Skip To The Main Content
As the ​leading publication dedicated solely to the PEO industry, PEO Insider is your best source for hard-hitting technical insight, timely updates, and practical perspective on all things PEO.
PEO Insider Issues

Processes • Infrastructure • Service Delivery

When an organization’s processes, infrastructure, and service delivery work together, things really buzz. Take it from bees. They perform a series of actions, within an organizational framework, in order to achieve their goal: The survival of the hive. The byproduct, of course, is sweet, sweet honey.

The same applies to PEOs: Repeatable, efficient processes supported by a robust infrastructure deliver valuable products and services to clients, sustaining the PEO and creating profit. This simple formula has variations as plentiful as there are PEOs. This feature provides some insights into this symbiotic nature of the PEO operation:

  • Improving Processes while Scaling PEO Service and Operations;
  • Product Development for PEOs;
  • So What is this API Thing? Automating Communication Between Different Computer Systems;
  • The Importance of Third-Party Providers in the PEO Model: Determining Provider Capabilities;
  • Coordinating Product Development, Management, and Service Delivery: Processes, Pitfalls, and Success;
  • With Growth Comes New Efficiencies, Despite New Complexities;
  • The Human Side of Operations; and
  • PEO Innovator: Innovation in PEO Operations.

We hope this insight will help you make your PEO operation buzz.


Know More

It’s Always Something

In PEO sales, it’s always something. Sales are going along great, then suddenly you hit a certain size and hit the wall. You start hearing prospects say they don’t need a PEO because they can look everything up on the Internet. Or, you realize you need to reevaluate your value drivers to differentiate your PEO and recalibrate to your market.

If it’s not one thing, it’s another, so what’s a PEO to do? The good news is, as this feature illustrates, there’s always something:

  • When you hit one of those natural growth plateaus and want to get past it, do your research and invest in organic sales;
  • If you want to improve sales results, use the right metrics to develop better prospecting, appointments, and proposals;
  • When prospects suddenly “know it all” because they have the Internet, double down on your value sale and remind them that they get what they pay for;
  • If the sales process has become too complicated for younger business owners, meet them halfway by engaging them on your website and consider the online sale;
  • Has your sale become stale and your PEO just another PEO? Examine your value drivers and make sure they differentiate you and match your market;
  • Are sales disruptors hitting you from all directions? Track them down and apply imagination and persistence; and finally,
  • Is your marketing operation becoming so “robust” that it fails to engage its audience and has substituted quantity for quality marketing content? Step back, pause to listen, raise the bar on your content, and improve your connection.

Know More

Bumpers, Bells, and Buzzers

Would you say a PEO working within the healthcare legal and regulatory framework feels more like a ping pong ball, a yo-yo, or the ball in a pinball machine? Most businesses would feel the constant bouncing back and forth like a ping pong ball, or perhaps the constant ups and downs like a yo-yo. PEOs, however, because of the added complexity of the co-employment relationship with their clients, would feel more like the ball in a pinball machine: They are propelled on what is hoped to be the right path, only to have the rules change and bounce off a bumper, then to ricochet wildly in an uncontrollable direction while madly working the flippers and hoping not to tilt.

There are always bumpers, direction changes, and obstacles in the healthcare arena. Here are the ones present at the moment, what the NAPEO experts have to say about them, and some ideas from this month’s PEO Innovator:

  • Short-Term, Limited-Duration Insurance: A New Rule Reinstating Not-So-New Requirements
  • IRS Begins Employer Mandate Enforcement: How to Defend Yourself and Your Clients
  • EEOC Wellness Program Incentive Limits Vacated Effective 2019
  • Healthcare Data Security for PEOs
  • Is Your PEO Ready for a Master Medical Plan? Here’s What Carriers Want
  • Affordable Care Act E-Filing
  • Managing Client-Sponsored Plans in a Co-Employment Environment
  • PEO Innovator: Leveraging Technology and New Ideas for Better Healthcare Benefits

Know More

The Ever-Changing Legal and Regulatory Environment

What is constantly changing, always moving, and might give you a headache if you look at it too long? If you said a lava lamp, you would have been close. It’s the legal and regulatory environment for PEOs.

This month’s feature, our annual legal and regulatory roundup, starts with a description of the political climate in Washington, D.C., how it affects what comes out of Congress, and how PEOs can spread the industry’s message on both sides of the aisle.

The feature then moves to the latest developments in the federal arena:

  • The #MeToo movement: Amidst the spotlight being intensified on workplace harassment, articles in the feature cover mitigating risks, helping clients with claims, and educating and supporting clients;
  • The huge and expanding issue of data security and compliance; and
  • Joint employment, handbook policies, and other initiatives out of the National Labor Relations Board.

And in the states:

  • The role of PEOs under new state-run retirement plans;
  • The saga of the PEO Model Act in Missouri;
  • The torturous employment laws and cases coming out of California;
  • The distinction between selling insurance and providing PEO services as recently revisited in Georgia;
  • The near-toppling of exclusive remedy in Wisconsin, and similar actions in Michigan and Montana; and
  • The recently passed legislation in Ohio protecting the business income deduction for clients.

There you have it: the PEO legal and regulatory environment as it stands right now. It will change, but NAPEO will keep you informed.


Know More

Get Hopping

Left to their own devices, PEOs don’t just grow. It takes deliberate and targeted effort, planning and executing growth strategies based on the individual PEO. This month’s feature provides insights into different ways of doing this:

  • Internal and external growth drivers. PEOs can optimize internal drivers, respond appropriately to external drivers, and focus on top-line and bottom-line profitability simultaneously to position themselves for growth.
  • Growth capital. Investors are ready with growth capital for PEOs with diverse client bases, high retention rates, and high-quality recurring revenue, among other things.
  • Acquisition. Asking and answering the right questions can help PEOs identify appropriate acquisition targets.
  • Expanding into new markets. One PEO accomplished this by finding markets with concentrations of prospects showing the qualities of its ideal client, combined with favorable economic conditions and demonstrated demand for PEO services.
  • The building blocks of growth. Educating internal employees, clients, and worksite employees, consistently providing top-notch service, and using referrals to help fuel the sales engine work together within the PEO’s organizational culture to form the foundation for organic growth.
  • Building leaders. This month’s PEO Innovator shows how it cultivates leaders to develop growth in new markets.

