PEOs are a benefit to small business employers, but like choosing any other service provider, you must do your research to select the right PEO. At the end of the day, a PEO should be flexible, fit your business needs, and works in your business’ best interest.
The National Association of Professional Employer Organizations (NAPEO) offers a set of general guidelines to help get you started. You may not need to check off everything on this list, but do consider all of the guidelines to help make your best judgement.
10 tips to select the right PEO
- Determine your human resource and risk management needs.
- Make sure the PEO is capable of meeting your goals. Meet the people who will be serving you.
- Ask for client and professional references.
- Confirm that the PEO has a demonstrated history of adherence to the industry’s professional performance practices, including responsible financial management of its business.
- Check to see whether the company is a member of NAPEO.
- Investigate the PEO’s administrative and management expertise and competence. What competence does its internal staff have? Does the PEO’s corporate staffing allocation follow the priorities of its marketed services? Does senior staff have professional training or designations?
- Understand how the employee benefits are funded. Is the PEO fully insured or partially self-funded? Who is its third-party administrator (TPA) or carrier? Confirm that the TPA or carrier is authorized to do business in your state.
- Understand how the employee benefits are tailored, and make sure they fit the needs of your employees.
- Review the client service agreement (CSA) carefully. Confirm that each party’s responsibilities and liabilities are clearly laid out. What guarantees are provided? What provisions permit you or the PEO to cancel the terms of the contract?
- Make sure the PEO you are considering meets all applicable state requirements.
Diversified Human Resources (DHR) is the leading full-service HR solutions provider based in Arizona, with offices in Denver. Since 1996, DHR has served thousands of Arizona and regional companies with payroll, benefits, HR administration, retirement, and workers compensation solutions. Contact us today and learn how easy it is to tailor a plan to upgrade your HR function and improve your bottom line.