How to Evaluate the Best PEO Companies

Partnering with one of the best Professional Employer Organization (PEO) companies can optimize HR, benefits, payroll, compliance, and more for your business. However, the PEO space has exploded with contenders over the years. Conducting thorough due diligence is essential to determining which PEOs truly deliver best-in-class service worthy of your trust. This article outlines key factors to evaluate when identifying the best PEO companies for your needs.

Verify industry credentials and recognition.

Reputable PEO companies will have earned credentials and recognition that set them apart. Look for the IRS Certified Professional Employer Organization (CPEO) designation, which ensures conformity to strict financial reporting and operational guidelines. Accreditation from the Employer Services Assurance Corporation (ESAC) is another mark of excellence. Also check for inclusion on rankings such as Inc. Magazine’s Best Workplaces list or the Weatherhead 100 list. External validations signal PEOs that go above and beyond.

Look for specialized industry experience.

Some PEO companies specialize in certain industries, like healthcare, technology, manufacturing, or professional services. A PEO with proven success serving businesses in your specific industry understands associated risks, regulations, hiring needs, and more. They can customize services accordingly. If your operations are unique, industry-specific expertise is invaluable.

Verify state licensing and insurance.

Make sure any PEO company you consider is properly licensed in all states where you have staff. PEOs must hold a license demonstrating compliance with regulations in each state to operate there. Also confirm that the PEO carries appropriate insurance policies, including workers’ compensation, commercial general liability, professional liability, fidelity bonding, and more. Proper licensing and insurance equals protection.

Check client retention and satisfaction.

The best PEO companies earn the loyalty and praise of clients. When evaluating options, ask about client retention rates and check client satisfaction through surveys and testimonials. Tenured clients suggest the PEO reliably delivers positive results. You can also request referrals to contact current clients about their experiences firsthand. Happy clients indicate a PEO that achieves outcomes.

Review technology capabilities

Since PEOs centralize key aspects of workforce administration on technology platforms, their tech stack merits close evaluation. Assess capabilities across HR information systems, payroll, time and attendance, benefits enrolment and management, reporting, mobile access, and applicant tracking. Also check for intelligent functionality like employee self-service and automation. Cutting-edge technology maximizes efficiency.

Examine the safety and compliance record.

A major benefit of a PEO is transferring liability for safety, health, and compliance obligations. Scrutinize each PEO’s processes for mitigating risks and their track record with workplace safety, OSHA, and compliance matters like wage and hour, FMLA, ADA, EEOC, and more. A PEO with a sterling history of safety and compliance delivers on risk protection.

Evaluate the breadth of HR services.

Some PEOs provide fairly basic HR administration, while others offer comprehensive talent management solutions. Make an inventory of your needs across HRIS, recruiting, onboarding, training, performance management, diversity hiring, compensation analysis, and more. Then assess how completely each PEO can bundle the required HR services together. More robust HR capabilities prevent gaps.

Confirm the availability of consultative support.

The best PEO companies move beyond just transactions and administration to offer strategic, consultative guidance. They lend their expertise to help clients optimize hiring, retention, diversity, compliance, benefits, safety, technology use, and more. Consultative support accelerates business success. Ensure prospective PEOs provide this higher-level advisory role.

Research leadership experience

A seasoned, skilled leadership team steers the best PEO companies. Review the backgrounds of executive management, board members, and investors. Look for deep experience in HR, risk management, benefits, payroll, technology, compliance, sales, and operations. Diverse leadership expertise translates to well-rounded service delivery. Financial backing from reputable private equity firms also lends credibility.

Validate Service Centre Resources

Assess the resources behind the PEO’s client service model, including the service centre. What are the hours of operation and service standards for responsiveness? What is the average tenure of service personnel? How does staffing scale to accommodate growth without compromising quality? Deep-service resources prevent gaps in support.

Check the efficiency of implementations.

The vendor selection process offers the opportunity to assess the effectiveness of the PEO’s implementation and onboarding program. How quickly can they transition new clients to service? How do they facilitate data migration, system configuration, training, and other startup needs? Efficient onboarding ensures you start experiencing benefits sooner.

Benchmark Pricing Against the Competition

Part of due diligence includes benchmarking the PEO’s fees against competitors. Gauge if pricing is competitive for the specific services and value delivered. Be wary of rates that seem unrealistically low, as that may signal underinvestment in service quality. Optimal PEO partners deliver superior ROI, not just the lowest cost.

Confirm data protection practices.

Vet each PEO’s data security protections before entrusting them with sensitive company and employee information. Inquire about their security protocols, access controls, training programs, compliance auditing, insurance coverage, and breach response plans. Rigorous controls and a cybersecurity spine distinguish leading PEOs.

Request and check references

The best validation of a PEO’s services comes directly from clients. When narrowing down your options, ask PEOs for client references. Reach out to those references and solicit candid feedback. Verifying satisfaction through peers who use the PEO provides helpful, unbiased insights.

Review Recent Company Developments

Progressive PEO companies continually invest in enhancing services and expanding capabilities. Evaluate press releases and news articles to determine what recent initiatives or developments the PEO has pursued. Examples may include new technologies rolled out, service centres opened, expertise added, or acquisitions made. Forward momentum aligns with client needs.

Meet your account management team.

Client service starts with your dedicated account management team. Arrange to meet prospective account managers during PEO evaluations. These key contacts should demonstrate expertise, commitment to understanding your needs, and passion for delivering exemplary service. Choose a PEO where you can connect with the account team.

In the conclusion, reiterate that not all PEO companies are good. Conducting thorough due diligence leads to the best professional employer organization matched to your goals. Seek PEOs with proven credentials, specialization, licensing, satisfaction, technology, leadership, service resourcing, efficient onboarding, value, data security, references, progressiveness, and consultative account support. Taking time to identify PEO companies that excel in these areas yields a trusted workforce partner.

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