Business is fast-paced, and just keeping up can often be a full-time job. The worldwide COVID-19 pandemic has convinced businesses that dramatic legislative changes can change the landscape in a matter of hours, not months.Add to that, business growth which should be a hugely exciting time within the business cycle, and you likely meet with lurking, unexpected Human Resources challenges if you are not prepared,enter–Professional Employer Organizations or PEOs.
PEOs are the equivalent of outsourcing andexpanding your human resources functions with an expert within the HR space. A partner, who, depending on your current HR capability, can upgrade you from the equivalent of a horse-drawncarriage to long-distance electric vehicles almost overnight,that is, if you align yourself with the right PEO. Thatis why I always encourage business leaders to treat the process as if they were hiring for their most strategic position.
Hire for Culture
As with any executive hire, finding a candidate that shares a similar vision or mindset about the role of Human Resources can be the most critical piece of the process when hiring a PEO.
This is (hopefully) going to be a longterm strategic partnership. Rarely would you hire someone who you don’t like. Take the same approach here.Hire a PEO that aligns with your vision of what you think your HR department should be.
The beauty of aligning with a PEO is that you can skip the step of investing time and effort into aligning and tweaking and skip right to high levels of functionality
Are you looking to innovate your people’s operations, or are you simply looking for someone to take the transactional work off your plate? If you are like me, nothing gets your mind whirring like adding major capabilities to an essential function. Waking up and finding yourself aligned with a PEO who is transactional-based will leave you with an empty feeling when trying to leverage your newfound creativity within your HR functionality. Doing your due diligence upfront by interviewing your potential business partners for their internal culture, creativity, and innovation levels will ensure you are getting exactly what you want in an HR department.
Hire for Expertise
Not all PEOs are created equal. Some specialize in retail others in the manufacturing sector, whilesome are experts in navigating a unionized environment. Whatever your needs are,it is important to have a keen understanding of where a specific PEO’s expertise lies. As we all know, hospitality-based employees will have a completely different expectation of the HR function than a tech firm might. Where the latter employing a predominantly non-exempt workforce with a heavy emphasis on internal guest-service training, and the former hiring primarily exempt professionals with a highly specialized skill set.
Intricacies of the payroll process alone may assist you in making this determination. Do you have multiple, complex pay calculation processes combined with even more intricate state and local paid-time-off laws? You should feel as if you are hiring an expert when partnering with a PEO. If you feel that you are having to train your PEO on the details of your operating state’s payroll laws, it may be time to align yourself with an expert who requires a little less hand-holding.
Hire for Technology
Often times, PEOs will compile multiple pieces of various technology platforms, package them together, and offer them to you as a unified solution. As your business grows, the level of functionality contained within this platform can be huge in terms of what it allows you to accomplish from a business perspective.
Let’s consider the rather routine HR task of managing benefits. Your company goes through an acquisition and is now responsible for offering the company benefit plans to over 500 new employees, and then proving said offer occurred by reporting-out on an end of year 1095-C form. During this process, you discover that your PEO’s technology is not quite as seamless as you had hoped. The offer would now be made manually, along with discovering that this particular PEO has no ACA reporting capabilities. You’ll be left with taking that information to another vendor, or worse, tracking the 1095-C data manually.
I’ve worked with peers who leveraged a PEO in an effort to enhance their workforce management capabilities (i.e. scheduling and time keeping). They entered into an agreement with a Professional Employer Organization who had compiled their own unique solution by assembling functionality from multiple technology suites. This sounds great in theory, yet upon further consultation, they discovered they had given up some essential administrative capabilities with their new scheduling platform by pairing the HR data within a separate system. While they were able to work around this to get up and running, there was a general lack of expertise on the PEO’s part by not fully understanding the technology and its interaction with other platforms, coupled with the additional workload of identifying and solving for a problem created by technology. It was only after making an on-site visit to another customer that they realized what the scheduling system could do. After this, they were going back and challenging their PEO to figure out how to make their setup do the same.
Technology can be the lone difference between an HR department that is the envy of all others, and one that makes the entire HR team loathe reporting for work every day. Be sure to ask specific, direct questions of a solution’s capabilities, and continue pressing for concrete answers. Take notes and when a potential PEO partner says,“I’m not sure, let me check”, follow-up with them.
Business leaders may look to bringing on a PEO for cost-saving reasons, or to simply offload much of the human resources heavy lifting, more often than not just wanting the PEO to be up and running within their organization sooner rather than later. But consider the stakes, you are in many cases bringing on an entire Human Resources department at one time. Multinational companies invest millions of dollars into ensuring their HR function is well-positioned to serve the company strategically. They do as data has proven the immense, tangible dollar value a Human Resources department can add to a company.
The beauty of aligning with a PEO is that you can skip the step of investing time and effort into aligning and tweaking and skip right to high levels of functionality. So long as the appropriate amount of time is invested upfront to ensure you are hiring the right fit for your organization.