What Is A PEO, Definition Of A PEO and How Can A PEO Help My Company?

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1 Passionate Professionals Strategic Solutions Smart Growth What Is A PEO, Definition Of A PEO and How Can A PEO Help My Company? If you have ever asked What is a PEO? or What is a definition of a PEO? or How can a PEO help my company? Total HR Management understands the genesis of each of those questions. In a world full of acronyms, it can get a bit confusing. The goal of this white paper by Total HR Management is to provide the answers. A Professional Employer Organization (a PEO) is a firm that provides a service under which an employer can outsource HR (human resources) functions and employee management tasks. As a PEO, Total HR Management has years of experience with a track record of long-term, satisfied company clients. The tasks and services that a PEO can cover include employee benefits programs and administration, payroll processing and workers compensation, recruiting and selection, EPLI & risk/safety management, and multi-employer 401k plans. Wow! That sounds like a lot and is a bit overwhelming. What is great about a PEO or professional employer organization like Total HR Management is that we tailor our programs to fit the needs of your company. By helping you do more with less, the goal of our employee leasing programs and HR outsourcing plans is to help you work on your company while freeing you from working in the bureaucratic doldrums of your company. An ESSENTIAL Point Clearly Made There is one ESSENTIAL point to know at the beginning. Despite the paranoia that circles around phrases like co-employer and employee leasing and HR outsourcing and even professional employer organization, there is nothing to worry about. As the owner or CEO of your company, you never give up any control of your business. The bottom line always begins and ends with you. You stay as you were in the beginning and without any question: The Owner or CEO of your company and the person in charge. As a PEO and co-employer in name, Total HR Management is and always remains a service partner. We are there to help you, but you are in charge of your business at all times. PEO Services & What Is A PEO A PEO delivers such services by establishing and maintaining an employer relationship with a client company s employees by contractually assuming substantial employer rights, responsibilities, and

2 risk. By focusing on employee issues like time management responsibilities and employee handbooks, Total HR Management improves the efficiency and thus the productivity of our client companies. In a PEO relationship, you retain the day-to-day control over how you manage your employees while the PEO or co-employer handles the HR management, risk management and benefits administration. A PEO is a co-employer that helps make sure your company stays in compliance and up-to-date in an ever changing world of regulations. By shouldering many common employer risks, we take the burden off of your back. With Professional Employer Organization services you benefit from the shared responsibility model. Shared responsibility means your company no longer faces the threat of unexpected changes in state and federal compliance and regulatory requirements on your own. Seen & Heard When We Are Needed Although our description of What is a PEO? and Definition of a PEO surely helped to demonstrate the value, the following articles and investigations do the same as well. You may not need to read it all, but it s nice to know it s there as a resource. That s like a PEO as a co-employer because you don t always need us or even need to be aware of us, but it s nice to know that we re around when you do. This is a key goal of Total HR Management to be seen and heard by our clients companies only when we are needed. Value Of Professional Employer Organizations Study By NAPEO Reveals Faster Growth, Lower Turnover & Higher Business Survival Rates = In Other Words, It Just Works In a report on a convincing study, NAPEO revealed that companies, which chose to work with PEOs, have lower employee turnover and higher business survival rates respectively. Released during the annual NAPEO conference in Miami, the study underscores the true value of professional employer organizations. From past and present experience with loyal client companies, Total HR Management is not surprised by the positive results of the NAPEO study. NAPEO Study By Two Respected Economists Achieved by the respected economists Laurie Bassi and Dan McMurrer, the 2014 NAPEO study was a follow-up to a report released in 2013 that clearly showed that small businesses in PEO arrangements grow faster than non-peo using competition. In a statement about the success of the 2014 study, Pat Cleary, NAPEO president and CEO, explained the positive results of the outcome: It s very simple: Small businesses that use PEOs grow 7-9 percent faster, have employee turnover that is percent lower, and are 50 percent less likely to go

3 out of business than companies that don t use PEOs. This proves through hard data the value proposition of PEOs. An impressive study figure was the drastic reduction in employee turnover rate for companies using PEOs. While the overall employee turnover rate in the United States is approximately 42 percent per year, companies using PEOs experience only a percent rate. When you are talking about keeping an additional 10 to 15 percent of your employees working and happy, the obvious value of PEO relationships is clear. Such a percentage is a definitive edge that could have an actual impact in a competitive business environment. Without question, however, the most impressive value-driven outcome of the 2014 NAPEO study was the resonating fact that businesses partnering with PEOs are 50 percent less likely to fail from one year to the next when compared to similar companies in the business population as a whole. Pat Cleary Of NAPEO Illustrates The PEO Edge Pat Cleary expressed his faith in the 2014 study when he said, Across all industries, this study shows that there are clear advantages for PEO clients on two of the most fundamental issues faced by any business: retention of employees and continued survival PEOs make it possible for companies to retain their best and brightest employees and focus on their core business, which helps them survive and grow. James Harwood and the Human Resources Professionals at Total HR Management could not have said it any better. In the competitive post-recession economy of the early 21st century, a professional employer organization like Total HR Management provides small to mid-sized companies with the extra edge they need to succeed. As Total HR Management states on the website, Most importantly, we consistently deliver on our promise to help you work on your business and not in your business. Our clients stay with us because we follow through with our promises, delivering consistent and reliable services. Such service is why PEOs remain successful. Does It Make Sense For Your Company To Work With A Professional Employer Organization (PEO)? In the 21st century, owning and running a business is more challenging than ever. While your core business remains your main priority, there seems to be so many other employment-related responsibilities that consume an employer s focus. Employee benefits, healthcare reform, payroll processing and EPLI risk management are commonly referred to as administrative burdens for a reason. They are a time suck. Then again, hiring a fulltime human resources director is expensive. What are the options and what are you supposed to do

