Partnering with a Professional Employer Organization (PEO) will save you money and time. However, not all PEOs are made equal. Do you know how to tell if you have a sub-standard PEO providing lackluster services?
Here are some signs that your PEO may not be providing you the service you expect:
Poor Responsiveness
When you ask your PEO a question, how long does it take them to get back to you? You should be expecting an initial response within one to two business days. Some queries may take a little bit longer to resolve if the person has to do some research. However, if you are typically waiting days to weeks for an email to be acknowledged, this may indicate that you are not a priority for your PEO.
Consistently poor responsiveness is often a sign that your PEO does not have the resources to properly handle all of their clients. It might also be a sign that they have other priorities than taking care of their clients.
Call Center
When you call the PEO with a question about employee benefits, who picks up the phone? The correct answer is a benefits administrator (or an office person who can route the call correctly).
Some PEOs try to save money by outsourcing to a call center. Unfortunately, this means that when you call, you will get somebody who only has the information provided to them in a script. While this might work for simple queries, it will significantly delay responses to more complicated ones. Not to mention the fact that routing you to a generic call center, which might not even be in the United States, shows a certain lack of respect for you as a client. As with poor responsiveness, this may indicate that they have other priorities, such as their bottom line.
Lack of Initiative
When, for example, there’s a change in the employment law in your state, how do you find out? A good PEO will proactively contact you when a change might affect your business, even if it is only a boilerplate letter sent to all of their affected clients.
Does your PEO take the initiative to make sure you stay compliant? If you are always the one who has to call them, asking all of the questions in scheduled meetings, or finding out about changes in the law from the internet, then your PEO may not be doing as right by you as you think. Remember that you are paying them to handle compliance issues for you, including keeping up with the law as it changes and develops.
No Workers’ Comp Savings
Not all PEOs allow you to sign your employees on to their workers’ comp plan. This is a significant benefit over the lower level of service, which is just finding you a good workers’ comp plan.
When PEOs provide your workers’ comp plan, you benefit from their experience modifier rate. For a new business with a claims history, this can significantly reduce premiums. Having a larger pool of people also mitigates the impact on premiums from a claim.
Unstable Medical Renewals
There’s a trick that low-quality PEOs play on their customers. They start you off with a “honeymoon rate” on health insurance. It’s excellent. Then renewal time comes around, and you are facing a double-digit increase in rates.
Sometimes increases may happen if you have filed a lot of claims; a PEO can reduce this but never quite eliminate it. But if there’s no other good reason for the increase, then it is likely there was a bait and switch.
How to Handle Lackluster PEOs
So, what should you do if your PEO is not giving you the service you expect? You have two choices. You can sit down with them, explain your issues, and try to get them resolved to your satisfaction. If that doesn’t work, you can change PEOs to one which offers better service.
With issues such as lack of responsiveness or initiative, you can often work with the PEO to improve things over time. However, suppose your PEO does not give you access to their workers’ comp plan, use a call center, or jack up your health insurance rates. In that case, these indicate a problem other than lack of experience or mismatched expectations. At that point, it is time to partner with a different PEO.
A best-in-class PEO will give you none of these problems and, indeed, will offer the kind of personalized service you need to grow your business.
