How does a PEO arrangement affect my employees?

By February 16, 2017Business, PEO

Have you ever tried getting a squirrel to take food from your hand? You have to start by throwing food to the squirrel and dropping it gradually closer to your body. Then, once the squirrel is close enough, you just leave the food in your hand and try to stay as still as you can. 

This is the frustrating part because you can wait several minutes for the squirrel to come within a few inches of your hand, only to be scared away because you couldn’t hold in a sneeze.

The point is, it can take years to gain trust and only seconds to lose it. If you are involved in a Leadership role with your organization, you probably already know this.

Successful leadership is fully contingent upon maintaining a relationship in which both parties have mutual trust.

That being said, who in their right mind would jeopardize losing the trust of their followers by placing control of that relationship in the hands of somebody else?

What I am referring to here is the relationship between an Employer and his or her Employees.

One concern that has been voiced quite often by employers about using a PEO’s services is the potential for some type of negative outcome for employees; and rightfully so. Understanding that it is very difficult to gain the trust of employees, I can appreciate this type of skepticism.

By nature, PEOs handle some pretty sensitive areas of the employer-employee relationship in the form of HR matters, Workers’ Comp and Payroll administration. Because of this, it is highly recommended that any Employer that is considering a co-employment arrangement diligently analyze terms of said arrangement in order to have a clear understanding of how employees may be impacted.

The arrangement of PEO Programs are structured in such a way that the employee should NEVER be negatively impacted by their employer’s decision to utilize a PEO’s Services.

In my personal experience, the benefits that can be gained through a PEO outweigh the potential for any negative consequences that can impact the employer-employee relationship.

Simply put, usually the only negative change that employees experience, should your organization utilize a PEO, is the name of the employer that appears on their W-2 and pay stubs. Instead of your organization’s name, they will see the name of the PEO in these areas.

Keep in mind, there are other changes that employees may experience should your organization choose to utilize a PEO. However, they are generally categorized as positive changes. Whether or not these changes are actually beneficial will depend on the position your company is in.

Ultimately, it is up to you to decide if your organization can benefit from a PEO’s services. That being said, here are some other changes that your employees may experience should you choose to utilize a PEO:

  1. Improved Benefits Packages

Employers that partner with PEOs often gain access to benefits that usually are only offered by Larger companies such as dental, medical, vision and 401(k) plans. The great thing is that this is fully optional. If you are not able to offer a better benefits package to your employees through your PEO, then you do not have to participate.

2. Hands-on Safety & Risk Management

Most small businesses lack a true Safety and Risk Management program that is required to effectively create a safe workplace and manage Workers’ Comp claims. Because PEOs have an interest in keeping a safe workplace, they will work with Employers to create and implement a true Safety Program that will limit employee injuries and accidents. PEOs will also provide additional support that can help employees smoothly get through the claims process in the event of a workplace injury.

3. Presence of a Human Resources Department

Businesses that can benefit from an Improved Safety Program can generally benefit from having a team of HR experts as well. It is fairly obvious that employers can benefit from maintaining compliance with regards to employment law. What most people overlook though, is how much the employees that are subject to those regulations will benefit from an employer that provides them the protections that are called for under said laws.

In closing, it is almost guaranteed that your employees would take notice if your organization made the switch to a PEO. However, the right PEO will provide a positive experience for both employees and employers that will outweigh any perceived negatives.

Keep in mind, trust is very difficult to gain and easy to lose. Thus, employers should practice due diligence when considering a PEO to ensure that there are actually benefits to be gained.

The Golden Rule: Not every organization is a fit to partner with a PEO.

Chris Blom

Partner

chris@tcacorp.com