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Thursday
Dec042008

Common Mistakes of Shopping for PEOs and Employee Leasing on the Web (Part 3 of 3)

Bruce Silver, Founder

Third of a three part series.

 What is Behind Door Number # 1, 2 or 3? 

When searching the internet for a PEO, it is important for a busy executive to have some idea of what your needs are, and understand the process you are about to undertake, before starting on your virtual journey. We have identified three types of websites that Google and Yahoo link to when searching for employee leasing or professional employer organizations. The first type of website that visitors will encounter are “Provider” sites, next are “Leads” sites, and last but not least, websites of PEO “Brokers” or consultants.

Is your company among the thousands who are looking for affordable health insurance coverage? You probably have read that professional employer organizations can save business owners 20% to 30% on their health insurance premiums because of their large group health plan. While this claim may be slightly exaggerated, the fact is that less then 10% of all professional employer organizations actually have a master group health plan.

 Door # 1 – Are You A PEO Provider?

So how do you know if the website you visit belongs to a true employee leasing or professional employer organization? Look for logos of national and local industry associations like NAPEO, ESAC, FAPEO and others. At the same time, logos from payroll or staffing associations may mean the company is not focused on providing comprehensive human resource services or the “Fortune 500” benefits plans you want.

The “About Us” section should identify the management, their background and expertise. Are you looking for a company that offers a true “master” group health plan? Click on the employee or benefits section to see what types of employee benefits programs are available. Don’t be fooled by insurance company logos. Linking to the websites of Aetna, Blue Cross, or any of the national or regional health plans networks, does not indicate that a company has a large group health plan to offer.

Many PEO’s claim to save you money because of their “large group purchasing power”. In reality, all you get is their insurance broker shopping the market. You may be better of with your own broker. It is important to read between the lines. Here are a few examples:

We offer customized, tailored benefits programs, suited to meet each of our clients’ needs, objectives, demands, and budget. We negotiate contract renewals or we handle receipt of carrier billing and payments.

Be prepared to ask tough questions when you contact the PEO or employee leasing company. Ask about renewals and underwriting. Remember that you will be speaking with someone who represents only that company, and it’s their job to “close the sale”.

 Door # 2 – You’re Leading Me On?

Next stop on our virtual tour are the nefarious “Leads” websites. Many of these websites are very attractive, easy to navigate and usually feature information taken directly from websites of established companies (without their knowledge). A typical example is the website SmallBusinessExpo.com. Notice the last sentence at the bottom of the page:

Are you Gevity? Call to customize this page at no charge. Contact us by phone or email.

Google links to obvious “Leads” websites like BuyerZone.com and Staffmarket.com. It is relatively easy to see that these sites collect your company information and sell it to the highest bidders. Many “Leads” websites provide visitors pages of information on topics relevant to employee leasing such as payroll processing and workers compensation. Often the articles are written offshore or copied from legitimate HR blogs and websites.

Websites carrying ads from Google is another clear sign to move on. Why would any employee leasing, PEO or HR company want a competitor advertising on their website? Beware of companies who consistently rank first or second place in Google or Yahoo. In a recent search of Google for employee leasing, the first position linked to wiseGeek.com. wiseGeek is owned and operated by Conjecture Corporation of Sparks, Nevada, who “creates and manages a portfolio of informational and entertaining consumer web sites”.

Door # 3 – PEO Broker, Who’s Side Are You On? 

Our last stop takes us to websites of “Brokers” or consultants specializing in employee leasing, HR outsourcing and the professional employer industry. You will find there are exceptional professionals across the country, many have years of industry experience, with backgrounds in accounting, banking, and insurance. But, how will you know if you have found a qualified consulting firm or PEO brokerage that will help you find and negotiate for a suitable provider? My best advice comes from President Ronald Reagan, who when dealing with the USSR on nuclear disarmament said; “trust but verify”. 

“Brokers” websites typically offer business owners and executives a choice of leasing firms and PEOs to select from. Some consultants specialize in a particular region of the country, or have experience with certain industries. The demands and requirements of a client in the trucking business are not the same as those of an IT company. An industry professional will know exactly which PEOs to contact for a proposal. Ask the firm for their years in business, background, industry experience and expertise, and how they are compensated.

Website testimonials may indicate client satisfaction, but it is always a good idea to ask for, and follow-up on references from both their clients, and the companies they work with. LinkedIn members can access groups dedicated to the PEO industry where you can ask industry professionals about a particular broker or consultant’s reputation. Buyer beware is the rule of the day when shopping for payroll, HR outsourcing and professional employer services.

Tell us if we removed some of the bumps on your road to finding the right employee leasing company or professional employer organization for your business.

 

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