Know More

Where Technology is Taking PEOs, and Vice Versa

The PEO industry and technology have both had amazing journeys of development and innovation over the last three and a half decades. Much PEO progress is directly tied to technological advancements. As the PEO industry matured and grew, technology became more and more a part of the PEO operation. Today, technology is not only essential for PEO internal workings, but has also become an important benefit for clients and worksite employees.

This feature provides a picture of where technology stands with the industry right now. The PEO’s technological framework is the foundation that serves as the company’s infrastructure, supporting all of the software and applications that allow the PEO to run. To make the most of their technology, PEOs should stay up-to-date with patches, software updates, and hardware refreshes and upgrades.

Technology roadmapping helps the PEO execute on its strategic goals. It creates a path from your human capital management system to the products and services needed to serve clients, as well as your “secret sauce,” which makes your PEO unique.

While Software as a Service (SaaS) has been around for a while, the technology continues to evolve and spinoffs frequently emerge. This complicates the questions of when to migrate from on-premises to SaaS, how it fits your organization, what investments are needed, how to make the transition, and how security is handled.

Nothing exemplifies the joint journey of the PEO industry and the technology industry like this month’s PEO innovator. This PEO started in the early 1980s and grew and developed along with technology. The company embraced the various iterations of “cutting-edge” technology, took novel approaches to problems, leveraged innovation, and came out in an unexpected, but good, place.


Know More

PEO Profitability-A-Poppin’

The beautiful thing about popcorn is that you start with small kernels and, handled properly, they become big fluffy, yummy pieces of puff, which are about 20 to 50 times the size of the original kernels.

PEO profitability is much the same way. This month’s feature provides insight into this.

First, you must evaluate into your PEO’s performance. Define what you will measure to determine your profitability, examine the drivers behind your business, and interpret the results.

Avoiding margin erosion is key. Some of these eroding forces are commoditization, selling a product over a service, failing to recognize costs, and rising compliance costs. It’s important to address these before they become threats.

Because your PEO is like no other, metrics and key performance indicators give you specific knowledge about maximizing your profitability. Industry benchmarks provide the baseline; customizing them with your numbers provides a drill down for additional insights.

There has been a surge in acquisition activity among PEOs recently, and many companies are incorporating it as a strategy to reach profitable growth goals. Acquiring PEOs can achieve synergies and diversified product offerings. PEOs looking to be acquired can increase shareholder value and access technology. The key is a sound financial process and a strong integration strategy.

Many PEOs diversify their offerings, service lines, or products to enhance profitability. One PEO, however, has diversified in an innovative way: It accessed technology resources by being purchased by a large IT and connectivity company that wanted to partner with companies serving the small and mid-size business market. The PEO’s profit margins have increased by integrating these technologies for its clients, receiving more warm leads from other business units, and raising the bar on its insurance programs.

We hope this feature will help you get your PEO’s profitability-a-poppin’!


Know More

Healthcare Certainty

Ah, long car trips: counting VW bugs, finding license plates from different states, and the constant chorus of, “Are we there yet?”

Since the Affordable Care Act (ACA) was passed in 2010 and the regulations to implement the massive law were rolled out over the better part of the last decade, PEOs have been counting noses, looking for healthcare solutions for clients all over the country, and wondering, “Are we there yet?”

In a word, no. We are not there yet. Even during the roll-out of the ACA—as Americans waited for definitive instructions—some portions of the law were removed, others delayed, and others implemented in ways other than expected.

Then came the 2016 presidential election, with promises to repeal and replace the ACA, or at least improve the healthcare landscape. Since President Trump was inaugurated in January, everyone has been anxiously awaiting the anticipated change in course. While all attempts to repeal the law have failed so far, some snippets of a different direction have come, as detailed in the first two articles in this feature.

Nonetheless, the ACA is still in effect, and PEOs must continue to comply with existing rules and regulations, as outlined in the third article.

Being the experts in healthcare coverage for their clients, there are best practices PEOs should follow whether the ACA is repealed or not, and whether a new program comes into play or not. These are covered in the last article in this feature.

The road has not been straight, the signs have been confusing, and we are still not there yet. However, the information you are about to read may help you on your journey.


Know More

PEO Confab

The old adage, “The more things change, the more they remain the same,” seems paradoxical, but examples are all around us. Each day is different, but the sun still rises just the same. Old songs, movies, and TV shows are remade, but each new audience sees them as new. No two PEOs are the same, but they all face the same challenges.

Speaking of PEOs, one might reverse the old adage to read, “The more things remain the same, the more they change.” PEOs live in a paradox: Their success depends on them performing exacting tasks consistently and correctly as everything changes around them. PEOs have adapted to constant change since the beginning.

PEO Insider got together with four PEO executives in September during NAPEO’s 2017 Annual Conference & Marketplace, and their discussion shows this clearly. Three of the participants have been in the industry for decades, and one for only a few years. Today’s start-up PEO’s challenges are not that different from those experienced in the early days: setting up infrastructure, getting benefits programs in place, and hiring qualified staff. However, technology is vastly different, rules governing benefits plans are certainly different, and lessons have been learned about finding and developing PEO talent.

To read the transcript of their discussion presented in this feature is to observe the similarities and differences in each person’s story, to note the ways the industry has evolved with the changing climate in order to succeed in its mission, and to admire the people who live and work in this paradoxical business.


