The first step in any buying decision is to understand exactly what your company needs. In the case of a PEO, are you looking for health benefits? COBRA administration? A seamless cloud-based platform to keep HR information organized?
It’s also important to look for an organization that fits your budget and can support your growth. That is one of the major advantages of working with a PEO: It can help your organization grow from an administrative perspective.
We spoke with business owners and CEOs to identify what deciding factors are most important when choosing a professional employer organization.
Payroll and Employee Benefits Administration
It’s not surprising that payroll and employee benefits administration rank among the top reasons why business leaders choose to partner with a PEO. Managing these functions is a major feat for any business, especially small businesses with limited money and resources.
Maxime Bouillon, co-founder and CEO of Archie, told us that working with ADP TotalSource helped simplify HR tasks so he could concentrate on expanding his business. In the buying process, he put an emphasis on taking care of employee benefits, payroll and compliance.
“From my perspective, in the business world, entrusting payroll and compliance management to another individual feels like a welcomed relief that frees up your time to focus on the core aspects of growing your business,” Bouillon told us.
In addition to freeing up your time on payroll and benefits administration, PEOs are especially valuable for small businesses that want to access competitive yet affordable employee benefits.
For example, one of the biggest reasons why Steven Rothberg, founder of College Recruiter, chose to partner with Insperity was because he wanted to provide his small team with top-of-the-line benefits.
“In addition to it simply being the right thing to do, we felt that [offering comprehensive benefits] would lead to better recruitment and retention, and it has,” said Rothberg. “We’ve heard from a number of employees over the years that a key factor in them choosing to join us instead of accepting a job offer from a rival was that we offered better benefits.”
In your search for choosing a PEO, review their payroll features and potential benefits offerings.
Compliance and Risk Management
Another critical feature to asses when choosing a PEO is its ability to help with legal compliance and risk management. Some PEOs specialize in certain industries, providing you with focused industry support. Look for a PEO that can help address your specific compliance needs.
Daniel Vasquez, owner of Dynamic Auto Movers, quickly realized just how vital risk management was when he partnered with Insperity.
“At Dynamic Auto Movers, we’re growing fast, and staying compliant with ever-changing labor laws can be a nightmare,” said Vasquez. “With Insperity, we didn’t just get HR support; we got a built-in safety net that shielded us from costly mistakes, like misclassifying employees or missing a compliance update. This saved us from potential legal headaches down the road.”
Simon Lee, CEO of Glance, shared similar insights when choosing a PEO for his mobile app development company. He needed legal and compliance support to employ developers in different countries.
“We operate in several states and countries, and the employment laws are different in all those places, which was something other than what an in-house team could manage,” said Lee. “The PEO’s capacity to manage international compliance and quickly bring new talent on board was precious as we grew.”
Platform Usability and Scalability
When choosing the right PEO, it’s important to consider how user-friendly and scalable the platform is. You want an HR solution that can be easily utilized by your workers and incorporated into current and future processes.
“If the PEO’s platform is not user-friendly or if it is not easily customizable, then it may end up hampering your productivity rather than helping it,” said Lee.
When you’re choosing a PEO, consider your current and future needs. As your company changes and more people are brought on board, your PEO should be able to scale with you.
Customer Support
A factor that can make a world of difference, but is often over looked, is a PEO’s customer support. This includes the implementation process as well as ongoing support. Vasquez and Bouillon both noted this as a key factor to consider when choosing a PEO.
“I advise anyone considering a PEO to ask about how proactive they are in setup, not just how fast they’ll respond when things go wrong,” said Vasquez.
Bouillon echoed similar advice, stating that good customer support is essential.
“Spend time looking into the providers reputation and customer support services before making a decision, because they play a role in determining how successful the overall experience will be for everyone involved,” said Bouillon.
A great way to test the usability of the PEO platform is to perform a demo with the vendor before committing. During this demo, ask about scalability to ensure the PEO can evolve with your business.
“Scalability was crucial,” said Bouillon. “Having a partner that could evolve with us was essential for our growth journey.”