When Is It Time to Leave a PEO?

Author: Saul Macias, MBA, PHR – Vice President of HR Services

When you were smaller, partnering with a professional employer organization (PEO) made sense. It shifted some tasks and liabilities off your shoulders and allowed you to afford to offer good health benefits to your employees. Most of all, outsourcing your human resources, benefits, and payroll gave you space to concentrate on growing your business.

Though co-employment had a role in the growth of your organization, many employers arrive at a point where it is appropriate to exit. Here are some key considerations as you decide whether to initiate that transition away from your PEO:

Benefits: Lots has changed in the world of benefits in the past couple of years. Offering benefits in-house would give you the autonomy to design, choose and manage your health and retirement benefits. The desire for greater flexibility in employee benefits can be a key driver to part ways from a PEO. (A lack of knowledge in this area, however, can often delay a PEO exit).

Service: As you grow, your business and your employees’ needs become more complex. In the midst of that complexity, you may find that your PEO lacks the expertise to drive and support your HR, benefits and payroll to meet your unique and evolving needs. Furthermore, a lack of onsite support or expertise to help you cover a multi-state or international expansion can be most challenging under a PEO model.

Cost /Scale: The average employer in a PEO has 15 employees. According to the Society of Human Resources Management (SHRM), the average HR professional supervises approximately 70 employees. Somewhere between 70 and 100 employees the economics may merit managing your benefits, payroll and HR in-house. But what will it take to build a team that can handle this role?

Co-employment: Under a PEO, one key area of managing your employees is done by a different company whose culture and identity could be very different from yours.

Once you have decided to exit, how do you make it happen?

PEO Transition: Working with an experienced partner like ABD can help you analyze and manage the critical transition away from your PEO. Our team of multi-disciplined experts can help you plan, select the best technology platform, build the required work flows, and transition into your new program while keeping daily operations running smoothly. We can also help you hire an internal team or uncover new options that offer more flexibility than a PEO, but still allow you to outsource some or all of your human resources function. Contact us today to explore the possibilities.

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Which Jobs to Automate – Which Must Stay Human

According to a recent article in Fortune Magazine, the brokerage firm USAA noticed that when the stock market recently plunged everyone stopped using their online services and called on the phone. How do you plan or staff for that?  What is the right level of automated services for efficiency v. losing the personal touch?  It is a challenge that faces virtually every industry.

Safety and Efficiency

One clear factor that argues for automation is safety.  For example, in manufacturing, an increase in workers’ compensation claims could be a symptom of an inherent risk in the manufacturing process that can be automated to reduce strains and accidents. Further, a business case can often be made that significant efficiencies can be gleaned from the right kind of automation.  Tesla is a shining example of how improved process design, the right level of human interaction, and robotic technology can efficiently produce a world-class automobile.  But what about service industries?

Three Cases Where Human Touch Matters

  1. The Customer Values It – In the service industry where advice is required, such as making a medical decision, a legal decision, or where to invest, the human touch is critical.  Experience, objectivity and wisdom are extremely difficult to automate and customers are not willing to accept an electronic answer in these situations.
  2. Where Multiple Factors Must Be Represented and Considered – In complex organizations where there are different factions, points of views and stakeholders, it is extremely difficult to automate decision-making or the process.  It is one thing to automate processes, it is another to gain agreement on the path forward.
  3. Holding A Single Person or Team Accountable – Once a system is automated it becomes a hardware or software issue.  Often, in order for there to be high customer satisfaction, there must be a group that is accountable.  Judges, managers, coaches – all these roles cannot be automated because someone must be ultimately accountable.  This holds true for top level decisions as well. Every successful organization knows that leadership matters.  It matters because some human must exercise good judgement and must inspire others to follow.  Automating that secret sauce is quite a way off.

So as business becomes more technical, automated, and enamored with big data trends, each organization will have to use some judgment about what can be automated and should necessarily remain human.  it is probably better to debate this is in a planning session (with other humans) before automating the wrong process and driving your customers to the competitor.

Paul Finkle SPHR, CMC – Executive Vice President, Practice Leader

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

EEOC Proposes Mandatory Collection of Pay Data

By: Paul Finkle, CMC, SPHR – President & CEO/Principal

The Equal Employment Opportunity Commission (EEOC) recently announced plans to require employers with 100 or more workers (anyone subject to EEO-1 reporting) to report pay data and provide aggregate information from employee W-2’s. We normally do not write about proposed regulations, but this one appears to have legs. EEOC Chair Jenny Yang stated that the purpose of the new regulations would be to provide the EEOC with insight into “pay disparities across industries and occupations.” The pay information would be broken down by gender, race, and ethnicity across 10-12 broad job categories.

Data on 63 million employees would be covered by this proposed regulation. The regulation would be in addition to the current EEO-1 report, which applies to employers with 100 or more employees and federal contractors with contracts in excess of $50,000. (Federal contractors with 50-99 employees would be required to report race, sex, and ethnicity data, but would not be required to report pay data.)

This new EEOC proposal comes on the heels of California’s Fair Pay Act which became law effective January 1, 2016. This legislation requires equal pay for “similar” jobs.

In short, it behooves employers to get an objective review of pay structures so that their practices are defensible and logical – as well as being internally equitable and externally competitive.

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.