Know More

End-of-Year Housekeeping Chores

PEO operators are used to thinking a few steps ahead, and the fourth quarter of any given year shows this clearly. While PEOs are performing their day-to-day operations, continuing to execute their strategic goals, and preparing for year-end, they are also planning for the first quarter of the next year, with their current tasks being geared towards having a successful start when the new year arrives.

This end-of-year housekeeping involves every functional area of the PEO.

Let’s start with the sales operation. Viewing your PEO’s sales function in context requires looking at your markets and your competition. This helps the PEO develop plans for the year to come. Make sure your sales department and other PEO departments are in sync, your sales process educates potential clients, and your sales decisions are informed.

The end of the year is a great time for assessing client needs and client profitability. This helps the PEO make adjustments as well as take a really good look at its relationships with individual clients.

The framework on which everything runs, of course, is IT. Closing out the old year in the system is the first step towards the next year. The IT department should perform a self-analysis, an analysis of its interaction with other PEO departments, and an analysis of how the PEO’s growth plans will affect IT.

The legal department plays a key role, as well: It must be aligned with the PEO’s operational and financial plan, perform day-to-day compliance, support the company’s governance, and keep up with changes in the law.

Renewals, assessments, and goals are on the agenda for the risk management department at the end of the year, including renewal meetings with carriers, client review and assessment, claims reviews, evaluation of the PEO’s overall risks, and setting goals for the next year with these things in mind.

The HR, benefits, payroll, and staffing areas have their end-of-year checklists, too. The evaluations, plans, and changes that come out of this annual review will enhance the experience for your clients.

Finally, none of this would work without the finance department. It must prepare for W-2 reporting, send year-end notices, develop the budget, close out the year in the accounting system, and prepare for the annual audit.


Know More

The PEO Life Cycle

This month’s feature examines the PEO life cycle, and there’s no better way to do this than letting a variety of PEOs in different phases of their life cycles tell their stories.

We begin with three different start-ups:

  • One started by someone who spent his whole career in PEO, started one successful PEO, and then combined his corporate training and industry experience into a new model and new enterprise;
  • A start-up created by the CEO of a charter school management firm who considered hiring a PEO, but started his own PEO instead; and
  • A small family PEO started by someone with a background in insurance, investment strategies, and benefits who spent a decade in a family-owned PEO.

Now, on to the growth phase. We hear from:

  • A 10-year-old PEO whose strategy is following best practices, benchmarking, learning from growing pains, and delivering high value and transparency to achieve profitable growth;
  • A fairly young PEO that is gearing up for growth by building up its operation and developing services, maintaining company culture through selective hiring, and investing in a digital marketing platform; and
  • Another PEO with over a decade in the industry, which started up slowly and deliberately, planning with goals in mind, realizing that the only time it did not experience steady and significant growth was when it was not focused on re-investing and focusing on the sales operation.

This next one is a little different. Here we have a PEO with almost 20 years under its belt whose owners wanted to retire and bring in new management. This is the story about how the new exec approached and achieved the company’s transformation.

This feature would not be complete without taking a look at those who have been through the complete PEO life cycle, and then started all over again:

  • A PEO that bootstrapped in the mid-1990s, made it through the “dot-com” crash, but decided to sell after almost 20 years in business, only to start a new PEO with capital attracted by the owner’s two decades of PEO experience;
  • The never-say-never story of two PEO partners who sold their company in 1997, lived their lives, and then re-partnered in 2011 in a brand-new PEO; and
  • An industry icon who built one of the most successful PEOs in the industry and carried it through its entire life cycle, then built a new PEO from the ground up with a time-tested concept.

Know More

Summer Sales Issue

Like PEOs, the shops and vendors on the boardwalk by the ocean offer a variety of yummy and fun things. How do you decide? Burgers or hotdogs? Popcorn or pretzels? A walk on the beach in your new flip flops or a bike ride?

Patrons on the boardwalk may be drawn in by the sound of burgers sizzling on the grill, the aroma of freshly popped popcorn, or the stacks of colorful flip flops. Small business owners may be drawn to your PEO through your online advertising, a call from one of your salespeople, or a search of the NAPEO online “Find a PEO” directory.

Like the beachgoer who wants to make sure the burger is juicy, the butter on the popcorn is real, and the flip flops are comfortable, your small business owner prospect will discern the value of using your PEO by what is on the inside.


Know More

Longevity

The PEO industry is relatively young, a mere 33 years. The oldest company in the world that is still operating is Kongo Gumi, a construction business in Japan established in 578. There is a restaurant in Austria, Stiftskeller St. Peter, that opened its doors in 803, and a pub in Ireland, Sean’s Bar, that started up in 900. Now those are old industries.

Still, the relative youth of the PEO industry does not diminish the accomplishment of long-lived PEOs. We’ve all seen PEOs come and PEOs go, but more important, we’ve seen companies that have endured the ups and downs of the economy, the hard and soft insurance markets, and the constantly changing regulatory environment.

Despite the industry’s challenges, we see PEOs reaching the 10-, 20-, and even 30-year marks. In an industry that pretty much invented itself, with no road map or play book, companies are achieving longevity. Read on to learn the principles behind how eight PEOs have done just that.


Know More

The Legal and Regulatory Roller Coaster

Here we go: Up and down, around and around. Step right up and hop on the legal and regulatory roller coaster.

PEOs are no strangers to this wild ride, but in times like these, it’s not any less exhilarating, or nauseating, as the case may be.

On the federal level, these measures are currently in flux as the new administration comes in:

  • The Department of Labor’s (DOL’s) fiduciary rule;
  • Blacklisting rules and a minimum wage increase for federal contractors;
  • The new overtime regulations under the Fair Labor Standards Act (FLSA);
  • The applicability of joint employer status to PEOs; and
  • The allocation of client and PEO responsibility for Occupational Safety and Health Administration (OSHA) and state rules for recordkeeping obligations and worker safety.

