HR firms handle more than payroll
By Lou Basso
Dolan Media Newswires
Long Island, N.Y. – Businesses are paying a heavy toll for the economic downturn.
Now more than ever, they need resources to help streamline operations, manage risks, contain costs and build employee morale. For these and other reasons, many small and midsized companies are outsourcing their human resources tasks to professional employer organizations.
PEOs handle tasks including payroll, tax and employee benefit administration, regulatory compliance, workers’ compensation, unemployment claims and employee assistance programs. To get the most from PEOs, companies must take certain steps from the start.
Client companies should be receptive to questions the PEOs ask and should understand the need for the information. Plus, they should recognize that the way they previously handled tasks was not necessarily compliant with federal and state regulations. Clients should understand that PEOs are supposed to help companies to become compliant. Clients also should make sure employees understand that PEOs can help the employees as well as the companies.
Going forward, companies should view their PEOs as partners and risk managers and not simply as payroll services. PEOs can help determine courses of action and solutions that will best serve the companies and minimize risks. But communication is vital. PEOs must be kept apprised of payroll, wage and hour, employee relations, discrimination complaints, new hires, terminations, workplace injuries and other HR issues where the PEOs can help achieve important goals such as cost savings and employee retention and training.
Clients should discuss payroll and HR decisions with appropriate representatives from the PEOs before making any decisions. This allows the PEOs’ specialists to provide advice on any risk or compliance issues before problems develop. Where problems cannot be avoided, the PEOs should be informed early. This will enable the PEOs to provide a risk analysis, help minimize risk and better prepare the clients.
One of the biggest mistakes clients can make when outsourcing HR functions to PEOs is to think the clients can sit back and take a hands-off approach. PEOs cannot be effective if clients assume the providers can serve without input.
Although PEOs can relieve the administrative burdens, there still must be working relationships based on communication and cooperation.
You know an HR outsourcing relationship is working when the PEO feels informed about the company’s business and the company feels that the PEO is a partner in the business. Often, when a PEO hears from its client on a regular basis, it is a good indication that the HR service provider is viewed as a trusted partner.
Lou Basso is president of The Alcott Group, a professional employer organization.