Alexandria, Va. (June 16, 2004) — As the U.S. economy heats up, the nation's smaller businesses are in a war for talent. Professional employer organizations (PEOs) help them win the war by finding the best possible workers. PEOs can deliver positive results within months. Retention rates rise, along with productivity, sales and service quality.

PEOs enable employers to cost-effectively outsource the management of human resources, employee benefits, payroll and workers' compensation. PEOs arm smaller businesses with recruiting tools to find the best applicants. Today's complex employment realities require the sophisticated resources that PEOs provide, including skill evaluations, psychometric tests, background checks and in-depth interviews. Smaller businesses also benefit from the lower fees that PEOs provide for such services.

PEOs Screen to Predict Success and Integrity
Without using a thorough screening process, an employer runs the risk of placing the wrong person in the job, leading to lost productivity and costly turnover. PEOs tailor pre-employment tests to predict success on a specific job and loyalty to the employer.

"The test results reveal how well the applicant matches the traits of the client's successful employees," said David Fernandez, president and CEO of OEM America, a Connecticut-based PEO. "We help reduce turnover when we can find applicants with traits typical of people who stay on the job. Nothing is absolute, but these tests can have a huge impact if constructed well, even in industries that have high turnover."

Smaller businesses that make hasty hiring decisions without background checks run the risk of hiring someone who is inclined to theft or violence. "Our StaffSourcing service offers assistance to clients who want help with ad preparation, testing and applicant evaluation," said Barbara Schneider, regional vice president of Oasis, a Florida-based PEO with an entire division devoted to recruiting. "A job applicant's skills and stability are important; so are ethics and attitude. The biggest mistake companies make is failing to collect enough information before hiring."

Behavioral assessments can raise red flags about the applicant's work-related traits, such as service quality. "The first line of defense against negligent hiring is a careful screening process," said Sandra Dickerson, CEO of Your People Professionals (YPP), a PEO based in California. "We protect our client by doing a thorough screening. Our psychometric assessments predict how someone will perform in the workplace. We also match job candidates to the client's culture and environment. We are not looking for wall flowers for a fast-paced sales position!"

PEOs Cut Recruiting Time, Improve Retention
Operators of smaller businesses often dread the mountain of résumés and numerous interviews involved in recruiting. PEOs remove this burden and deliver good candidates quickly, then handle the paperwork for the new hire.

"When one of our clients wants to fill a position, our first step is to define what they need," said Mark Trimble, vice president of human resources for Payroll Solutions, a PEO based in Nevada. "We can create the job description and suggest the appropriate compensation package. After we place the ad, we select and interview applicants using the job-specific criteria, then present the best ones to the client." Payroll Solutions also offers various psychometric and behavioral assessment instruments. "We recommend the testing to our clients as an added dimension for the final hiring decision," Trimble said.

After finding good employees, companies want to retain them as long as possible. A PEO can arm the the businesses with knowledge about why people leave a company, and why they stay. A foundry had 100 percent turnover, but their retention rate increased 26 percent after they used the recruiting services of Employer Solutions Group (ESG), a Utah-based PEO. "We studied why people left the jobs within days or weeks," said Dee Henderson, ESG's vice president of human resources. "Many had no idea about the work conditions in the plant, so we recommended plant tours for anyone interested in jobs there. About 30 people tour each week, and the ones who apply believe they can handle this type of work." Employer Solutions also does background checks and looks for people "who are mature, committed to the community and able to manage significant responsibility in their lives," Henderson said.

Smaller businesses benefit from PEOs' training about how to interview well. "Our management training classes include sessions on traditional and behavioral interviewing techniques," said Soley Belmar, manager of business development for CPE, a California-based PEO. "We also give our clients interviewing forms and procedures that help managers establish consistent and thorough interviews."

PEO Clients Praise Recruiting Services
PEO clients speak highly about the recruiting services. "Working with Payroll Solutions, I can attract and retain better employees," said Katrina Ferry, president and sole owner of Alternative Management. She uses this PEO's recruiting program because "as an individual business owner, I am not good at hiring. My niche is association management; Payroll Solutions' niche is employment services."

Smaller businesses finding applicants on their own also benefit from PEOs' expertise. "We depend on Your People Professionals to recommend qualified applicants even if we found the person on our own," said Ron Palladino, co-owner of Renaissance Companies, an antiques and reproduction furniture company. "They do the screening for us and recommend the best applicants from all sources. Our track record working with YPP is so much better than when we were doing this on our own." Gene Gray, co-owner of the insurance brokerage Gray and Troy, agrees. "Any applicant from YPP is a good fit."

Losing employees means higher unemployment costs, so a PEO's ability to cut the turnover rate contributes to the bottom line. "My unemployment costs motivated me to select Modern Business Associates (MBA)," said Brian Bell, president of Capitol Marketing in Florida, where MBA is also located. "I had high turnover in my telemarketing business, but MBA has significantly reduced the turnover and saved me at least six figures a year."

For more information on the PEO industry, visit the NAPEO Web site: www.napeo.org.

NAPEO, the National Association of Professional Employer Organizations, is the recognized "Voice of the PEO Industry.®" NAPEO has approximately 300 members with employees in all 50 states, representing more than 70 percent of the industry's revenues. Professional employer organizations enable clients to cost-effectively outsource the management of human resources, employee benefits, payroll and workers' compensation. PEO clients focus on their core competencies to maintain and grow their bottom line.