A Professional Employer Organization (PEO) can be a valuable partner in managing critical HR, compliance, and risk management responsibilities. However, not all PEO service providers are equal. Choosing the right PEO services provider is key to realizing its full benefits for your organization. This article outlines tips for selecting the best PEO partner.
Verify PEO Industry Credentials
Reputable PEO services will have earned credentials that signal their commitment to high standards. Look for certification from the IRS as a Certified Professional Employer Organization (CPEO). Also confirm that they are accredited by the Employer Services Assurance Corporation (ESAC). These credentials validate that they follow strict operational and financial reporting standards. An accredited, certified PEO is best positioned to deliver exemplary service.
Review Service Offerings
Not all PEOs are full-service. Some specialize in certain areas like payroll, benefits, worker compensation, or regulatory compliance. Outline your needs across HR administration, risk management, talent acquisition, training, compliance, payroll, benefits, technology, and more. Then evaluate PEOs on how comprehensively they can bundle required services. Using a single provider for an integrated solution can yield the greatest efficiency.
Request and Check References
Any PEO service provider you consider should readily provide references from current and past clients. Speaking with references is invaluable for verifying satisfaction firsthand. Inquire about their experience implementing the services, the calibre of account management, responsiveness to issues, and their assessment of the PEO’s impact on their organization. The right PEO partner will have a long trail of glowing references.
Compare Service Level Agreements
PEOs formalize their commitments through service level agreements (SLAs). Review SLAs in areas like customer service response time, issue resolution, uptime guarantees on technology platforms, and satisfaction commitments. For example, the SLA may specify that tickets will be addressed within 2 hours or that their client portal will be available 99.9% of the time. The most client-centric PEOs back up services with robust SLAs.
Evaluate Implementation and Onboarding Support
The onboarding process is key to getting your PEO partnership off to a positive start. Assess the PEO’s onboarding program and timeline to transition services. Look for robust implementation support to help integrate the PEO smoothly. This may include activities like data migration, staff training, policy review, payroll and benefits setup, and configuring technologies. Strong onboarding minimizes disruption.
Understand the Service Transition Approach
While uncommon, there may come a time when you wish to transition off of the PEO. To prepare for that possibility, inquire upfront about their offboarding process. How does the PEO ensure smooth transfer of data, records, and administration back to you? Do they provide transition support? Do they have any restrictions on transitioning to a different provider? Proactive PEOs make continuity of service a priority.
Evaluate the Safety and Compliance Record
A key advantage of PEO services is that they transfer liability for safety, health, and compliance to the PEO. Examine the PEO’s processes to promote workplace safety and minimize risks. Also check their track record of managing compliance with regulations like wage and hour, family medical leave, anti-discrimination statutes, and labour relations. A PEO with a strong record signal that they deliver on risk mitigation.
Get Answers About Data Security
Since a PEO handles sensitive employee data, data security capabilities should be vetted. Inquire about encryption methods, access controls, security training, compliance certifications, cyber insurance, and measures to prevent breaches. Press for specifics to gauge how seriously the PEO takes data protection. Only partner with PEOs that demonstrate excellent data security practices.
Assess Client Retention and Tenure Of Staff
The best PEO service providers earn long-term loyalty from clients and staff. Ask about average client tenure to determine retention rates. Also inquire about turnover amongst account managers and service staff. Higher retention signals greater client and employee satisfaction. Tenured teams translate to more cohesive, experienced service marked by long-standing client relationships.
Meet the Prospective Account Management Team
Client service is only as strong as the account management team behind it. Once you narrow down PEO contenders, meet your prospective account managers in person whenever feasible. Gauge their level of experience, engagement, expertise, and commitment to service excellence. The ideal PEO team feels like an extension of your organization. Ensure they measure up.
Confirm the Accessibility of Key Contacts
Day-to-day communication with your PEO should be seamless. During the vendor selection process, define who your key contacts will be. Confirm how accessible account managers and service staff will be via phone, email, ticketing systems, and client portal messaging. The top PEOs make it easy to get questions answered and issues addressed promptly by knowledgeable representatives.
Review Technology Capabilities and Integration
PEOs are reliant on HR, payroll, benefits administration, and other technology platforms. Review which systems the PEO uses and the breadth of their functionality. Also, understand how they integrate the platforms with your existing infrastructure and applications. Seek a seamless, unified technology experience for your organization and employees.
Benchmark Pricing and Contract Terms
Do not select a PEO solely based on the lowest price. However, pricing should be competitive for the value delivered. Benchmark proposed fees against industry averages. Also compare how billing is structured and which services are included in the base fees versus add-ons. Carefully review contract terms like length, early termination clauses, fee increases, and liability limitations.
Confirm Capabilities Scales With Your Growth
If your organization plans to expand, ensure the PEO can scale accordingly. Ask about their capacity, staff-to-client ratios for various service levels, and ability to provide consistent services nationally or internationally. A PEO that supports growth provides more long-term value. Also confirm that they have experience supporting organizations of your size and complexity.
Trust Your Gut Feeling During Vetting
Some evaluation factors are subjective. After reviewing proposals, checking references, and meeting prospective account managers, pay attention to your overall gut feeling. Do you trust this PEO to become an invaluable partner? Are you confident in entrusting employee relations, data, and regulatory compliance to their care? Go with the PEO that instils the greatest confidence based on vetting.
In the conclusion, reiterate why carefully vetting PEO service provider matters and recap the key selection criteria covered. Finding the ideal PEO partner depends on verifying credentials, services, references, SLAs, compliance, data security, retention, account teams, technology, scalability, and overall fit. Conducting in-depth due diligence ensures you choose a PEO that aligns with your needs and positions your organization for HR success.
