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Employee Management Help For Business Owners

HR Outsourcing Firms Ease The Pain

Business owners and executives have many areas of their business to focus on. Opening the door every morning with a to-do list of tasks is challenging enough, having to be concerned with employee administration and compliance can be overwhelming for most. A recent article in The NY Times highlights some of the issues facing corporations larges and small. 


Look at the wide-ranging duties of human resources, it’s no wonder that companies are seeking outside help. “H.R. is supposed to be responsible for finding, developing, retaining and training the best people,” Suzanne Lucas, author of a blog called the Evil HR Lady. “It can also be responsible for benefits, compensation, employee and labor relations, business partners, data collection and legal issues.”

Fortunately, there are companies whose mission is to help small and midsize business owners and executives comply with the myriad of local, state and federal employment regulations.

Human Resource Outsourcing is a broad term that defines the performance of an HR service by a third party provider. It could be simply an ASO - Administrative Service Organization that provides a single service such as payroll processing, COBRA or 401k administration. Some are Information Technology firms who have developed software programs to ease the burden of employee administration and HR compliance. Many HRIS - Human Resource Information Systems, Labor Management, Recruiting and Staffing software platforms can be customized to the requirements of any businesss or association. Some firms offer a hybrid of technology combined with professional HR support services.

Employee leasing or  PEO - Professional Employer Organizations deliver a comprehensive integrated model called co-employment which enable business owners and corporations to transfer most of their personnel administration, benefits and human resource compliance to a qualified HR partner. The entire focus of these companies is making sure your business operates a safe and secure workplace, and complies with all of the latest employment rules and regulations.

“Outsourcing firms can take up various tasks, from payroll to benefits to recruiting, to free up a client to focus on its strengths, said Don Weinstein, senior vice president for product management at ADP, a large H.R. outsourcing firm. The new health care reform legislation, for example, will have a big impact on employers, some of whom may be overwhelmed by its complexities.”

It is important that business owners, executives and HR directors determine what services they require today and in the future, or as I like to say “identify what’s broken”. There are many providers to choose from, offering different HR service models and pricing formulas. Trying to identify the right fit for your organization can be a daunting task, but once you do, you will never go back to managing your employees on your own.


Employee Leasing for Franchise Business Owners

PEOs Offer Employee Management Solutions for Franchise Owners

While attending the 2012 Franchise Expo South at the Miami Convention Center, I was amazed to see all the new and exciting franchise opportunities that were present this year. Every aisle featured a wide array of franchise enterprises offering almost every category of business and consumer products and services. The Expo represented a who’s who of the franchise industry.

Exhibitors included well known veteran operators like Baskin-Robbins Ice Cream and Sign-A-Rama, as well as two new entrants from Palm Beach County, FL. The Original Brooklyn Water Bagel Company and Hurricane Grill and Wings, were rolling out fresh new restaurant concepts with delicious and original menu items that are sure to please the entire family.

A variety of personal service concepts were on hand, from accounting and financial services to health care, home care, and personal security, to beauty services and spas. There was one common theme throughout—the franchise industry was alive and well despite a weak economy and tight credit environment.

The Advantages to Owning a Franchise

The advantages that successful franchise systems offer are numerous. First time business owners acquire a franchise system’s time-tested formula. Individuals willing to invest their time and money can purchase a recognized brand within a protected territory from an organization that provides training, marketing support, and a proven business model.

There is no shortage of potential franchise business owners either. The economic downturn and high unemployment has created a large pool of potential entrepreneurs yearning to operate their own business. Thousands of returning American Veterans can take advantage of special financing and training programs from over 400 franchise systems who participate in the International Franchise Association’s VetFran (www.vetfran.org) program.

Leading franchisors help entrepreneurial servicemen and women, and inexperienced business owners to hit the ground running by offering a “turn-key” operation. The franchise team supplies all the required expertise, guidance and support, beginning with site selection through vendor relations, making certain that every new franchisee is generating revenue from day one.

Congratulations Franchise Owner - Now What?

Most franchise systems help franchise owners get up and running. They provide the model and the franchisee operates the business. However, many franchised business models can’t operate without employees, and many owners have never recruited, trained or managed a workforce before. Fortunately, small business owners can turn to HR outsourcing companies, called professional employer organizations, which can pick-up where the franchise system leaves off. PEOs or staff-leasing firms assume many of the employment responsibilities that franchise owners must contend with.

