Partnering with a Professional Employer Organization or PEO for HR solutions will save you hours of human resource administration. It can also translate to better benefits and a Fortune 500-style HR infrastructure for your employees. Because you are sharing resources with other small and mid-sized companies, a PEO can be an affordable solution. Finding the perfect PEO may seem like a daunting task. It is an extremely important relationship as the right PEO will feel like an extension of your staff.
Following are 9 questions every executive should ask when interviewing a PEO.
1. Who will be my daily contact? What are their background and qualifications?
Your PEO should provide a main point of contact to discuss service issues or HR questions. Sometimes, you may be assigned a full team of professionals who specialize in various areas of HR. Meet the contact or the team during the vetting process. Just like any on-site employee of yours, you will be working closely with these people. You will trust them with one of your largest company assets – your people! Get a feel for their professionalism, knowledge, and ability to handle your common employee issues and questions.
2. How often will someone from your PEO visit my office or check in?
Although the answer to this question may depend heavily on your company’s needs, the answer should be a question back to you “how often would you like someone on our staff to visit your office?” The ability to customize a program to fit your human resource needs will benefit your company as it grows and changes. If you are fortunate enough to require little human resource intervention, bar the occasional employee hire or conflict, you may agree that phone and email are acceptable means of communication. If, however, you anticipate needing assistance on a regular basis, you should be able to request on-site visits. Ask about the flexibility to change the frequency as your needs evolve.
3. Can I see a sample invoice?
Some PEOs bundle their billing into one lump fee, typically calculated per head or as a percentage of your payroll expense. When billed this way, it is difficult to understand services included in the fee. Ask the PEO if they offer unbundled billing. With line items for things like insurance premiums, training, FICA, FUTA, administrative fees, and all other services it is easy to understand what you get. Make sure you aren’t paying for products or services you will not use.
4. Do you assist with benefit and unemployment claims administration?
Make sure your selected PEO will assist employees with benefits claims questions or disputes. The PEO should act as a liaison between your staff and the insurance carrier so employees receive the maximum benefits.
Additionally, the PEO should assist your organization with unemployment claims. Because a PEO shares an unemployment rate with you, they should work diligently to ensure all claims paid out are legitimate. Ask your prospective PEO what steps they take to protect unemployment rates.
5. Will you demonstrate your technology platform?
In a technology driven world, your PEO should be able to offer you an easy and user-friendly way to store employee information. The technology exists to take your employees from the hiring process through onboarding, training, payroll submission, all the way through retirement. Ask to see a demonstration of the software you and your employees will use. Ensure it is accessible and intuitive to contribute to a positive employee experience.
6. Will you work with me to improve my workers’ compensation rate?
Your PEO should be interested in lowering your workers’ compensation rate through hands-on risk management, safety programs, and claims management. Ask what types of safety programs would be implemented or enhanced to lower injuries for your workforce. Be wary of the PEO willing to sign you on without a thorough analysis.
7. I have a good (medical, dental, 401k) plan. Can you carve out the cost of yours, so that I may keep my plan?
You may have an insurance or another plan that your employees absolutely love and appreciate. Ask if the PEO will allow you to keep a plan already in place. If they are not willing to carve this out of your fee, you will pay for a benefit you don’t use or end up getting rid of a plan your employees love.
8. What type of training and organizational development do you offer?
Your PEO should be interested in the growth of your employees. Your business is most profitable when your employees’ abilities and skills are optimized. Ask about training opportunities and organizational development activities. Understand if the training is included in your fees or available for an additional fee. Compare any fees to other training opportunities available in your industry.
9. I’ve heard of PEOs going out of business. How can I be sure that your PEO is financially solid and will not leave me liable?
There are now two certifications or accreditations you can look for in your future PEO. In the fall of 2017, the IRS created the Certified Professional Employer Organization (CPEO) designation. If your PEO is a CPEO, it means they have provided extensive financial and company background information to the IRS. The IRS, in turn, has recognized the PEO as financially sound and reliable. You can rest assured that a CPEO assumes responsibility related to payroll administration and federal employment tax reporting and payments. Visit www.irs.gov for a current list of IRS Certified PEOs.
Additionally, a PEO may opt to go through a rigorous certification process to become ESAC (Employer Services Assurance Corporation) certified. This certification is to the PEO industry what FDIC is to the banking industry. The PEOs covered submit quarterly financial and operational updates for analysis and confirmation to continue certification. If your PEO is ESAC certified, then assurance is provided through $1 million surety bonds plus $15 million excess bonds covering all clients. A list of ESAC certified PEOs can be found at www.esacorp.org.
We know that partnering with the right PEO is critical. You want to partner with an organization that aligns with your company’s values and mission. You want to partner with a PEO that is committed to your growth and profitability. We’d love to talk to you about Tandem HR’s values and mission and how we can assist your small or mid-sized business in becoming an exceptional workplace.
Contact us today at 630.928.0510, email@example.com or click on the Get Started button below to submit our FREE consultation form.