The promise of joining a PEO (Professional Employer Organization) was to help your business in two main areas: lower costs, primarily the cost of health benefits and workers’ compensation, and lower risk, primarily in the area of HR regulatory compliance. Sure, they promised various other benefits, but let’s be honest, you very likely joined the PEO for one of these two reasons. And, while you likely had some concerns about loss of control, you bit the bullet because you wanted lower costs or lower risk.
So, is your PEO keeping its promise? More and more companies are answering, “No”. For starters, in the past several years, many organizations are finding that the cost of being in a PEO has risen faster than the marketplace. The ACA (Affordable Care Act) has made the benefits of joining a PEO for lower healthcare costs not nearly as attractive. And, as workers’ comp rates have stabilized, that, too, has reduced potential cost savings. In addition, as PEOs have increased the use of technology, it is hard to determine if your HR compliance risk is reduced since it is becoming increasingly difficult to speak to a truly qualified HR Professional when you have a critical employee issue. Finally, the Administrative Fee that is charged by the PEO seems to be constantly increasing, especially as your company grows.
But, what choice do you have? Even if you can save money on benefits and workers’ comp by leaving the PEO, how is payroll going to get processed? And, how is HR compliance going to be handled without having to hire additional staff or pay triple-digit rates to an employment attorney? So, is there a realistic, practical alternative to a PEO relationship? For more and more companies, the answer is a resounding, “Yes”.
Administrative Services Outsourcing (ASO) is a great PEO alternative. With this service, you get virtually all of the benefits of working with a PEO, without the loss of control, limited choices of features and costs of health benefits plans you can offer to your employees or lack of access to qualified HR Professionals for your employee issues.
ASO service typically includes:
- HR Services, both proactive and reactive. Proactive HR is in compliance with all of the various regulations, updated employee handbook and forms, and advice on best practices to help protect your business and attract and retain the best employees. Reactive HR is having a truly qualified HR Professional in your corner for those employee issues which inevitably come up in business.
- Benefits Administration, working closely with your broker to remove from your plate the administrative tasks of offering employee benefits, while you make the decisions about what plans you want to offer.
- Leave Management, ensuring you are fully in compliance with all of the various local, state and federal regulations when your employees take a leave, need an ADA accommodation or have a workers’ comp claim.
- Payroll and Tax Filing, providing full, end-to-end payroll and tax filing on a state of the art payroll/HRIS system.
- Qualified HR Professionals to work directly with your employees, your management team, and your executive team.
- Recruiting Services are usually available as well.
Sounds a lot like the services a PEO offers, doesn’t it? That’s because ASO service is essentially PEO services without the co-employment. And, with ASO you will be able to:
- Offer customized benefits to your employees, with more choices of plans and options, to meet your budget
- Offer benefits tailored to your company and employees, with more choices of plans and options, to meet your budget
- Have true HR professionals on your side who understand your business and value your time
- Likely lower the fees you pay each month for HR and payroll administration
- Regain control over your HR policies and practices