BUSINESSMANAGEMENTREVIEW.COMDECEMBER 202319be less expensive. Alternatively, a company may need a more robust and competitive benefits offering to attract the quality of talent they need. Meaning that even if it costs significantly more, it is an investment the employer is willing to make to expand their offerings. · Size/Staffing Considerations. The sweet spot for PEOs are usually companies under 50 full-time employees. Of course, there are exceptions to this rule, but once an employer reaches 100+ full-time U.S. employees, it's generally time to consider whether the PEO is the most cost effective approach. · Control/Data Access. As part of a PEO, an employer likely conformed to the PEO's way of doing business with their rules and their benefit options. The employer may be ready to change this dynamic to have more control, including the ability to respond to employees' needs/interests. Additionally, employers may want access to data and/or analytics that they are otherwise unable to obtain.· No "best fit" options. PEOs generally work with a standard/limited set of service providers, which may or may not be a best fit for a specific employer need. For example, an employer may want to use a specific healthcare insurance carrier, type of coverage, or plan design that is not available through the PEO. · Service. When service levels provided by the PEO do not meet expectations -- e.g., poor client management, slow response time, insufficient process automation, inflexible and/or hard to navigate technology --it is time for the employer to either consider a different PEO or move away from a PEO strategy altogether. LINING UP REPLACEMENTS BEFORE EXITING THE PEOBefore you exit a PEO, consider the fact that all of the PEO functions need to be replaced by third parties or in-house staff. If you build your team well, the minutia of all of the things the PEO was doing can be delegated to the respective teams and done in a fashion that is more tailored to your business objectives. There are a multitude of vendors to select for each function of the PEO. When a new client asks us to help them leave a PEO, we engage the following consulting teams to navigate the selection of vendors or carriers, all related to employee benefits and Human Resources.: Two important points to note: (1) many PEOs allow you to stay on their payroll system and carve out the other functions, and (2) worker's compensation and employment practices liability coverage needs to be obtained by a property and casualty broker. CONCLUSION Even when a review of the data supports an exit with compelling financial and strategic reasons, there is often still quite a bit of push back and resistance. Why? Because people are concerned by the extraction. Coming off a PEO when you have reached a certain employee count is the equivalent of choosing to wake up early to exercise. Perhaps in the moment, it is not exactly how you want to spend your time or exercising is physically difficult, even mildly uncomfortable. Think of your broker partner as a personal trainer: your broker can encourage you, show you new approaches, and make it less likely you'll injure yourself. Recognizing and taking this administrative heavy-lift head on may be undesirable in the short-term but incredibly beneficial in the longer term. If you are able to save on the administrative costs of the employee benefit offering, you can reallocate those funds in a manner which better serves your employees. If you build your team well, the minutia of all of the things the PEO was doing can be delegated to the respective teams and done in a fashion that is more tailored to your business objectives
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