One thing that is not in flux is the new EEO-1 form: The old form had 121 data points, while the new one has 3,360. PEOs should be ready for this new twist, however, because the Equal Employment Opportunity Commission (EEOC) for the first time will use analytics software to identify indicators of potential discrimination on the front end.

On the state level, the rules in the states and local jurisdictions remain a jumble. State licensing and registration laws offer a mix and match variety of provisions addressing everything from direction and control to hiring and firing and treatment of taxes to benefits payments. Human resources and employment laws, governing things such as “ban the box” rules and paid sick leave, can vary down to the local level. Proposals designed to raise revenue, which affect PEOs, are on the rise among the states.

Finally, two PEO execs offer their experience keeping up with and navigating issues in the states, which may make your journey a bit smoother.

So, hang on, and don’t be surprised if by the end of the ride things have changed again.


Know More

Reinvesting for Growth

As PEOs progress, and by necessity, grow, various things happen, creating different possibilities. For example, your company might be topping out of its current capacity. Having trouble keeping up with client needs might be an indicator of this. You may feel like you don’t have the right internal numbers and skill sets to answer every call promptly and easily. Maybe you feel as if your PEO is not keeping up with its competition. You have come to a fork in the road: You could stay the same, or you could bump up to the next level. Bumping up to the next level, however, requires an investment.


Know More

Developing Strategic Goals

“The PEO business is so easy and uncomplicated that it basically runs itself,” said no one ever. Everyone who has ever been in the PEO industry knows what a crock that statement is: Running a PEO is difficult and complicated, to say the least. What helps, however, is planning, setting goals, and figuring out how to achieve those goals.

This feature focuses on setting goals. There are many tools available to help in the process, tools that help each PEO determine its own formula for developing strategic goals. These tools, listed in the glossary below, are available to all businesses, but for PEOs, context is everything.

The first and last articles in this feature examine how two of the most applicable tools work in the PEO context. In between, several PEOs with different models from around the country talk about how they do it.


Know More

New Frontiers

The landscape for PEOs is getting interesting. A brand-new type of business is emerging, HR industry disruptors are revealing lessons and opportunities for PEOs, the possibility of serving international clients is opening up, and changes in the workforce are leading to new ways to reach employees. All of these developments present new frontiers for PEOs.

The gig economy has gotten a lot of attention. This new business model has taken off, well ahead of the legal and regulatory framework’s ability to answer questions about the employee rights, data security and privacy, and independent contractor issues that have already arisen. A serious issue, worker misclassification, poses risks to the gig companies themselves and the PEOs that work with them. Flexibility, adaptability, and proper administration of gig workers, however, can mitigate these risks.

The initial apprehension felt when online-only HR providers—Software as a Service—came on the scene has subsided somewhat, at least for now. It’s clear now that PEOs have advantages over these companies—PEOs are strategic partners with customized, hands-on service, with the emphasis on service. Furthermore, the “disruption” allowed PEOs to reexamine the quality and effectiveness of their own marketing efforts and revitalize their service delivery and user experience.

Global opportunities are opening up for PEOs, too. One particular PEO has developed a global market strategy by working with a local economic development organization, which opened the door to international companies interested in expanding to the U.S.

Now that most everyone has a smart phone, Millennials populate the workforce, and people expect around-the-clock service and access, PEOs are shifting to mobile-first design. This allows access to employee self-service for people in industries that don’t necessarily use computers in their work, caters to the way Millennials work, and makes services and information available 24/7.

While technology has played a big part in these developments, PEOs will always be people-centric, setting them up for success in these new frontiers.


Know More

A Year in the Life of PEO

PEO people are so engaged in the industry that they can discuss everything from the minute details of their PEO lives to broad issues of universal importance across the PEO operational spectrum. Each PEO does things it’s own way, yet each has a stake in the direction of the industry. Listening to them talk about their businesses and the operating environment, you will often hear them finish each other’s sentences. It’s like playing a game of “Mad Libs,” each person filling in the blanks with his or her unique ideas.

It’s not that they interrupt each other—it’s just that they “get” each other, despite coming into the PEO industry in different ways, being in different phases of their business life cycles, and finding their own ways to deal with the industry’s challenges.

On September 8, 2016, five PEO professionals got together in a meeting room in Austin, Texas, during NAPEO’s 2016 Annual Conference & Marketplace. PEO Insider® invited them there to talk about anything and everything having to do with their lives in the PEO world. This issue’s feature presents the transcript of this discussion.


Know More

A Fresh Look at the Ever-Changing PEO Space

The PEO landscape is constantly changing. PEOs, however, are used to it—it’s been changing since day one, and PEOs are proficient at navigating the ups and downs of the space where they operate. What is certain is that these changes always conspire to make the PEO industry interesting.


Know More

The Changing World of HR

You know when you haven’t slept well for a few nights in a row, and you feel tired, worn out, and walk around in kind of a daze? You feel, well, like a zombie.

This is a pretty common state for many small business owners these days, as the low unemployment rate, while good news, means that businesses have an even harder time finding workers to fill jobs. Finding and keeping skilled workers has always been a challenge, and now it is keeping small and mid-size business owners up at night.


Know More

The Butterfly Effect

In the life of a PEO, anything and everything affects sales: The way the receptionist answers the phone, how a client’s payroll is processed, the way HR folks interact with worksite employees, and of course, the quality of the services and the effectiveness of the sales team.

The PEO operates under the concept that any little thing can have big implications for getting and keeping clients—its own butterfly effect.

The PEO carries a lot of responsibility for each client, each worksite employee, and itself. While only a few are tasked with representing the PEO during the sales process, everyone in the organization has a role as a brand ambassador in building business.


