2010 the year YOU need a PEO

2010 is shaping up to be an especially dangerous year to be a California Employer. We have the national health care debate, massive losses in the unemployment system, and let’s not forget workers comp. While we have no idea what will come out of Washington or Sacramento, what we do know is that there will be tough decisions to make and your business is much better off with a seasoned HR professional available to consult with your executive team. PEOs bring this expertise to your business at an affordable cost.

A PEO is a business that specializes in employment just like your business specializes in whatever it is that you do. They create a co-employer relationship and bring many of the advantages of a large business to small businesses. A PEO administers a large group health program, giving them leverage that small businesses can only dream of. This same leverage exists in many places within the employment relationships and nowhere is that more true than in California. California is a great state to live in but it is a tough state to be an employer. Let’s look at how a PEO might assist your business when these hot topics hit your inbox.

The Health Care Debate is clearly going to bring change to the employee benefit area of your business. It makes no difference if you provide health insurance or not, the rules are going to be reshuffled and your entire strategy is going to have to be reevaluated. When the smoke clears there will be changes and your business will have to adapt. A PEO will have seasoned professionals that will evaluate the options and be able to help guide your business through the decision that best fits your business. Nobody knows what the outcome of the debate will be, but change is assured and having experience professionals on your team will be critical to your decision process.

Unemployment Insurance is going up but employers are not necessarily going to be helpless victims. Like any fund, when the unemployment peaks and starts to come back to earth the political process in Sacramento will start looking for ways to rebuild the fund and the first wallet they are going to look in is yours. This is the time to make sure that your team has an experienced player that knows how the system works so you can develop strategies for what is sure to be a tough year.

Grab your wallet because Workers Compensation is headed up again and with history as our guide, we know that the increase will not be even or fair and how you manage your business in this area can make a big difference in the bills you pay. We already know that the WCIRB has proposed increases over 20%, and there is probably more than that for businesses that fail to manage this part of their business properly. The base rates and what finally hits your wallet is impacted by many different areas, most importantly your experience rate – that is directly connected to your safety programs. So managing these costs can have a long term impact on the bottom line profitability of your business. Does your Safety Officer do everything they can to manage the experience and make sure that you only pay your fair share? Some businesses end up paying more than their fair share because they do not understand how the system works.

As the Program Director for a regional CEO Roundtable program I have the privilege of personally knowing more that 50 CEOs who run some of the leading businesses in the region and not one of them claims to be a Professional Employer. They are all employers but their focus is like a laser beam on the “Business of their Business”, not the business of employment. They are employers because it is required to serve the mission of the business. Their passion is to build or serve the market with a product or service and rarely is that employer services. California has an especially complex set of laws and regulations imposed on businesses and it often gets in the way of serving the mission of the business.

The largest of these companies have Professional HR staff but for the smaller ones this is either not addressed or relegated as an additional duty to someone with little or no background in HR. So it is no surprise that many experience major difficulties in these areas. The liability in HR is often silent until it suddenly hits the business in the form of a law suit or regulatory fine.

I am a serial entrepreneur and have owned and operated small businesses since 1988, and have used a basic strategy of outsourcing everything except for the critical path of the service or product delivery. In other words, I outsource all the things that do not create specific and unique value to my product or service delivery. Because of this strategy I have been a YPP Client since 1999 and I find it one of the most economical and low impact ways of taking care of the employer responsibilities. As I look to next year with all the changes in employer responsibilities in the pipeline, I know that I have YPP monitoring these areas and helping me make the decisions I need to make to implement whatever comes out of Washington or Sacramento.

Like any business decision you have lots of choices when you are selecting a PEO and like lots of other decisions it is the people you chose that make the difference.

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