NAPEO: National Association of Professional Employer Organizations



November 2014
FEATURE
With a business as complicated as PEO, it only makes sense to define long-term goals, formulate a strategy, allocate resources, and execute the strategy. This makes sense in any business, but it's all the more crucial when your business has a lot of moving parts, handles risk, and has slim margins–margins for profit and margins for error.
   Every long-term strategy should begin with a foundation, something on which to build. However, don't start building until you identify your priorities and define your direction. Articulate your guiding principles and purpose. Who uses your products and services? What is your brand promise? What are your strengths and weaknesses? Answering these questions will help you set long-term goals and execute your strategy.
   With PEOs, a fundamental part of the long-term strategy is growth. Growth can be increasing revenue or size, increasing efficiencies, increasing capacity, increasing offerings, or enhancing overall revenue. PEOs can grow organically or through acquisition. Organic growth can be achieved through horizontal growth, vertical growth, channel marketing, and market expansion. Acquisition offers choices: the strategic buy and the financial buy. PEOs can use any combination of organic growth and acquisition, but client retention always needs to be part of the plan.
   The result of long-term strategic planning is directions for running your PEO. Start with evaluating every aspect of your operation. To support the plan, does it need major modifications or minor tweaks? Next, determine your management and staffing needs in light of the new plan. Finally, balance your cash inflow and outflow, sourcing capital for investment, both internal and external, to match the plan.
   To finance your strategy, you may need outside capital. Choices include debt (line of credit, senior bank loan, and mezzanine financing) and equity, which is attractive to investors because of the PEO recurring revenue model and growth potential.
   A long-term strategy is not complete without succession planning and an exit strategy. Both should be considered from almost day one. Succession planning involves deciding how your business will go on without you, including identifying and developing people internally to fill key leadership roles in the company. You also need to provide your employees with direction for that time now, either formally or informally. What will happen when you are ready to leave your business is your exit strategy. You could sell your business, give it away, or close it. Closing your PEO has few advantages, but there are several options for selling, and several considerations for giving. Your exit strategy will likely change over the years, but make sure it is always right for your current situation...

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DEPARTMENTS

healthcare
ACA Guidance
What's New as We Wrap up 2014?

Malcolm C. Slee, Esq. and Sravya Boppana, Esq.
It was a relatively quiet summer on the Affordable Care Act (ACA) guidance front, as the good folks at the Internal Revenue Service (IRS), Department of Labor (DOL), and Department of Health and Human Services (HHS) apparently decided to work on their tans rather than the regulatory agenda. But September brought us some new important pieces of guidance that you should keep in mind as 2015 approaches...
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legal currents
The Tech No-Poaching Antitrust Case
What it Means for Non-Solicitation Agreements

Doug Riegelhuth, Esq.
Perhaps you've heard about the class action lawsuit In re High-Tech Employee Antitrust Litigation, charging that Adobe, Apple, Google, Intel, and other large tech companies conspired and agreed from approximately 2005 to 2009 not to (among other things) solicit each other's employees, thereby suppressing the pay of technical, creative, and other salaried employees in the tech industry. Having already settled an investigation by the Department of Justice (DOJ), the four remaining defendants in the class action recently sought approval from the court for a $324.5 million proposed settlement of the class action. Though the court previously approved a $20 million settlement by Lucasfilm, Pixar, and Intuit, who negotiated their settlement in 2013 before the case was certified as a class action, in August the court rejected the $324.5 million proposed settlement for not being enough. The judge said that because of the “ample evidence of an overarching conspiracy,” the settlement was not “within the range of reasonableness.”...
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executive office
Developing Internal Talent to Align with Overall Long-Term Goals
DC Mickle-Bee
It's no secret: my long-term goal at PMI PEO is growth. When I began my role as the president and CEO in 2010, I made growth a significant goal of the company's long-term plan. PMI has earned a place on Florida Trend magazine's Fastest Growing List of Privately Held Companies, and this year we became #4101 on Inc. Magazine's 500/5000 Fastest Growing Companies list.
   My approach to driving growth is...

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marketing
Aligning Your Marketing Strategy with Your Long-Term Strategy
Jake Lunt
Before I boarded the plane to Florida to attend NAPEO's 2014 Annual Conference and Marketplace in September, I took a minute to look at a map and consider the area. I was unfamiliar with Miami, so all I saw were countless roads leading to different locations within the city. Because I planned to attend a Marlins game, I quickly looked for and found the stadium on the map. There were roads coming from all directions heading to the stadium. Initially, I had no idea which road I should take. The key to picking the best route was to also know where the hotel was located. With clarity about where I was starting and where I was going, it was easy to determine a few routes that would get me there quickly.
   Similar to the number of roads on that map, the number and variety of sales and marketing tactics available to PEOs right now is...

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  COLUMNS

the inside word
Working Together to Provide Opportunities
Brent R. Tilson
2015 NAPEO Chairperson

This time of year is a hectic one for our industry: sales teams are working hard to close deals, new clients are onboarding, open enrollment is upon us, 2015 budgets are being finalized, end-of-year processing is underway, and what spare time we have is committed to holiday parties and vacations. As if that wasn't enough to manage, the Affordable Care Act (ACA) has now given us even more to oversee for our clients and worksite employees. While these added duties could be viewed as burdensome, I see this as one of the greatest opportunities for our industry...
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napeo notebook
The Rogue Lion and the PEO Industry
Patrick J. Cleary
According to African lore, the rogue lion is the most dangerous creature. It is the rogue lion that leaves the pack, leaves the hunt in the wild, and enters villages where he finds the prey quite easy to catch. Having feasted thus, the rogue lion never returns to the elusive prey of the challenging wild, choosing instead to thrive on the easy prey that the village provides.
    What does this have to do with PEOs?...