The majority of new franchise operators are unaware of the myriad of Federal and State laws imposed on small businesses today. Failure to comply with labor and wage and hour rules, submitting timely payroll reports and tax payments can result in severe penalties and fines. Defending your firm against a wrongful termination, independent contractor dispute, or sexual harassment can lead to expensive litigation, and have a catastrophic effect on your bottom line. All too often, a business owner hires a ‘bad apple’ whose behavior causes accidents, costly claims, and disrupts your ability to maintain an engaged and productive workforce.

PEO - Not Just a Payroll Company

Just as a successful franchise system provides a “One Stop” solution for operating a business, employee leasing and PEO companies are the answer to managing franchise employees. They are true HR companies providing comprehensive human resource services to employers under a co-employment agreement. Franchise owners operate the business, while the HRO or PEO acts as the administrative employer of record.  Employment-related reporting, HR compliance, payroll administration, workers compensation and workplace safety are handled by an experienced staff of HR and payroll professionals. Highly trained safety engineers and risk managers are assigned to examine and evaluate any worksite for potential hazards.

Another advantage employee leasing and professional employer organizations share with the franchise industry is that they both achieve economic efficiencies by bringing together large numbers of subscribers. By serving thousands of small business owners, many PEOs offer franchise operators a wide range of discounted insurance programs, employee benefit plans, and workers’ compensation coverage at significant savings to small business group rates. Franchisees gain a high level of HR and safety expertise, valuable employee benefit and incentive programs, and the latest HRIS technology at one low cost. Outsourcing your tedious and non-productive employee administration responsibilities to a comprehensive HR company is a win-win for the franchise owner and franchise employee alike.

For additional information click here.


PEO Group Health Insurance Premium Renewal Rates Increase

Professional Employers Experience Double Digit Increases Again

Group health insurance premium renewals are going out and the reports are not encouraging. It’s that time of the year when employee leasing companies and professional employers send small business owners their new health rates for the coming year. Employers across the nation are being told what to expect, and it’s not exactly what they want to hear. Especially now, when the economy is starting to stabilize.

Many of our small business clients who have been relying on their PEO partner to keep their health insurance rates low, are finding out that it’s no longer the case. Business owners with some of America’s best known and largest human resource outsourcing firms, Administaff, ADP Totalsource, and TriNet / Gevity HR have experienced another round of double digit increases. CFO’s and HR managers have complained about increases from Alphastaff HR, another “Top 10” provider. Their clients renew in September, and a few said they received cost masters with 35% rate increases across the board from Aetna.

Bait and Switch?

Many of our small business clients are learning that some of their health plan choices have been replaced with new healthcare plans that offer more limited networks with fewer in-network providers, or of medical plans that are restricted by geographical location. Just last week we were contacted by a primary care practice with 3 offices in West Virginia. They told us how  their current PEO had just informed them that an entire network of plans was  being eliminated. The majority of their employees will be left with just one  option, and a very expensive one at that. Needless to say, they are now looking to us to help the doctors find a better option for their staff.

It May Only Be RoundOne ?

The worst may be yet to come. September through January is when over 75% of group health insurance plans are set to renew. This includes most of the nation’s largest and most successful staff leasing, HR outsourcing, and professional employer services firms. Yet to announce their new health plan renewals are leading HR and employee benefits providers Advantec HR, Oasis Outsourcing, and SCI Staffing Concepts, who are scheduled to renew in the month of October, Frank Crum’s health rates are good until November, and Accord HR and Fortune Business Solutions renew in January 2011.

It is important to note that while these industry giants, and their highly compensated employee benefits advisors, are still battling it out with their health insurers, the fate of hundreds of thousands of small and midsize businesses are being decided. Combined, these PEOs and employee leasing companies represent about two hundred and fifty thousand (250,000) business owners and about five million (5,000,000) employees nationwide. Let’s hope for the best.


Choosing HRO and PEO Companies - What is Most Important?

HROs and PEOs - It’s All About PEOPLE

Human resource outsourcing and professional employer organizations provide SMEs, small and mid-size companies with a wide range of valuable administrative, professional, and technical services, whose functions can be burdensome, and disruptive to an organization, if not handled appropriately. Everyday we work with clients to assist in their evaluation and selection of HR outsourcing providers who can not only provide the level and quality of services that will enable our clients to operate more effectively and efficiently, but will develop into a mutually rewarding long term partnership.