Know More

The Key to PEO Profitability

There is an arch bridge in Greece from 1300 B.C., and it’s still standing. There are hundreds of arch bridges from the Roman era across Europe and the Middle East, many also still standing.

The arch is a very simple structure, yet it has great strength, stability, and endurance. Building it requires a frame to support the side stones until the keystone is placed, but then the arch is self-supporting and maintains its strength through the weight of each of its parts.

Although it is very complicated, the PEO can build a strong financial structure based on these principles. Each element—balancing costs and revenues, finding and keeping the right employees for your PEO, using the right technology and workflow processes, focusing on client fit, and matching your service profile to your client base—works together to support the PEO, held together by comprehensive and granular reporting, analysis, and decision-making.

This structure is the key to a strong, stable, and enduring PEO.


Know More

The Journey to CPEO

Imagine embarking on a journey that was 17 years in the making, a journey that will expand business opportunities and provide certainty for the PEO business model.


Know More

How to be a Compliance Superhero for Your Clients

Imagine your clients, slogging away, day after day, dealing with legal compliance, changing regulations, federal laws, state laws, new laws… all the while trying to run their businesses, into which they’ve invested their blood, sweat, and tears. Regular hours? Forget about it.

 

If only these small business clients had someone to help, a superhero of sorts, to save them from these burdens.

 

Actually, if you are reading this, you are likely one of those very superheroes. As a PEO, you help your clients with these problems every day. Because things change constantly, this feature is designed to provide the very latest about the legal and regulatory issues that affect you and your clients right now.


Know More

The Beautiful PEO Operations & Technology Ecosystem

The PEO business is all about people. All of the PEO’s services are designed to benefit client companies and their employees. HR, benefits, payroll, and risk management are all done for people. Under the surface, each PEO has a rich operations and technology ecosystem that makes it all work.

All of the PEO’s functions require data, and this data must flow smoothly through the PEO. Like a coral reef, the PEO has a technology infrastructure that its operation depends on. The reef has hard coral, such as brain and elk horn coral, which serve as the framework. It has soft coral, such as mushroom coral and sea fans, which serve as a different kind of framework, much like the cloud does for PEOs. Like the coral reef, the PEO’s operations and technology work as an ecosystem that supports its life.

The coral reef is rich in life. An endless variety of life—fish, turtles, sharks, eels, crabs, shrimps, urchins, sponges, and algae—flows in and out of the reef, finding shelter and nourishment. An endless variety of PEO client and employee data flows through the PEO’s technological ecosystem in the same way, allowing the PEO to provide its services.

Technology, like the reef, can grow and adapt with changes in the PEO or its clients. Older coral may die, leaving its exoskeleton behind, but new coral builds upon it. There is always something new, just as in the PEO.

It’s a kind of beauty the PEO, its clients, and its co-employees can appreciate.


Know More

The Complicated Machinery of the ACA

Rube Goldberg was an American inventor and cartoonist who lived from 1883 to 1970. His cartoons are easily recognizable. They depict complicated contraptions, completely over-engineered to perform straightforward tasks in ridiculously convoluted ways. They often involve a chain reaction, so they are not only overly complicated, but they take longer, too. The term “Rube Goldberg machine” has expanded to mean any complicated and confusing system.

The Affordable Care Act (ACA) is one such system. It has lots of pieces and parts, each part has its own unique complexity, and it continues to unfold in its labyrinthine manner as the law gradually becomes fully implemented. PEOs and other interested parties watch as it does so.

Right now, here are the things to watch:

  • Changes in store for healthcare consumers, providers, and PEOs;
  • Transitional relief, as it expires and employers are subject to new requirements;
  • A host of new affordability guidance on everything from employer flex contributions to counting hours of service;
  • The potential for state innovation waivers to affect health policy;
  • The affect the ACA’s changes to disability claims can have on administering employee benefits plans; and
  • The ins and outs of 1094-C and 1095-C reporting.

Keep your eye on the ball, or the gear, or the coin as it moves through the ACA, and you will be able to make it to the other end.


Know More

The Evolving PEO Value Proposition

How would you describe the PEO value proposition? While it’s intangible, you may imagine it as something that flows. It’s constantly evolving as PEOs change to meet small business needs, keep up with developments in HR, benefits, and technology, and adapt to the changing workforce. You may envision the PEO value proposition as an ethereal thing, composed of many different colors that blend, change, and flow in different directions.

You may envision it this way because of the many different ways PEOs structure and promote their offerings, and the many different variations and combinations of the offerings themselves. However, it is possible to identify themes running through:

  • Pure-play PEOs, PEOs also offering some mix of non-co-employment such as ASO, specialized and niche PEOs, and PEOs appealing to a broad business base;

  • Disruptors to the PEO value proposition, such as the Affordable Care Act (ACA) and online-only HR technology entrants such as Zenefits; and

  • Indications of where the PEO value proposition is going, for example, PEOs taking advantage of the opportunities created by the ACA, adapting to compete with the latest market entrants determined to take market share, adding compliance assistance as a major focus, preparing for technology to become a bigger part of the value proposition, and recognizing the opportunities the Small Business Efficiency Act (SBEA) presents.

It’s always interesting to see what PEOs do. And the value proposition is a beautiful thing.

 

 


Know More

PEO Snapshot

It’s hard to get a good snapshot of a moving target, and the PEO industry moves pretty fast. PEO Insider® was able to find out exactly how fast, and in what directions, when it sat down with five PEO professionals during NAPEO’s 2015 Annual Conference and Marketplace in Phoenix, Arizona, in September.

When you get PEO people together, you just know the conversation is going to be good. Members of the group, representing companies of different sizes, models, and geographies, talked about their experiences in different markets, their clients’ and their own challenges, the state of the industry, emerging issues, and their thoughts about what’s coming up in 2016.


