One of our partners, Kim Runyen from TriNet, wrote this post on September 23, 2015 for the TriNet blog.
As an entrepreneur, you founded your business because you are passionate about the product or service you provide the world. However, on the road to success, you probably found that your time spent pursuing your passion is crowded with other common business needs – such as marketing, accounting and – the big one once you hire your first employee – human resources.
While it may be overwhelming to think of tackling all aspects of your business, while still trying to achieve your dreams, the good news is that you don’t have to worry about everything on your own. A good professional employer organization (PEO) can handle your HR needs, helping to keep you compliant and on top of the ever-changing world of HR, while freeing you to focus on the many other aspects of running a small business. A PEO is a company, such as TriNet, that takes care of your payroll, benefits, compliance support and other HR needs.
But finding the right PEO to act as your company’s “co-employer” is a big step. Before you put your trust in an HR solution, perform a due diligence check on the PEO company you are considering.
1) Be sure the pricing makes sense
In the PEO market, a price that looks too good to be true probably is. A PEO that advertises unrealistically low initial rates may increase its costs dramatically within a very short period of time. Ask yourself – and them – where the profit margin may be hiding from you. Keep in mind that you don’t want to just look at the price you are paying but at the value of the service. Weigh the cost of partnering with the PEO against how much it would cost you – in money, time and possibly disastrous HR mistakes – to try to perform HR tasks internally. When it comes to PEOs, the cheapest option frequently isn’t the best one.
2) Make sure their HR offerings are designed for a workforce that resembles yours
A PEO that mixes your healthy, careful employees with other employers’ hard-living, high-risk employees almost guarantees that your health insurance and workers’ comp rates will skyrocket.
Along the same lines, even something that sounds as if it ought to be pretty basic, such as payroll, ends up working much differently for some types of workers than for others. Payroll needs for a salaried vice president who receives bonuses will not be the same as payroll for an hourly factory worker.
3) Check that they have a solid benefits package
To make the cut, PEO candidates should offer a benefits package that:
– Provides coverage for new hires soon after they start working.
– Has no pre-existing condition exclusionary clauses.
– Contains no individual underwriting.
– Offers guaranteed issue coverage.
4) Look for a quality provider network
Your employees need a PEO that has a stable health care provider network and modern administration systems. If you have any employees working out of state, picking a PEO with a national presence is also important.
5) See if the PEO employs solid professionals within its own organization
Does the PEO you are considering have the expertise to deploy human resources managers who understand the specific HR needs of your industry? If your PEO’s HR managers haven’t provided services to workers who look like your workers – in your industry – you may encounter some sticky problems down the road.
6) Opt for a PEO with cloud-based products and services
Cloud-based HR services and other cutting-edge technology offerings are vital to keeping you and your workforce productive. Look for a PEO that invests in offering software and apps that help you easily and efficiently manage your basic HR needs from anywhere, at any time.
7) Check references
Can your PEO provide valid contact information for satisfied clients with HR needs that are similar to yours? Call these references and ask them questions about their experience working with the PEO. Are they trustworthy? Knowledgeable? Is the value they’ve received worth the investment? Will they be able to service your business long-term as you grow?
8) Make sure your PEO is accredited
Not all PEOs are created equal and you need a financially sound partner whom you can trust. Accreditation by the Employer Services Assurance Corporation is the PEO industry’s gold standard for verifying a PEO’s financial reliability, as well as compliance with industry ethical, financial and operational best practices.
When you are ready to start researching ways to meet your HR needs, send an email to HR@gan.co. We’ve partnered with TriNet to offer startups the best deal ever given to a group of startups on HR services like payroll and health benefits.