In the course of our evaluation process, we examine all of the important functions that a company transfers to the professional employer or employee leasing company. We will look closely into their payroll application and HRIS human resource information system. Usually we arrange a demonstration, so that HR managers and payroll administrators can test a program’s ease of use, flexibility, and experience the power of the HR platform first hand.

We will evaluate and compare each PEO’s employee benefits plans, examining group health plans, dental and disability coverage, and 401k retirement plans. When workers compensation is a challenge, we’ll call for an on-site risk assessment, and go over loss prevention programs, risk avoidance and management systems, as well as OSHA reporting. Usually during the process, a business owner or HR executive will ask “With all of the critical factors we use to evaluate a professional employer organization, which is the most important factor to consider? The answer for me is a simple one.

  It’s All about the PEOPLE.

I agree that there are many important parts of a HRO or PEO operation that requires careful consideration, but nothing in my professional opinion, is more important than the professionals and support staff who routinely handle the tasks of payroll, benefits and HR administration, making certain that everything operates smoothly and error free.

Business executives and HR managers are keenly aware of the important role that technology plays in the administrative process. However, when someone presses the wrong button or adds an extra zero, it can create a world of chaos in any organization. The only solution, a quick and effective response by a capable and coordinated team of professionals who are available 24/7 to handle any potential issues.


How Do You Compare PEO Rates - Part 3 of 3

Welcome back. If you have been following our last two posts, we asked our readers to participate in a quiz. We are at the final phase of comparing PEO quotes from three different professional employer organizations. Our goal is to determine which PEO has the lowest rates. The answer may have surprised many of our readers. If this is your first visit, click on the link to Part 1, PEO Pricing - Smoke and Mirrors?

Congratulations!!! If you answered # 4 None, you had the correct answer. Did you get it right? What did you think of the answer? In part two, we compared the employee leasing proposals between companies A and B. Today, we are going to compare the rates of PEO C with our other two employee leasing companies.

Level the Playing Field Before Starting a PEO Rate Comparison 

In part 2, we learned that PEO’s A and B actually have the same rates by class. The format used to show the billing charges were different, but the rates by employee class add up to the same cost for professional employer services.

Our example on the right shows the employee leasing burden for employees by class. For office workers, the total rate for PEO A is 16.70% vs 116.70% for PEO B. The same is true for sales 17.50% vs 117.50%, and for delivery 26.45% vs 126.45%. The basic difference is in the way it is presented to a prospective business owner.

Since we now know that PEO A and B have the same cost, all we need to do now is compare  rates for employee leasing company C. Unfortunately, they are presenting our client with a blended proposal that shows a combined staff leasing burden for the entire company.  In this case, PEO C is charging 119.05% of payroll or 19.05% added to payroll. How will we be able to figure out which PEO has the best rates?

 Blending to Compare Employee Leasing Company Rates

We know that PEO C has, not only bundled their rates by class, as PEO B has done. They have gone a step further and “blended” or combined the three workers compensation classes into one. Let’s see what happens when we do the same thing with the proposal from PEO B. When we add up the payroll for office, sales and delivery, the combined payroll adds up to one million dollars ($1,000,000).

The next step is to calculate how much of the total payroll each employee class represents. Our example above shows that office employees total $300,000 in payroll. When divided by the total million dollar payroll, you get .30 or 30% of the payroll. Using the same formula, the sales department represents 50% of the payroll, and the delivery department makes up the remaining 20%.

Now that we have calculated the percentage of the total payroll for each employee class by workers compensation, it is time to multiply each rate class by their respective percentage of payroll.

In the example to the left, we have identified the three payroll classes, the PEO billing rate, and the percentage of total payroll. We know that office workers represent 30% of the total payroll, and that the rate is 116.70%. When we multiply the PEO rate by the percentage of payroll the answer we arrive at 35.01%. Let’s do the same calculation for the Sales and Delivery departments. Sales equals 58.75% and Delivery equals 25.29%. When we add up all three deparments together, the answer we get is 119.05%. As you can see, all three PEO quotes show the same total billing rates in three different formats. How many of you came to the same conclusion?

Does this mean that the cost for all three PEO companies will be the same? Not necessarily, but that is a topic for another post. Look for our next revealing installment about the secrets of the Professional Employer and HR outsourcing industry, and the games that some employee leasing companies play.