Know More

Outside Influences

And How They Affect the PEO World 

The state of the economy, the insurance markets, and access to financing affect all businesses and industries. However, because PEOs serve small and mid-size businesses, and a multitude of industries, that extra layer magnifies the effect these forces have on PEOs. In the last year, the Small Business Efficiency Act (SBEA) has entered the picture.

The PEO Index, discussed in our first feature, provides a 10-year history of how the PEO industry tracks with unemployment data and the gross domestic product (GDP). The index shows not only that PEO clients fare better than non-PEO clients, but it also shows that the same elements that drive GDP growth or contraction can be applied to the industry. Increasing government regulation dampens productivity, but again, PEOs have a positive effect on their clients in this area. While the future of the economy is uncertain, the time is ripe for PEOs to reach out to help businesses make progress in a challenging environment.

The workers’ compensation insurance market is definitely in a better place than it was three years ago, but PEOs continue to face structural challenges and increased regulatory interest. While the National Council on Compensation Insurance (NCCI) has filed rate decreases in 30 states, seven states had rate increases. Carriers are also facing dismal interest returns on their investments, leading to adjusted pricing for customers, including PEOs. Some carriers have left the market, and while other carriers have absorbed those customers, regulators are responding to the failures. However, market condition now are generally stable and PEOs have ways to manage their risks.


Know More

A Walk Down Main Street

What’s Really Happening in the Small Business World? 

For PEOs, it’s hard to know what is really happening within any given small business.

It’s possible to collect data from small businesses about their optimism, and conversely, pessimism, towards such things as new job creation or the ability to fill existing jobs, plans for capital outlays and increasing inventories, expansion, and the outlook for sales. Trends in these areas provide a broad context and can tell PEOs a lot about their clients and potential clients.

So too can data that aggregates information from small business owners about the challenges they face from industry and economic issues, product demand, tighter consumer credit, and laws and regulations. Such data provide insight into the environment in which clients and potential clients find themselves operating.

One of the most important statistics for PEOs is the state of small business employment. Tracking small business employment not only indicates how the economy is performing, but also takes the pulse of small business, because in a small company, employees are pretty much everything.

More telling than economic data and statistics, however, are narratives from real small business owners, revealing their every-day struggles and challenges, in their own words. This feature presents narratives from nine small businesses across the country, of different sizes and in different industries. These narratives can help PEOs interpret the economic data and statistics, and really see how it filters down to real life in the small business world.


Know More

Gobbling Up Technology

Supporting Growth • Integrating Data • Improving the Client Experience

Do you remember those early video games that were so addictively fun, yet so frustrating when you failed a level or ran out of lives? Somehow, the fun always won out and you kept playing. PEO technology is like that, too. It can do so much for the PEO and its clients, yet getting to the next level or figuring out how to make it all work can be frustrating at times. Still, the excitement of finding new ways to support your PEO always wins out. With both vintage video games and PEO technology, the fun comes in developing a strategy to beat the game.


Know More

The PEO Business Model

To be a PEO, you have to do certain things for your clients—human resources, employee benefits, payroll and taxes, and workers’ compensation—through the co-employment relationship.

That doesn’t sound very colorful. How much variety can you create with just these four elements? As it turns out, quite a lot.


Know More

Healthcare Compliance, Operations, and Affordability

Wouldn't it be nice if everything you needed to comply with the Affordable Care Act (ACA), incorporate it's requirements into your operation, and keep healthcare coverage for your clients and worksite employees affordable were packaged up in a neat little box? All you would have to do is open it up, read the instructions, and boom—done!
   

Know More

The Legal and Regulatory Issue

Have you seen the YouTube video1 about the most complicated board game ever? Well, here’s a sample of some of the game play

Know More

Finding Your Groove

PEOs operate on thin margins. There is no mystery about that. Mix in the fact that PEOs need to grow to sustain themselves more so than most other businesses, and it’s obvious why maintaining those margins as other operational resources are adjusted to facilitate growth is so important. There are so many different levels, and so many elements to balance, for example: customer service capacity, growth plateaus, flexible technology, profit and loss, cost controls, overhead, staffing levels, service model adjustments, and cash flow, just to name a few. Adjusting something in one area affects the levels in other areas. It requires many micro and macro adjustments, constantly.


Know More

Where’s PEO?

It’s not uncommon for a PEO to feel almost invisible in the marketplace in some areas of the country. But then again, in other areas, it seems like you can’t swing a dead cat without hitting a PEO. This is a pretty strange predicament for an industry that has been around for more than 30 years, and it makes for some interesting challenges.


Know More

Healthcare Inside and Out

The Affordable Care Act (ACA) is a colossal law made up of a massive number of bits and pieces—or to use the technical term, rules and regulations. To help their clients comply, PEOs must understand both the ACA as a whole—what needs to be accomplished—and the ACA down to the cellular level—how it is to be accomplished.


Know More

The Past, Present, and Future of a Dynamic Industry

A recurring theme this year in PEO Insider® has been the collaborative nature of the PEO business. In this, NAPEO’s 30th anniversary year, the magazine has dedicated two regular columns—“#napeo30” and “PEO Spotlight”—to the history of both NAPEO and the PEO industry. Their development has progressed hand in hand, as NAPEO has provided a nexus for people in the PEO business to gather, network, and learn from one another. In this last feature of 2014, PEO Insider brings together five up-and-coming industry leaders for a snapshot of the industry yesterday and today, current challenges, and what they see in the future. As always, we have no intention of leaving you out—you get to be the “fly on the wall,” listening in as these five PEO professionals talk in-depth about everything from the state of the industry today, present concerns, and the business environment, to emerging issues, growth, and the future of the PEO industry.


Know More

Developing Long-Term Strategies

Start Here

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.