4 faced with such a problem? Managing Human Resources As A PEO The bonus of working with a professional employer organization is that it allows you to be hands off when it come to all of those annoying administrative burdens. When partnering with Total HR Management, you enter into a tailored co-employment relationship. We give your company what it needs; nothing more and nothing less. There is a bevy of administrative tasks we can handle. These administrative tasks range from payroll processing and employee benefits administration to liability insurance and regulatory paperwork. Keeping up with the times, we also have become experts at navigating the complexities of healthcare reform and PPACA. If you already have an employee benefits solution, but your payroll processing and EPLI situation leaves something to be desired, these are the PEO functions that Total HR will cover. By offering a tailored solution, we work with you to diagnose the needs of your company and provide a services package that makes sense. Human Resources Outsourcing And PEO Success With the National Healthcare Reform becoming federal law, Obamacare is no longer an idea but a living reality. The reality of Healthcare Reform makes everything that much more complex for business owners. Faced with the unknown bureaucracy of the state-run exchanges, small to mid-sized businesses find themselves under the gun. As Pat Cleary, President of the NAPEO, further explains: The increasing complexity of workplace regulations makes the professional employer organization model very attractive to businesses of all sizes. (NAPEO Press Release 11-11). As Total HR Management understands, the complexities of today s workplace regulations go well beyond the new requirements of the healthcare reforms. With a virtual swamp of both state and federal regulations to navigate, small to mid-sized business owners often feel lost in a human resources fog like a ship without a lighthouse. In such a morass, the best lighthouse available is a professional employer organization and the light is human resources outsourcing. A Definition Of A PEO Is Managerial Freedom The definition of a PEO is managerial freedom because you are freed from so much of the HR bureaucracy. While the majority of Professional Employer Organizations provide only pre-packaged deals, Total HR Management tailors our solutions to work for the specific needs of your company. We don t just offer solutions without a need. We provide you solutions and resources that work for the particular challenges and the actual context of your business.

5 The Total HR Outsourcing solution is Nothing New, Just Easier. We manage your human resources and offer you the best prices available for the services you needed, allowing you to focus on being an entrepreneur. Being an entrepreneur means working on your business and not in your business. By helping our client companies do more with less while always being easily accessible and present, Total HR Management is the PEO solution that makes sense Obvious Once You Know What Is A PEO Allow us to do what we do best to help you. A Professional Employer Organization can deliver the HR manuals that your employees need to both feel secure in their jobs and ultimately succeed. An aware employee is a good employee. Policies and procedures in HR manuals will be maintained in compliance with ever-changing state and federal laws and regulations. A Professional Employer Organization PEO will help with employment-related regulatory compliance ranging from ADA to OSHA updates, and this is a huge advantage that can be worth more to your business than you can possibly imagine. We make sure you avoid regulatory headaches that lead to financial problems. With our EPLI management team, if you have an HR-related employee claim, such as a discrimination allegation, Total HR Management will take the lead on managing the claim process. Five Key Differences Between Modern PEO Management Of Employees And Old- Fashioned Personnel Management Effective PEO management of employees is a modern version of what used to be called personnel management. Although there are overlaps between PEO management of employees and personnel management, there are some differences and definitive improvements that need to be recognized. Modern HR Management Benefits: 1. Traditional personnel management focused on personnel administration and basic labor relation issues. In contrast, the PEO management of employees is more diverse, focusing on recruitment and selection; ongoing motivation & morale in the workplace; and the maintenance of benefits administration and insurance requirements like EPLI for managers and their employees in the workplace. Modern HR management offers a wide range of potential services. HR Management & PEO Options Deliver Results 2. Under traditional personnel management, employees are provided with less training and development opportunities. Although it is important to keep employees happy, it also is just as important from this old-fashioned perspective to keep them in their place. Under HR management of employees, training and development opportunities are employed to maximize productivity. Rather than install an artificial glass ceiling, the ultimate potential of each employee is gauged, then fitted to a position that takes full advantage of their talents. 3. In traditional personnel management perspectives, employees are expected to know what is

6 allowed and what is not allowed in a workplace. Any problems can be navigated once they arise. In the HR management of employees, employee handbooks are distributed that provide specific guidelines. Rather than allow problems to arise, a professional employer organization takes advantage of a track record of experience to address issues in advance before they reach the actual point of being real problems in the workplace. Employee Handbooks & Modern HR Management 4. Traditional personnel management focuses on increasing production while keeping employees satisfied and moving forward from an external perspective. The modern HR management of employees helps to hit the mark of a company s productivity and profitability benchmarks by fostering a supportive workplace culture that promotes effective strategies across the board. Rather than just focus on the surface, modern HR management makes sure that problems are not being generated from dissatisfaction within by fostering employee feedback mechanisms and giving managers effective methods to keep track of a company s internal temperature. 5. In traditional companies, personnel management is a routine function that covers the same bases, year in and year out without external engagement. Human resources management is a strategic function that keeps track of external innovation and technological advancement, making sure that the HR management of employees remains up-to-date with a definitive awareness of the latest cost-saving and productivity-improving resources. Total HR Management & The PEO Option When hiring a Professional Employer Organization, Total HR Management recommends that you do your due diligence. With many glowing references from our clients in a variety of businesses and industries, we have the experience and expertise you need to be reassured that such a decision is the right choice to make. Total HR Management hopes this white paper has helped you understand what is a PEO and how the PEO option of effective HR services can help your company. To learn more about what Total HR Management can do for you, please call (800) for a free consultation Foothill Blvd., Suite 220 La Crescenta, CA Phone: Fax: No Legal Advice Intended: This white paper includes information about legal issues and legal questions. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. You must not rely on the information in this white paper as an alternative to legal advice from your attorney or other professional legal services provider.