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up front
Meet Your New Board Members!
Kerry Carruthers
At the Annual Membership Meeting during NAPEO's 2014 Annual Conference & Marketplace, five new members were elected to the NAPEO Board of Directors for two-year terms: Lee Allphin, Bruce Cornutt, Dawn Davidson Drantch, Esq., Steven McCarty, and Tom Shehan. (Shehan later stepped down from the NAPEO board when he left Nextep.)
    These new board members join NAPEO's 18 returning board members to form a dedicated and experienced corps of volunteers representing PEOs and industry service providers of all sizes in a variety of markets. In addition to its usual work of helping to guide the association's operational, educational, and legal/government affairs efforts, the board will also be developing NAPEO's 2015 to 2017 strategic plan ...

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capitol comment
What the Election Means for PEOs
Thom Stohler
As I write this column, Washington, D.C., is sorting out the results of the election. The Republicans gained majority control of the Senate by picking up at least seven seats—and will likely pick up nine seats by the time every recount and run-off election ends. In the House, the Republicans have expanded their majority by 12 and now have 243 seats—with another 17 races too close to call.
    The election on November 4 was a Republican wave election, meaning that almost all of the close races broke in the favor of Republican candidates. Republicans won seats in traditionally Democratic states and districts. Blue states like Illinois, Maryland, and Massachusetts elected Republican governors. Republicans won the West Virginia and Minnesota state houses of representatives, and won control of the entire Nevada legislature. In short, Republicans had a very good election night...

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napeo advisor
Minimum Wage, Post-Partum Depression
Brendan W. Williams, Esq.
Q. Who is affected by President Obama's minimum wage executive order?
    A. Not as many people as the news concerning it would suggest. On February 12, 2014, President Obama signed a political base-pleasing executive order to increase the minimum wage to $10.10 an hour for work done under federal contract. In October, the U.S. Department of Labor (DOL) adopted its final rule concerning this order. Under that rule...

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#napeo30
NAPEO's 2012-2014 Strategic Plan
A Journey

Kathleen A. Hillegas, Esq.
NAPEO's 2012-2014 Strategic Plan was born out of the governance overhaul that occurred in 2010 and the implementation of that governance process in 2011 and 2012. The NAPEO Bylaws that emerged from that process established the Planning and Development Committee, the mission of which was to serve as a forward-looking governance committee to strategically plan for the association's future and to create and manage a strategic planning process that would inform NAPEO's budget preparation. Whew! That sounds lofty—and it was. Out of the new governance process emerged a desire for the expenditure of NAPEO's resources to be closely aligned with the strategic goals of the association. Thus began an exhaustive and exhausting process that entailed hundreds of member volunteer and staff hours to produce a meaningful strategic plan...
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small business perspectives
Five Traits of High Achieving Small Business Owners
Karen Sams
Whether you're just getting started or looking to expand your business, you can learn from the most successful small business owners. Todd Rhoad, managing director at BT Consulting in Atlanta and a career consultant for high achievers, shares the five traits he sees in the most successful business owners...
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peo spotlight
Keep Calm and Call A PEO
An Industry Brand, and So Much More

Stephanie Oetjen
One day in the winter of 2013, NAPEO President and CEO Pat Cleary and Senior Director of Marketing Kerry Carruthers were looking for a creative solution to their current challenge: leveraging the looming implementation of the Affordable Care Act (ACA) to increase industry market share.
    In Pat's office that day, the two of them were analyzing the challenge, throwing ideas back and forth, and free-associating. Developing concrete plans to solve intangible problems can often be frustrating, as it was that day.
    “People just need to keep calm and call a PEO!” Kerry blurted out suddenly...

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global insights
The High Costs of Lawsuit Abuse
Thomas J. Donohue
The United States has the world's costliest legal system. What's driving up the costs? Excessive litigation and abusive legal practices—and they are taking a heavy toll on our economy, businesses, and workers. Some recent examples are so ridiculous that it's hard to believe they're true. But you can't make this stuff up...
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NAPEO Medallion Partners
NAPEO Thanks its 2014 Medallion Partners
Diamond Partners

F.W. Davison and Company         Risk Transfer Holdings         Slavic401k.com        
Platinum Partners

Artex Cedar Hill         Compass Consulting Group, Inc.         Humana         MassMutual Financial Group         McHenry Consulting

Summit Software         ThinkWare Corporation         Transamerica Retirement Solutions
Gold Partners

ALLInsurance Solutions Management, LLC         Avalara         MetLife         PayPlus         Pinnacle Financial Services
Silver Partner

eflexgroup         Fisher & Phillips LLP         Human Resources Mexico, S. de R.L        
Bronze Partners

Capital Alliance Corp.         Comply Right Distribution Services         NetWise Technology

ResourceDirect         Kronos SaaShr, Inc.         U. S. Risk Insurance Group, Inc.      

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