3 Warning Signs Your PEO Relationship is in Trouble

July 6, 2017 Andrew Larsen

When you first got together with your PEO, things were great. Their strengths complimented your weaknesses. It was like your PEO could read your mind—handling all your HR, payroll and benefits needs so you could focus on growing your business. It was the perfect relationship.

But now something feels off.

Things aren’t working out as smoothly as they used to. Maybe you find yourself bogged down with paperwork required by the PEO for a simple merit increase or termination? You might feel like the fees they’re charging you aren’t completely transparent. Or maybe they just aren’t giving you the same amount of attention you got at the beginning of your relationship. If they take more than 24 hours to return your calls, that could be a deal breaker.

Here are some warning signs your relationship with your PEO might be on the rocks.

1. You’ve Changed
When you had a few employees and no budget to hire an HR professional, a PEO made sense. After all, one misstep and costly fines or litigation could follow. A PEO was safe and made you feel important by giving you “big-company” buying power on benefits.

But you’ve grown. The average PEO client has 22.5 employees and industry professionals agree that after about 50 employees, your company’s cost benefit savings starts to go down.

If you’re looking to grow, your PEO might feel even more restrictive. That’s because a PEO bundles together all their products into packages for small to midsize businesses. There are limited options for customization to fit your specific needs.

2. You Want to Stand Out, Not Blend In
Now that you’ve grown you want others to take notice. While a PEO provides a security blanket when it comes to compliance and automated processes, it also keeps you from adding additional business value your company.

Regardless of how innovative and exciting your ideas are, unless they fit into the parameters the PEO has set, when it comes to implementing them, your hands are tied.

You’re forced into a generic set of operating procedures that are the same all the other companies the PEO services. Never mind the fact that these companies are nothing at all like you. The PEO one-size-fits-all model makes getting noticed difficult, if not impossible.

3. You Need Control
To achieve your goals it’s crucial to attract top talent. Without control over HR, benefits and payroll, you are unable to make the kinds of changes needed to create the dynamic, successful company that will attract that top talent.

Just a few of the things you can’t do with a PEO are:

·      Offer competitive benefits packages

·      Create company policies specific to your unique workforce

·      Encourage innovative HR department that introduces new ideas to decision makers.

·      Finesse hiring, termination, and behavior policies

If you need more control but you’re not getting it, it might be time to have “the talk” with your PEO.

What Now?
Unless you’re never going to grow or change, it’s normal to eventually feel some dissatisfaction with your PEO relationship. Even though the fit isn’t as good as it once was, they still do a lot to help keep your business running and you may not feel ready to take all the responsibilities on yourself. Hiring an entire in-house team might not be financially possible either.

Here’s where an HR Business Process as a Solution (BPaaS) can be your knight in shining armor. HR BPaaS marries seasoned experts with constantly updated technology to match your specific needs. You have the freedom and control to implement your own unique policies, while your HR BPaaS partner handles the behind-the-scenes operations.

If you suspect your PEO relationship is on the rocks, you have decisions to make and a few things to consider. And, while leaving a PEO comes with its own set of complications, it can be done.

About the Author

Andrew Larsen

Andrew is the Marketing Communications Specialist for Zuman, the one solution for HR, payroll, and benefits administration that supports growing small to midsize businesses.

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