There are more than 700 PEO service providers in the US so how will you find the ones which are best suited for your organization?
PEOs provide a vast array of services so you must look to find the PEO that has all the required components on your checklist.
It is also important to shop around before you decide on partnering up with one to make sure you have a competitive pricing for the level of service.
Getting multiple quotes from the respective PEOs is not an easy task as it requires for you to fill out a different set of forms per each PEO from your selected list.
To make things worse PEO proposals can be extremely lengthy and difficult to compare to one another since there is no standard proposal format.
Many times PEOs bundle rates and one cannot breakdown the various components such as worker’s compensation, state unemployment rates or administrative fees.
Let’s dive in and see how PEO brokers and some other types of professionals are here to help.
Who Is PEO Broker?
The term PEO Broker is coined from other industries mostly because PEOs have not initially been brokered.
As the PEO’s desire to expand their client base across more industries and States within the US grew, many PEOs found most advantageous to team up with a salesforce outside their organization.
PEOs decided they would pay a percentage of revenue to an outside salesforce rather than pay more salaries internally. Another words, they are smartly exchanging a fixed cost for a variable cost and this cost is only realized once a client is on their books.
Not all PEOs allow brokers to offer their services.
There are some national PEOs such as ADP, Paychex or Insperity who only use their internal salesforce. They have spent tremendous advertisement dollars to make their name known.
These PEOs see less value in paying outside sales professionals a client acquisition fee.
A few other regional PEOs who do not partner with outside sales maintain their solution is so superior and specialized that they do not place high value in anyone other than their internally trained salesforce.
This landscape is changing especially now when there is much consolidation and acquisitions among PEOs.
A PEO Broker or someone who can connect a client with a suitable PEO is a category of professional who performs this service in different capacities.
There are three essential types of professionals who can help you to connect with a PEO provider:
These are firms who have made it their business to understand the wide differences among the many types of PEOs as well as the specific needs of the client.
Small and medium size businesses have general common needs and also very company specific drivers. PEO broker companies drill in to figure out what these company specific needs are to best pair the client with the proper PEO solution.
PEO broker companies have established relationships with all three types of PEOs (National, Regional and Niche). The reason for this is the desire to be in a position to have at least one option for every client who is a fit for the PEO partnership.
PEO broker companies have more relationships in place than the other two types of PEO connectors most often finding themselves in a position to interact with the PEOs upper management and owners of the company.
PEO broker companies have most often over a dozen different PEO relationships.
One Set of Forms
Some PEO Broker companies have standardized the process for the benefit of the client offering a consolidated RFP questionnaire applicable to all PEOs which maintain the relationship.
Clients fill out only one set of forms and the PEO broker company alongside the PEOs do the rest.
Additional benefits from PEO broker companies include the ability to negotiate on the clients’ behalf.
Due to the larger volume of business the PEOs receive from PEO Broker companies and the favorable professional business relationship, the client is often in a position to get the most competitive rates. This is further cemented by the knowledge the PEOs have that they are competing with other PEOs for the clients’ business.
This individual has a primary area of expertise such as health insurance or worker’s compensation.
Insurance agents who interact with clients in these areas have found that not all clients are good candidates for a stand-alone policy. For example if a client had a worker’s compensation issue and they were either being dropped by their carrier or their premiums became too high, then finding another carrier to issue them a competitive policy becomes a huge challenge. The challenge is a result most often from a claims history problem due to workplace injuries.
Health insurance agents have had recent challenges placing clients with the proper health plan due to Affordable Care Act (ACA) shaping of the industry.
Small and medium sized businesses have experienced their stand-alone health plans rise in cost and become reduced in choices.
These smart insurance agents realized that in order to stay in business and at the same time add value to their clients they needed to find another option.
Some paired up with a small number of PEOs and fostered these relationships.
The PEOs are of course glad to collaborate and the insurance agent is happy to have a new way to keep clients satisfied.
Insurance agents typically acquire one to three PEO relationships and work those into their array of services.
It is important to point out that insurance agents are compensated by the PEOs and clients will not need to write additional checks to them. These agents are very hands on.
They gather the information from the client and convert it into the PEOs format for underwriting and quoting.
Agents are involved in the entire sales cycle from data gathering until a signed client service agreement is executed and even offering support during the on-boarding of employees into the PEO.
What are the cons of using insurance agent for PEO search?
Insurance agents typically have less PEO relationships than PEO brokers and are less likely to provide a proper broken down cost analysis comparison.
BUSINESS CONSULTANT AND SPECIALTY PROFESSIONAL
This is a wide area with a common denominator which is that these professionals do not receive compensation from the PEO.
Under business consulting we have seen companies that contract with a small to medium size business for a fee to optimize their operations and in many cases taking them to the next level over a period of time.
A company that is in stage one seeking to go to stage two would contract the services of these professionals.
Part of what they would do is to make multiple recommendations and outsourcing the HR functions many times is one of them.
These highly skilled consultants often have a PEO relationship that they feel comfortable with and would simply refer the client to them.
Other times they would ask the client to find a PEO who meets a certain series of parameters. These professionals are compensated by the client and not by the PEO.
Other professionals who fit this criteria are skilled individuals who service a particular niche market.
For example a Prime Broker who works with startup hedge funds finds him or herself in a position where a client would ask them about a PEO solution.
These professionals often have one PEO relationship they know within their niche market that can satisfy that particular client. The client would simply be referred to the PEO and off he or she goes to explore this solution.
Corporate Attorneys and CPAs often find themselves as a part of this group.
They are in a position to evaluate the client’s needs and often recognize the value in pairing the client with a PEO either because the client requests it or this professional has become sophisticated enough to make the proper recommendation.
These professionals again would refer the business without expecting compensation in return as they are compensated directly from the client for services provided.
Oftentimes the individuals in this category would refer a client directly to the PEO relationship they have or to the other two PEO broker types mentioned before. B2B CFOs are also part of this group.
What are the cons of using these professionals for PEO search?
The same like insurance agents these specialty professionals typically have even less PEO relationships and will not get involved in the process other than refer a client to one PEO. They will not do a cost analysis comparison or help with the data gathering or anything else.
Whichever avenue you chose to find a PEO, it is recommended you take advantage of the guidance of other professionals especially if no additional cost will be incurred by you.
Using any of the above mentioned PEO brokers or connectors can be a great way to reduce the labor needed on your part to find, compare and evaluate the many PEOs that exist in the US and to make sure your company is best matched with the right solution.
If you found value in pairing up with the right professional who knows the PEO space and you do not necessarily want to do all the work by yourself then a PEO Broker company is the perfect bridge to the PEOs.
The Huldisch Group is here to help you throughout this entire process.
Email us today and we will find you the PEO to match your needs.