WHY NOW IS THE TIME FOR PEOS
PAUL SARVADI & INSPERITY
Scholars, leaders, and researchers often speak about how widespread catastrophes or crises can lead to re-evalutions, new perspectives, and dramatic changes that affect various areas of society. COVID is a prime example that certainly fits into this scenario. For business leaders, it illuminated the importance of a sophisticated human resources department. It drove home the need to focus on people and develop a robust people strategy for business success.
And that’s good news for PEOs.
PEOs are in the people business. It’s what they do. As business leaders search for solutions to meet their people’s needs and expectations, PEOs have never been in a better position to help. That’s one reason why Insperity Chairman and CEO Paul Sarvadi remains optimistic about the future of the PEO industry. He spoke with PEO Insider® to share his thoughts and perspectives on why now is the time for businesses to use PEOs.
“So much of what happened during the pandemic landed in the HR department,” Sarvadi says. “Business leaders are always into the financials and the data, but they need to remember that it’s their people strategy that drives success across the business.”
The bottom line, according to Sarvadi, is that the where, when, how, and why of work has completely changed. The lines between work and home have blurred further, and many employees have reevaluated the role their career plays in their lives.
COMPANY CULTURE & PEOPLE
The full ramifications of these shifts are not yet known, but it’s clear that business leaders need to place a greater emphasis on their people. At the foundation of any people strategy is a company’s culture. The mission, values, and attitudes of a company form the basis for how employees interact with one another and with clients.
Because the workforce is now more spread out across numerous home offices and remote locations, it makes establishing a corporate culture harder than ever before. However, doing so has never been more important.
“Every business has a culture, some are created by design, but most are created by default,” Sarvadi says. “Now, you have to be much more deliberate about how you design and create your culture.”
He notes that many businesses relied on the physical environment to drive and shape culture, but that’s no longer possible when employees are not in the office together each day. New, creative ways will have to be implemented to bring employees together. PEOs can play a role here, helping clients identify strategies and methods to shape a culture that fits the employees and generates a positive attitude toward the company’s mission.
To better understand what motivates and inspires employees and drives culture, Sarvadi advises business leaders to think like behavioral scientists. This means uncovering the forces that drive people each day and learning how to lead employees in the same direction.
“There are three employee-related factors that drive business success,” Sarvadi believes. “First, individual effort, or people doing their best even when no one is watching. Second, collaboration, or people working as a team rather than as individuals. Third, alignment, or having everyone working toward the same goals.”
He cautions that if a business leader doesn’t understand what drives behavior, then it will be very difficult to achieve success on these three points. Again, it’s people that drive results, so being able to understand employee behavior is critical to leading a successful business and achieving goals.
Of course, part of understanding human behavior is recognizing when people have been pushed too far. Employee burnout is a real concern, and one that every business grapples with on a continuous basis. Sarvadi explains that it has only become harder to spot employee burnout, especially with remote employees. To combat this, he says it’s safe to assume that all employees already have some level of burnout.
“There’s still a higher level of fear and underlying anxiety across the board,” he says. “You have to create hope about the future to lift people up.”
This is easier said than done, but it’s another way PEOs can help clients and provide value. The vast array of resources and expertise PEOs provide allows businesses to better take care of their people, which can help mitigate burnout.
This is incredibly important given the persistent labor market issues that have made finding and retaining talent so difficult. Again, though, PEOs can help.
“We’re in a very strange economic picture,” Sarvadi says. “There’s an acceleration of people leaving their careers, fewer people to hire, and the rise in inflation has wiped out the benefit of wage increases. All of this means your talent strategy has to be front and center.”
There are many ways PEOs help clients retain talent, but an emerging method has to do with the rise in data analytics. The digital age has generated endless data points, including in the HR space, but very few organizations have learned how to effectively apply that HR data to their businesses, Sarvadi notes. This is partly because data application is limited by the quality of such data. Now, however, there are more tools to filter out irrelevant or misleading data points and focus on useful ones. This means that a business can harness data to inform its people strategy. For example, Sarvadi explains that predicting employee turnover is possible by identifying common factors among recent employees who left, whom the company hoped to retain. By identifying these data points, the company can now apply them to its existing workforce to pinpoint current employees who share those characteristics. This allows the company to approach these employees to gauge their attitudes, satisfaction, and future plans. Ideally, the company is able to retain these employees.
THE EVOLVED VALUE PROPOSITION
This sophisticated application of data and focus on a robust HR strategy is in stark contrast to the industry’s early days. Sarvadi recalls how the PEO value proposition has evolved from savings on benefits and paperwork administration to the high-touch, high-tech HR services PEOs are known for today. That’s not to say that other factors are not important components of the value proposition, but it does illustrate how businesses are searching for—and expecting—more. He notes that interactions with clients are about increasingly sophisticated and complicated issues, which means PEOs must be prepared to rise to the occasion.
The good news is that business leaders and even investors now recognize the value of sophisticated HR services and strategy. They don’t need to be convinced. Insperity has been a leader in the PEO industry since the company was established 36 years ago. Sarvadi has witnessed the industry evolve, grow, mature, and accomplish many milestones.
Yet, he believes that the opportunity for PEOs has never been greater. Now is the time for PEOs, and it’s up to the industry to seize the moment.
Member Communications Manager