Know More

The Elegant PEO Technology Framework

Innovative, Integrated, Scalable

Because almost everything a PEO does for its clients depends on it’s technology infrastructure, this framework must be capable of adapting to technological advances, integrating each and every aspect of the PEO’s operation, and growing with the PEO.

In developing a framework that can accommodate all of these requirements, PEOs can look to the nautilus for inspiration. The outer shell of this creature is secure, reinforced by its unique inner spiral shape. The elegant and delicate shape of the spiral—an innovative design when it originated hundreds of millions of years ago—was so innovative, in fact, that the nautilus survives in the world’s oceans to this day. The shell has provided a framework for the nautilus to adapt to its environment over its evolutionary history, while the one thing allowing it to survive for eons—it’s shell—remains unchanged.

Know More

Cowabunga! Riding the Waves of Opportunity

“Cowabunga!” This slang from 1960s surf culture is the joyful cry of a surfer climbing a 12-foot wall of water and getting ready to “take the drop.”

It’s also the joyful cry of a PEO salesperson following a small business trend and getting ready to close some major business.

Opportunities for both surfers and PEO salespeople come in waves. Surfers know that everything that goes into making a good wave is not evident on the water’s surface. Surfers must know their surf spot geography, keep an eye on local weather conditions, and be aware of the tides. To PEOs, the small business market is like the ocean—constantly moving, with waves visible as they near shore, but their duration and strength somewhat of a mystery.


Know More

ACA Operational Flowchart

Your Guide to Compliance in a Few Easy Steps

The text of the Affordable Care Act (ACA) on the Healthcare.gov website is 906 pages, about two reams of copy paper. The Computational Legal StudiesTM website (http://bit.ly/1oRBKgQ) posts a version that comes in more than twice as long, at 1990 pages. The official, certified version on the U.S. Department of Health and Human Services (HHS) website is 2,409 pages. According to CNSNews.com, the 109 final regulations account for a combined 10,535 pages in the Federal Register. Ugh.

Okay, so the size of the various versions depends on type size and margins, but the ACA is still big and confusing, as PEOs have seen over the last four years of learning to comply with the law and its regulations. PEOs have always dealt with complicated and confusing things for their small business clients, and the ACA is no different.


Know More

Regulatory Climate for PEOs, Small Business, Getting Hotter

The PEO legal and regulatory environment is like the 24/seven news cycle: the flood of information never stops. You can check any time of the day or night, any day of the week, and there will be something requiring your attention.

Surely, there can’t be that much news to fill so much time. The fact is, there is. Just like the torrent of never-ending Internet and cable reports, there are new stories every day, but at the same time, the news may not always be new—it’s often a rehash of previous news. And, the news may not always be complete—it’s frequently an announcement about forthcoming or developing news. The difference is, however, that PEOs need to pay attention to rehashed news and incomplete news as well as the latest developments, because every little regulatory change matters, and it often takes time to prepare for forthcoming changes.


Know More

PEO: Greater than the Sum of its Parts

The basic value proposition of the PEO is simple: PEO clients receive human resources, benefits, risk management, payroll, and all of the associated compliance services, all in one place, the value of which is greater than the sum of its parts. Of course, if the PEO weren’t able to internalize this seemingly paradoxical principle, the value proposition—and the operation that creates it—would not be possible.

So, how do PEOs orchestrate all of the moving parts of their operations to deliver this value? The individual parts are important, and clients and worksite employees certainly benefit from them, but looking at the PEO holistically—as a complete system—allows the synergies that make all the parts work together efficiently.


Know More

Strength, Agility, Endurance

As far as business and service models go, PEOs are very diverse. With options including PEO, ASO, and HR consulting, PEOs, like Olympic decathletes, don’t have to do the same thing all the time, thus building overall strength, agility, and endurance.

The diversity and options don’t end, there, either. Within each service line, options abound: delivery options, service options, a la carte options. These options mean PEOs can serve a wider range of clients, giving them choices for serving companies that may not perfectly fit PEO or that may want something different. Just as the decathlete can sprint, jump, throw, and run long distances, the PEO can meet a variety of client needs with no sweat.


Know More

The Strategy of Risk Management

Managing risk involves dealing with uncertainty, reducing the possibility that things will go wrong, and protecting against hazards. Risk is best managed not by chance, a roll of the dice, but by a well-thought-out strategy and a methodical approach. The PEO’s strategy and approach helps lessen threats, many of which are beyond the PEO’s control.

Let’s start with the state of the insurance markets. The PEO certainly can’t control it, but it certainly can keep an eye on the markets, interpret the indicators, follow the trends, and act accordingly. The combined ratio is a key indicator for insurance carriers. High combined ratios and low investment yields year over year put stress on the workers’ comp line of business and its carriers. The Affordable Care Act (ACA) may affect the availability of health providers for work-related injuries and carriers will have to assume more of the risk associated with terrorist attacks if the Terrorism Risk Insurance Act (TRIA) is not renewed. Even so, the overall trend for workers’ comp is improving and, within this environment, PEOs still have options.

Know More

The ACA: A Guide to the Year Ahead

There are apps for just about everything these days. You can get business apps to do all the same things you can do with your computer, and much more: read credit cards, do video conferencing, and organize trips. You can get apps that help you find parking places, translate languages, and count calories. You can get any game you want, as well as beer-drinking apps and a keyboard app that makes cat sounds.


Know More

Making Change

Or, How to Turn Whatever is Thrown At You Into Opportunity

One of the first things you notice about people in the PEO business is how they handle challenges. The last few years have been rough on all businesses, especially small ones: a weak economy, high unemployment, severe layoffs, shrinking workforces, whole industries struggling, low consumer confidence, stalled hiring, suppression of wages, indecision in business, lending restrictions, a gridlocked government, and a frail recovery. Yet, PEO people still tend to say things like, “We’re all going to find a way to be successful,” “We’ve figured out a way to create our own niche and deliver value,” and “There is so much opportunity.”

