Tandem HR’s Vice President of Business Development, Grant Bramley, sat down with Liz Spencer, Executive Director of NCTV17 out of Naperville, IL (a Chicago suburb) to discuss how small businesses benefit from outsourcing HR administration to a PEO. Here’s what they discussed:
What is a PEO?
Liz: Tell me a little bit about your organization. You are something known as a PEO. What’s that all about?
Grant: Yes! PEO stands for Professional Employer Organization. We’re essentially an HR outsourcing partner for small to mid-sized businesses. When you have W-2 employees, you have a lot of responsibilities around compliance, HR processes, and other things you need to do to service, maintain, and ultimately develop those employees. The administration of these things can get pretty cumbersome. A PEO allows you to cost-effectively outsource the administration associated with payroll, benefits, human resources, workers’ compensation, and compliance-related areas.
Liz: Excellent! Those are important areas of business. As an employer in the non-profit space, I know it’s not what I’m trained in. I just know I need it.
Grant: Exactly! And some solutions offer a technology-only solution that can get a little murky. A PEO differentiates from an HR technology model by establishing a co-employment relationship. A PEO and its clients co-employ for the purpose of administration. The co-employment gives us (the PEO) the ability to aggregate, bring economies of scale, and also be a liability-holder in the relationship.
Benefits of Using a PEO
Liz: There are many HR companies out there. What do you (Tandem HR) bring that’s different? How do you use that scale a little bit more? You touched on that a little bit with the co-employment, but I would also think that expertise and availability of people to solve a lot of problems because it never times well when you need an HR person.
Grant: Yeah, absolutely. The co-employment relationship allows us to bring all of our customers together from a volume perspective. That gives us buying power within the areas that we service – specifically around insurance and technology. When we approach national carriers, we’re obviously bringing a much more attractive demographic than that of a typical small-to-mid-sized business. Typically, they’d have difficulty gaining access to the products we are able to offer. So, what that translates to – just using benefits as an example – is a broader offering. And when it comes to being a small employer, let’s say between 10-200 employees (especially at the lower end of that spectrum) you don’t have as much leverage competing (for talent) with the larger companies because you have difficulty accessing those benefits. Through a PEO, a small company can offer more robust benefits. And, we (the PEO) typically bring some cost benefit due to our buying power. And we’re able to deploy that in many ways through HR technology. It simplifies their life dramatically.
How much input does an employer have with a PEO?
Liz: How much say or input does the business owner have in the co-employment relationship?
Grant: That’s a great question. We get it all of the time. In the co-employment relationship, the PEO doesn’t have any authority within the business. The relationship is for the purpose of administration only. So, the things that small employment executives get really frustrated with are local, state, and federal reporting, compliance, and documentation, as well as the administration of benefits. All of those areas that are required that they’re never going to be an expert in. And so, as the PEO is the liability holder and the co-employer for the purpose of administration, the transactional activity goes to us. The client can rely on our Human Resources (HR) Business Partners as experts in their business. Ultimately, we get to know them as a company, educate them, and are there for them in sensitive situations. But the client still retains all of the authority around hiring, culture, training, development. They make the employment decisions.
How do you know when you need a PEO?
Liz: How do you know when your business needs a PEO? Or when you’re ready for it?
Grant: When you have enough employees where the administration associated with employment is now taking up a lot of time. Time better spent elsewhere. There isn’t a defined line in the sand. It’s usually brought to light by some relatively common pain points. Sometimes it’s when a business is growing based on customer demand and now they need to start hiring outside of their friends or family. COVID was a huge pain point because of employee distribution. Businesses went from having a group of employees in one location to employees in multiple states (due to availability of remote work). Or healthcare may be a pain point. A business may need to compete with much larger organizations or competitors in the same space (for employees).
The most common time that we see businesses moving to a PEO model is when they have 15 to 20 employees. Especially when they need to grow quickly (let’s say from 12 to 30). That’s really complicated to do if you’re not equipped with the hiring or recruiting mechanisms (like attractive benefits), or the means to reach and employ talent in different places. We bring all of that to a small company so that they can, in some ways, feel and operate like any of their largest competitors.
What sets Tandem HR apart from other PEOs?
Liz: What sets you apart? There are other PEOs out there.
Grant: Yes, and there are other good ones out there, too. I’ve had the pleasure of being in the industry for a while and working for some good companies on the other side of the fence. With Tandem HR, what I really think makes a difference for our businesses is we bring the Midwest values and pair them with a really high customer-centric approach in an industry that is marked by national competitors. We hold the same accreditations as some of the largest PEOs. We have a national footprint, but you don’t get lost in the customer experience of working with a huge PEO. Our HR Business Partners really work to get to know each and every client, understand their culture, and help them as an advisor. The technology we deploy – which is best in class – dramatically simplifies the client’s operational efficiencies.
Liz: That’s awesome! One thing that a small business owner always worries about when you partner with a larger firm is, will I be able to reach the person I need right now? Will I get that individual customer service, or will I just be on hold?
Grant: Yeah, and in this market, one other big distinction (which is sort of sensitive to Illinois) is that we have a master healthcare policy through Blue Cross and Blue Shield of Illinois. Which, we’re arguably the only one that can offer that as a PEO in our space.
Your business can grow 7-9% when partnering with a PEO
Liz: Now, I read someplace that if you partner with a PEO, the growth of your business will increase 7-9% – tell me a little about that. What’s the secret to growth with a PEO? I think I know the answer, but I want to see if I’m right.
Grant: You’re welcome to answer it if you want, but I’m happy to.
Liz: Well, I think that by taking that burden off me (the employer), I can concentrate on my job, my passion, and my skills without being overly burdened – because I got you!
Grant: That’s exactly right. So, it’s workforce optimization. We take the tasks off of your plate that would normally need to be researched, discussed, or potentially hired to deal with. And, it’s an on-demand resource while also being a liability holder. So, an example of part of our service offerings is what’s called Employment Practices Liability Insurance (EPLI). Whether or not a company uses a PEO, I highly recommend they use EPLI. EPLI is the insurance policy that protects the business from liability from employee allegations, which is obviously very prominent in the national news. Because we (the PEO) are the co-liability holder, we are the front end of defense in those circumstances because it’s our workflow, it’s our technology. Our HR guidance ultimately protects the business, and we’re a shared liability holder. So, we have a vested interest in the positive outcome. It’s not just, read this article, do whatever you want, and good luck. We’re there to help them, to defend them, and, more importantly, set them up so that it doesn’t get to that point. We protect them along the way so that they’re able to able to navigate some of those troubling circumstances.
If you’d like to explore the benefits of a PEO for your business, email marketing@TandemHR.com or call 630-468-9286 today!