration Payroll Administration Leave of Absence tracking HRIS Recruiting Other Mercer Single Source 1 11

7 What is a PEO? PEO stands for Professional Employer Organization PEOs operate with a co-employment relationship Focus on groups under 50 employees Fee structure is typically percentage of payroll Mercer Single Source 1 12 PEO PEO assumes all HR aspects of HR function Employee relations Pays wages & employment taxes out of its own account Collects & reports taxes to state & federal jurisdictions Retains the right to hire, fire & reassign employees Often offers benefits & workers compensation Policies, handbooks, compliance Mercer Single Source 1 13

8 Things to consider with a PEO Not all PEOs have access to same major medical programs May create additional liability All control of HR department goes to PEO PEO assumes most or all of employee liability Mercer Single Source 1 14 What is a HRO? HRO stands for Human Resource Outsourcer Third Party provider of common HR services. They can support all or a few of the HR needs of an organization. No co-employment relationship Fee structure is fixed per employee rate or per transaction Mercer Single Source 1 15

9 HRO HRO offers flexibility in the services they provide, employers can often choose which of the HR services they want. Employee relations Compliance, policies, handbooks Benefit administration Payroll administration Recruiting Human Resource Information System (HRIS) Mercer Single Source 1 16 Things to consider with HRO Not always 1 stop shop HROs do not always offer everything, specialize in 1 or a few areas May need to go to different vendors to outsource all needs Employer assumes employee liability, not HRO Mercer Single Source 1 17

10 Outsourcing Human Resources: PEO vs. HRO Which do I choose? Mercer Single Source 1 18 Summary PEO Very small organization High risk for workers comp Ok with giving up HR control HRO Want flexibility with HR Want to maintain control Mercer Single Source 1 19

11 Polling question #4 Which model do you feel is better for you? HRO PEO Mercer Single Source 1 20 Question & Answer Break To submit a question, please type your question in the box at the lower left corner of your screen and click on the Send button located next to the box. Mercer Single Source 1 21

12 Mercer Single Source 1 Michelle Lockhart Vice President Micah Zirnhelt Assistant Vice President Please stay online for a human resources information system (HRIS) demonstration and service presentation. Mercer Single Source 1 23

13 Mercer Single Source 1 Mercer Single Source 1 About Us Mercer Single Source 1 provides clients a comprehensive HR outsourcing service that includes a state-of-the-art human resource information system. Clients are supported by a nationally certified HR professional. We provide the client with human resource, benefit and payroll administrative assistance. Mercer Single Source 1 25

14 Mercer Single Source 1 About Our Staff Each of our Mercer Single Source 1 HR Administrators are professionally certified in the field of HR. This means each administrator: Has several years of HR experience Is recognized by the National Society for HR Management (SHRM). Maintains certification through continuing education. Mercer Single Source 1 26 Mercer Single Source 1 Your HR Administration Team We will assign a primary HR Administrator and support team to your organization. During the implementation period, your HR Administrator can travel to your workplace to conduct an Implementation Meeting with your employees and managers. Our HR Administrators build relationships with the companies they support. It s like having an HR professional down the hall from your office; we simply manage your HR activities remotely. Mercer Single Source 1 27

15 HR Administration Service Establish a comprehensive HR platform Make recommendations and review/create policies and handbook Manage new hire, status change & separation processes Facilitate on boarding, maintain files and update HRIS Ensure compliance & record keeping requirements Provide general assistance and support Offer on-line compliance training Sexual Harassment and Discrimination Prevention are standard Provide professional resource for HR assistance Mercer Single Source 1 28 Benefits Administration Service New employee and open-enrollment orientation. Eligibility tracking. Carrier communications regarding enrollments, terminations & status changes. Assistance with claims and coverage issues. Track Family Medical Leave and Disability leaves of absence Recordkeeping and compliance of benefits data. Maintain employee, benefit & dependent documentation in HR Benefits Advantage. Bill review Provide toll free number for assistance. Mercer Single Source 1 29

16 HR Information System (HRIS) HR Benefits Advantage Included in the Mercer Single Source 1 services and fees Simple, one-stop internet-based benefit and HR system Provides a variety of access levels to view and/or edit information Mercer Single Source 1 will enter your organization s information into the system and conduct all necessary maintenance We will save you time by taking responsibility for keeping the system up to date. Mercer Single Source 1 30 Optional Services Payroll Processing (CompuPay) COBRA Administration (COBRAHelp or CONEXIS) Background employment checks (Kroll) Drug Testing (Kroll) Flex Spending (TaxSaver) We will save you time by coordinating efforts with other vendors. Mercer Single Source 1 31

17 Question & Answer Break To submit a question, please type your question in the box at the lower left corner of your screen and click on the Send button located next to the box. Mercer Single Source 1 32 Contact Information Micah Zirnhelt - Sales & Implementation Specialist Angie Rummel - Sales & Implementation Specialist Michelle Lockhart - Vice President, Mercer Single Source 1 Mercer Single Source 1 33

18 Mercer Administration is a service of Seabury & Smith, Inc. Mercer Single Source 1 34

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