The inherent paradox of the PEO business is that when small businesses—the PEO’s lifeblood—struggle, that’s when they need PEOs the most. This paradox has existed since the very inception of the PEO industry. Throughout the industry’s lifetime, PEOs have adapted and thrived through changing economies, market cycles, and business environments. On the surface, how they do this is somewhat of a mystery.


Know More

The Rich Mosaic of PEO Profitability

A lot goes into PEO profitability. Zoom in, and you see the individual elements of your PEO’s financial and operational picture. Like the individual tiles, or tesserae, in a mosaic, they do not reveal much of a picture when viewed so closely. Zoom out, however, and a rich and detailed picture emerges.

Part of this zooming out is applying business intelligence to your PEO. This requires studying the various metrics and what they mean, developing baselines for improvement, and studying and analyzing areas that lead to the PEO’s success. Some of these areas are accessibility and response, productivity and profitability, client retention and growth, internal retention and growth, and product offerings. By aggregating the results of these analyses, you can create a scorecard to manage the big picture of your PEO’s profitability.


Know More

Worksite Liability! Employment Risk!

It All Comes Down to the Worksite

Every PEO’s goal is to help client companies succeed. The PEO’s infrastructure, strategy, and technology are designed to help it meet this goal. All of the PEO’s people work towards this goal. PEOs develop policies, procedures, and workflows to provide HR services, benefits, payroll, regulatory compliance, and much more to the client, all geared towards allowing the people at the company to do what they do best. In doing so, PEOs bear risk and liability.

PEO success depends on client success, and when it comes down to it, client success can be measured by what happens at the worksite. Problems at the worksite can mean problems with the company, and problems for the PEO. The PEO must keep a handle on employee relations and employment law compliance at the client worksite without always being there. Employee relations issues can easily develop into employment liability issues, ranging from workplace squabbles and hostile workplace claims to Fair Labor Standard Act (FLSA) violations and wrongful discharge claims. It can be very scary.

Know More

Thrust • Lift • Stability

Making Sales Soar

When making a paper airplane, crisp, even folds in the right places will generally result in an airplane that will fly straight, even soar. It may be a simple, traditional paper airplane design or a more elaborate and complicated one, but following the plan and correctly executing the folds are key. When you finish your plane and fly it, the throw gives it thrust, the wing shape gives it lift, and the symmetry gives it stability.

Thrust, lift, and stability are vital in your PEO’s sales strategy as well. A predictable sales model will generate a consistent stream of qualified prospects, providing the thrust for your sales program. Each PEO should identify metrics that reveal its target client type, product offering value, and sales team effectiveness, and analyze them to arrive at its own model.


Know More

Go with the Flow

Technology Takes PEOs from Communications and Management to Infrastructure and Data Protection

Many things PEOs do are intangible. Much of their value proposition depends on the flow of data in from clients and employees and the services delivered as a result of that data. If ever there were a type of business ideally suited to technology, PEO is it.

PEOs continue to advance in service, efficiency, and sophistication, and to a large extent, advancing technology helps fuel that. Social media’s growth into a part of everyday life brings business opportunities, as PEOs learn to apply marketing principles and strategies to this new communications channel. Because PEO services also involve the exchange of employment, HR, compliance, and business information, social media can be an effective tool there as well.


Know More

Healthcare Reform & PEOs

It’s Time to Get Practical

After three-plus years of learning, digesting, studying, and attempting to adjust to the requirements of the Patient Protection and Affordable Care Act (PPACA), and seeking to guide and support clients along the way, there is still much work to be done.

The details of PPACA compliance are a lot to absorb, and there is a lot to convey to PEO client companies. However, therein lies the opportunity. Under the category of “What PEOs Do Best,” the most massive regulatory upheaval the country has ever seen also provides the most massive opportunity for PEOs. But, it sure is a lot of work: it requires constant vigilance to keep up with the evolving regulatory environment, intense attention to detail, and a thorough understanding of how everything applies in the PEO context.


Know More

The Shifting Complexities of Regulatory Enforcement and Compliance

Complying with employment law has certainly gotten more complex in the last four years, as the Obama administration has increased its focus on investigations and enforcement. This shift will continue during the next four years as well. To the nation’s small businesses, this presents a complicated picture of rules and regulations, government agency initiatives, heightened enforcement, and increased penalties for violations.

In other words, PEOs have their work cut out for them.


Know More

The Care and Feeding of Your Client Base

Nurture and Engage | Connect and Deliver | Thrive and Grow

Warmth, loyalty, and longevity are certainly three ideal qualities of the relationships PEOs would like to have with all of their clients. The complicated nature of PEO/client relationships requires the PEO to provide the proper care and feeding for each and every client. 

The good news is that a holistic strategy to client care can allow PEOs to provide the energy, nourishment, and vibrancy their clients need, beginning with the sales process and leading to a fulfilling long-term relationship for both client and PEO. This ongoing client nurturing and engagement makes the ground fertile for client retention.

 


Know More

The PEO Risk Management Universe

The Macro to the Micro

Workers’ compensation management in the PEO context is a curious thing. PEOs have three fundamental policy structures available to them: the master policy, the multiple coordinated policy (MCP), and client-based policies.

While today’s brew of master policy, MCP, and hybrid states is not optimal, it has evolved into a  workable accommodation of the interests of PEOs, carriers, insurance commissioners, and ratemaking bodies. Carriers that will work with PEOs vary widely, and the market is limited because of the unique administrative burdens related to PEO coverage. This brew works now mainly because it still allows some flexibility for PEOs.


Know More

NAPEO WOULD LIKE TO THANK OUR MEDALLION SPONSORS