Tips for Choosing the Right PEO Company

Tips for Choosing the Right PEO Company

Selecting the right professional employer organization (PEO) is one of the most important business decisions an organization can make. PEO companies provide valuable HR services and benefits management to help businesses operate efficiently. With so many PEO companies to choose from, it can be overwhelming to try to determine the best fit for your organization. Use these tips to guide you in picking the ideal PEO partner.

  • Do your research.

The first step is gathering information on prospective PEO companies. Create a list of leading PEO firms in your region or industry. Visit their websites to learn about services offered, clients served, and areas of expertise. Check for longevity, as this indicates a stable business. Read online reviews and request referrals from professional associations or colleagues who use PEOs. This background research will help you narrow down the list to a few potential PEO partners for further evaluation.

  • Verify Credentials

There are several credentials to look for as you vet PEO companies. Confirm the PEO is certified through the IRS to provide payroll services. Top PEO services will have solid financial backing and a positive track record of compliance. Ask about their safety programs and procedures as well. Reputable PEOs will eagerly provide documentation of their qualifications.

  • Review Service Offerings

While many core PEO services are similar, there can be considerable variability around specialties. Carefully examine each PEO’s menu of services to find ones that best match your needs. Some PEOs excel at talent acquisition, while others focus on compliance. Consider must-have services like payroll, benefits, and HR management, as well as value-added offerings like training, technology, recruiting, and risk management. The ideal PEO partner will provide a comprehensive suite to handle your critical HR needs.

  • Compare pricing models.

PEO companies use different pricing models, so you’ll need to get quotes from multiple providers. Three common options are percentage of payroll, per-employee-per-month, and service bundles. The percentage model is easiest to budget but could cost more as your payroll rises. PEPM plans allow predictable per-head costs but require paying for each employee. Bundled packages offer pricing tiers based on the services selected. Make sure to understand all charges and fees so there are no surprises down the road.

  • Vet the PEO Team

The people behind the PEO are just as important as the services provided. Schedule introductions with your prospective account manager, their supervisor, and leadership contacts. Ask about each person’s experience, tenure with the PEO, and professional background. Making a personal connection will help determine if you can successfully partner with their team long-term. Also, request references to get feedback from current and past clients on their dealings with the PEO team.

  • Dig Into HR Technology

Today’s PEOs provide access to advanced HR technologies for everything from applicant tracking to time and attendance. Make sure the PEO can provide solutions that integrate smoothly with your existing systems. Ask about their platforms, mobile capabilities, analytics, and the convenience of a single sign-on. While assessing technology, don’t forget to inquire about support. Find out if they offer training as well as technical assistance when issues arise.

  • Confirm data security.

Protecting sensitive employee information should be a top priority. Evaluate each PEO’s data security measures, policies, and protocols. Ask how they safeguard payroll documents, medical records, employee data, and other confidential materials. Top PEO services will have robust systems in place like encryption, password protection, secure data centers, and background checks on staff. Don’t be afraid to dig in and ask tough questions to determine if security standards are adequately met.

  • Request Implementation Plans

The transition process is critical for smooth onboarding. Ask prospective PEOs to outline their specific implementation plans. Look for detailed timelines, assigned team members, effective communication strategies, and training sessions. A structured approach shows the PEO is committed to a successful launch. Ask current clients about their transition experiences as another telling indicator of how organized the PEO is.

  • Check industry knowledge.

Ideally, you want a PEO well-versed in your specific industry to handle nuances appropriately. For example, construction firms have different needs than retail stores. Ask candidates about their experience serving businesses in your sector as well as their ability to scale as needed. A PEO with your specific vertical expertise will have existing solutions ready to deploy that align with common requirements.

  • Request customer references

Do not underestimate the value of checking client references. Speaking directly with current customers gives transparency into the pros and cons of working with each PEO. Come prepared with a list of probing questions that go beyond surface-level satisfaction. Ask about responsiveness, contract terms, unique challenges, uptime, and support. Candid feedback from real clients can make or break PEO decisions.

  • Meet Face-to-Face

Despite all the research completed, it is still essential to meet in person with short-listed PEOs. This lets you assess professionalism, the office environment, interactions with staff, and overall business stability. Schedule on-site visits to meet your prospective service team face-to-face, if possible. The dynamics of an in-person encounter can frequently reveal deal-breaking red flags not uncovered otherwise.

  • Trust your instincts.

With due diligence completed, take time to reflect. Review the pros and cons of the PEO companies vetted. Compare costs, services, ratings, and responsiveness side-by-side. Then listen to your instincts. The right PEO-client relationship requires trust and confidence in a shared partnership. Carefully weigh alignment with your business needs, culture, and goals. With critical HR functions at stake, your gut feeling for the best PEO match matters.

  • Evaluate loss control services.

An often overlooked area to examine is the PEO’s ability to help manage risks and losses. Ask about safety training, workplace compliance, unemployment claims management and workers’ compensation programs. Strong loss control services demonstrate the PEO’s commitment to helping protect your business and employees. Also inquire if they offer HR guidance to help avoid lawsuits around discrimination, harassment, or wrongful termination. Look for a partner invested in helping reduce exposures that lead to claims.

Choosing the top PEO services requires rigorous evaluation to find the ideal fit. These tips will guide you through the selection process. Conduct thorough research and vetting. Dig into details on services, security, technology, and competencies. Check references and meet in person whenever feasible. Take time to carefully analyze the options. With due diligence completed, trust your instincts to make the optimal PEO decision for your most valuable business asset—your people.