The Professional Employer

  To run a business, you need a grasp of current employment practices, a detailed employee handbook, and to comply with all federal and state labor regulations. A Professional Employment Organization (PEO) can manage these administrative responsibilities and free up your in-house resources to concentrate on growing the business.

Hiring PEO services involves more than simply passing your HR responsibilities over to them: the PEO actually become a co-employer of your personnel. As the legal “employer of record” for your entire staff, the PEO hires your employees and leases them back to you. They then use their own tax ID to submit payroll records and file taxes, offer benefits, and secure workers’ compensation insurance.
So what does a PEO offer?
A PEO vendor brings the four core competencies of business to your organization:

Safety and risk management: If you’re looking for the key selling point of PEO services, this is it. PEOs assume liability if somebody gets injured on the job or accuses a co-worker of harassment. They also ensure compliance with all employment laws and OSHA regulations, and assure there’s no discrimination of age, sex, or race in the hiring and policies.

Payroll processing and taxes: PEO services take responsibility for your payroll taxes and responsibilities. This includes distributing paychecks, processing direct deposits, deducting taxes and retirement account funds, and sending out year-end tax statements.

Benefits administration: Saving money is a top concern for every business, and PEO vendors help tighten purse strings with discounted rates for health and dental insurance, disability plans, life insurance, employee retirement plans, and COBRA.

HR management: PEO vendors ensure compliance with ever-changing federal and state labor regulations. They help create employee handbooks and training documentation and place updated labor law posters where staff can see them. They also help recruit new talent by advertising for open jobs, prescreening candidates, and conducting background checks and drug screenings.
What’s the Cost?
The costs of PEO services can vary greatly based on industry and the package of services rendered. In addition to an initial setup fee - usually $1,000 to $5,000 - PEO vendors charge 3% to 6% of each employee’s gross salary per pay period. They may also charge additional fees for some payroll services, recruitment methods, and training, or bundle all services into a single package.

  Matthew Bandyk of U.S. News & World Report offers this advice to small buisnesses preparing for a recession:

Spend more time talking to your customers and less time listening to the talking heads on television. Don’t be afraid of the future—take charge of it by asking your customers what’s going on. This economy is not going to shut down. If we’re in a recession, it doesn’t matter. People are still going to buy stuff. It’s our job to give our customers the maximum opportunities to pay from us. That might mean we’ve got to work a little bit harder. We’ve got to manage our businesses a little more efficiently.

One way a small business can become more efficient is to outsource payroll and employment compliance inssues to a Professional Employment Organization (PEO).  Payroll and HR functions do not generate profit.  They are simply time consuming liabilities.  By outsourcing these functions small businesses avoid potential budget-busting payroll & compliance errors.  Plus relieving your business of these responsibilities frees you to concentrate on increasing sales and improving customer satisfaction.

  As I’m sure you are well aware by now, I advocate the benefits of small businesses outsourcing employment and payroll responsibilities to Professional Employment Organizations.  However I do not advocate small businesses outsource blindly.
Not all PEOs are created equal.  Some PEOs are self-insured. That allows them to offer workers comp coverage at a lower rate than other organizations, but there is a downside. The Houston Business Journal recently reported on the hazzards of self-insured groups:

Small business owners are not aware of the financial risks involved in obtaining workers’ compensation insurance through self-insured groups, according to a new study by Opinion Research Corp.
Eighty-five percent of the 501 small business owners and managers surveyed nationwide by the Princeton, N.J.-based research group said they hadn’t seen, read or heard about the closure of several self-insured trusts last year. Seven such companies failed this year in New York, and litigation continues in the financial failures of groups in Tennessee, Kentucky and California.

Before outsourcing your employment and payroll responsibilites please do your homework. Confirm whether or not your Professional Employer is self-insured. Then decide if you can afford the risk.

  If you deal with people, you will, sooner or later, have to deal with conflict. Since no two people view the world exactly the same way, disagreement is quite normal. In fact, anyone who agrees with you all of the time is probably telling you what you want to hear, not what he or she actually believes. The real question isn’t how to avoid conflict, it’s knowing how to work through it.

Conflict between employers and employees can lead to arguments, misunderstandings, and miscommunication which are some of the biggest time-wasters in the workplace. Every minute spent on “drama” is a minute of productivity lost by the employer. Left unmanaged these conflicts can lead to bad feelings and even violence. This makes conflict management critical to avoid arguments and ultimately litigation.

Conflict can be avoided if steps are taken early in the employment relationship. Efforts spent on quick conflict resolution have proven to be the most cost effective measures for reducing and eliminating claims. Professional Employment Organizations (PEO) can help you with these problematic, interpersonal areas. Why use a PEO? Because sometimes, conflict between your employees can have legal implications involving harassment, discrimination, and employee rights. A PEO will consult with you about employment laws regarding these sensitive topics and in some cases act as an intermediary.