The most comprehensive HR outsourcing solution is a Professional Employer Organization (PEO). But not all PEOs are created equal. You may have been sold on a PEO that didn't meet your expectations. Now, you're looking for a new PEO and can choose from over 480.
With that many options, you must narrow down your choices. Creating a list of your potential PEOs can be done in a three-step process: deciding on a national or local PEO, finding a list of relevant PEOs, and vetting the PEOs remaining.
Local vs. National PEOs
The first question that must be answered when you're considering a PEO switch is whether you want to join a local or national PEO. While there are pros and cons to each, it's important to understand your specific needs so you can make the right decision.
National PEOs
National PEOs are often headquartered in a different state with regional offices across the country. These PEOs have recognizable brand names because they spend a large amount of money on advertising.
However, they have to charge clients more to cover their massive advertising budget. They also have to charge more to staff and maintain those regional offices. And you're likely to get less personalized service because national PEOs tend to use off-shore call centers to reduce their expenses.
Local PEOs
Local PEOs are usually headquartered in your state or at least in your region. A local PEO has the same regulatory environment as you.
They have extensive knowledge of how to maneuver in your market because they are a small business in your community, just like you. Local PEOs can also charge less while providing the same services as a national PEO because they do not have the same amount of overhead.
Finding PEOs
Your next step is to find PEOs that match your criteria. There are three ways you can do this.
Referrals
Referrals are recommendations you get from other business owners or people you know who use the PEO. Referrals are one of the best ways to find a PEO since they are or have been a customer and will have in-depth knowledge about the services a particular PEO provides.
National Association of Professional Employer Organizations
The National Association of Professional Employer Organizations (NAPEO) is another great way to find your next PEO. You can use their search function to filter out PEOs that aren't relevant to you.
Steps:
- On NAPEO's homepage, go to "Find a PEO"
- Under "Find a PEO Search" is a dropdown menu of states
- Select the state your business operates in
- Press the "Search" button
Another way to find your next PEO, though providing you with less detailed and personalized information, is to use Google. Search your state + PEO and you should get many results. Review the first page or two of the results and note any PEOs mentioned that catch your eye.
Vetting PEOs
Your final step is to vet any PEOs you think might fit your needs. This is the most important and time-consuming part of finding your next PEO.
PEO Website
The first place to go is the PEO's website. You want to make sure you review the information they provide and make sure you feel comfortable with the services they offer.
Items to look for:
- Do they have transparent pricing?
- What is their client retention rate?
- Where are they located?
- What kind of HR software do they provide?
You want to look for PEOs that only charge a single price for their services. Worrying about add-on costs adds extra stress and financial strain to your decision. Weed out any PEOs who do not provide straightforward pricing.
Contacting PEOs
Any PEO you're considering should offer you a free consultation and even let you see their HR software. You want to make sure the software gives you the tools you need to effectively manage your business, including payroll, personnel files, benefits administration, and more.
When you contact a PEO, you can ask more detailed questions and questions specific to your business. You should also ask for references. Speaking with existing clients can give you a good picture of what your life would be like with this particular PEO.
You also want to know what cost savings the PEO can provide you. PEOs should be able to provide you substantial cost savings for healthcare, but make sure you also get cost reductions on workers' compensation insurance. Not all PEOs provide access to discounted workers' comp plans. Also, check on their retirement plans and administrative fees.
Finally, you'll want to know the experience of their HR staff. You're going to rely on their HR experts to help you navigate complex situations. You need to trust that these HR experts have the knowledge and resources necessary to help keep your company out of legal trouble. Avoid PEOs who cannot provide you with HR experts who have at least three years of experience in the field.
Choosing a PEO
This seems like a tedious process, but choosing a PEO is not a quick or easy decision. After you have gathered all of the information necessary, compile it and review it. Give yourself time to look it over and trust your instincts. Comparing PEOs against one another should give you a clear answer of which PEO should be your company's next partner.
