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Top Tips for Selecting a Reliable PEO

Selecting a PEO

Your business relies on engaged employees eager to roll up their sleeves and help it succeed. With each new hire, you search for that unique combination of talent and personality that’s going to take business to the next level. When it happens, it’s pure magic!

These same high standards apply to business partners. At Integrity, we meet with a lot of companies searching for a partner to help with HR. They’ve come to the conclusion that handling HR themselves is actually impeding their growth and they’re looking for a reliable PEO (professional employer organization). A quick google search brought them to us, but how do they determine if we’re the trusted partner they’re seeking? When meeting with prospective clients, we encourage them to dig deep when they research PEOs. Here’s what we recommend:

Start with solid standing

There are many resources you can use to confirm a PEO is adhering to key standards. Associations put together industry guidelines that membership businesses must follow, and you can leverage each of these in your search. The national association governing PEOs is NAPEO and they have a search tool to find qualified members doing business in your state. Better Business Bureau (BBB) was established to advance marketplace trust in vendor solutions. See if complaints filed against them have been answered and resolved adequately.

You’ll also want to verify business integrity. The IRS offers a voluntary certification that validates ethical, financial and operational practices. Launched in June 2017, its Certified Professional Employer Organization (CPEO) program involves meeting rigorous requirements to become a CPEO. This has created a premiere group of PEOs that represent the highest industry standards. These include background verification, review of tax compliance history, annual audited financial statements, and an independent surety bond guaranteeing payment of federal employment tax liabilities. This certification also guarantees CPEO clients cannot be held liable for unpaid federal employment taxes once remitted to the CPEO. It can be very revealing to ask “why” they do or don’t have CPEO status.

Pitch perfect

A successful PEO partnership will satisfy strategic business requirements and enhance employee engagement. Carefully review services listed online to make sure they offer the HR outsourcing services you need most. Before scheduling the sales presentation, talk with your team to understand what they value most. That way, you can ask pointed questions and better gauge if they can fulfill that vision. Listen carefully any “extras” mentioned in their presentation and make sure those promises are included later in the contract. It might be something to consider if they won’t formally incorporate those responsibilities into your agreement.

Great minds think alike

Get to know each PEO you’re considering on a more personal level. You want to align with business partners with similar beliefs, so start by learning about their mission and values. From there, here are some other helpful questions:

  1. How long have they been in business?
  2. How did their PEO business evolve to where they are today?
  3. Have they always provided HR-outsourcing, or did they change their business model?
  4. What’s the average tenure of their employees and senior leadership team?
  5. Who will be your day-to-day contact, and can you meet them?
  6. How often will your assigned contact proactively reach out to you?
  7. How much will their PEO service fee increase each year?
  8. How do they stay current with a constantly evolving benefits, tax and hiring landscape?

Be my guest

A prospective PEO should be eager to supply references of three to five recent and long-term clients (be sure to get a mix of both). Happy clients are great advocates, so the PEO should have no problem with this request. If there’s any hesitation, think twice about engaging further. Here are some questions that would provide insight when talking to current clients:

Big picture questions

  1. Why did you choose this PEO?
  2. What has been the biggest benefit of working with this PEO?
  3. Is there anything you wish you knew before partnering with this PEO?
  4. Any weakness or issues you’ve encountered?

Details that matter

  1. What was the on-boarding process like?
  2. Did their HR software platform integrate seamlessly with your legacy system? If not, how was that remedied?
  3. What’s the typical turn-around time for answering questions?
  4. Are timelines being met? (Payroll, State and Federal reporting)
  5. Are there any benefits not available that your employees have asked about?

These questions can help you decide which PEO provides both the services and support that you and your employees value.