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What Are The Pros And Cons of A PEO?

The following post is provided courtesy of Human Capital Concepts (HCC), a Certified Professional Employment Organization that partners with employers to manage employee-related responsibilities and risks. HCC  provides worry-free HR, benefits, payroll, and compliance solutions all in one place, with personal attention from a dedicated team of experts.


When you dreamed about growing your business, you probably didn’t imagine that you’d need to become an expert in labor regulations, health care mandates, and safety guidelines, along with HR administration, payroll, benefits and compliance. The fact is small businesses spend 17 percent of total manpower on non-core business tasks. Most of these tasks revolve around employee management. A PEO may be able take many of these challenges off your hands.

A PEO is a “Professional Employer Organization.” A PEO will handle all of your company’s HR responsibilities and tasks. Partnering with a PEO will do more for your business than freeing resources for your core business activities. PEO clients consistently provide a better employee experience. Businesses that partner with a PEO experienced twice the revenue growth of their non-PEO competitors. PEO clients are also 50 percent less likely to permanently close.

Before you decide if a PEO is right for your company, you should consider all your options for HR support.

PEO Pros and Cons

When considering teaming up with a third party for your HR needs, you have several options. These options each have pros and cons. A PEO vs a payroll broker or HR administrator, such as an HRO or ASO, may look similar on the surface. They are, in fact, very different.

HRO stands for “Human Resources Outsourcing.” As the name suggests, an HRO allows you to outsource some or all of your HR tasks. The HRO will offer a la carte services. The downside of an HRO is that you are still responsible for decisions surrounding the minutiae of your human resources administration. You’ll still need at least one expert on staff who can make these decisions. Another disadvantage is that your company won’t enjoy lower benefits costs when you partner with an HRO.

An ASO is a cross between an HRO and PEO. ASO stands for “Administrative Services Organization.” Unlike an HRO, an ASO will administer all of your HR tasks. But unlike a PEO, an ASO does not provide workers’ compensation or liability coverage. Also, partnering with an ASO will not help your company save money on benefits coverage.

Partnering with a professional employer organization, or PEO, offers more pros than cons. The advantages of using a PEO range from tax reporting to benefits procurement. The PEO will administer all of your HR needs. A PEO will withhold employees’ taxes and employment tax liabilities. A PEO will also take care of the yearly tax reporting. Your company will benefit from partnering with a PEO to handle many of the aspects associated with having employees.

Higher health insurance costs are a downside of being a small business. Companies that partner with a PEO can leverage the PEO’s size when purchasing health insurance and other group benefits. The PEO will also carry workers’ compensation and liability insurance.

PEO Benefits

Partnering with a PEO provides many benefits for business owners, startup founders, nonprofit executives, and others. For starters, you’ll be able to focus on your core business activities. You strive to be the best in your industry, and growth is exciting. But with growth comes more employees and a larger HR burden. HR compliance, workers’ compensation laws, and employer liability issues are complex and divert resources from your company’s main focus.

A PEO will provide expert support as your HR partner. Human Resources expertise is crucial to the success of your business. Errors from your HR department can potentially cost your company thousands. Hiring the wrong HR personnel can increase your risks of fines, workers’ compensation claims, and lawsuits. In fact, a PEO with recruiting expertise can protect your organization from hiring the wrong people.

You’ll enjoy cost savings when you partner with a PEO. A study conducted by noted economists Laurie Bassi and Dan McMurrer of McBassi and Associates on behalf of the National Association of Professional Employer Organizations (NAPEO) found that businesses enjoy a cost savings of 27.2 percent when they partner with a PEO. According to the study, the average cost savings from using a PEO is $1,775 per year per employee, which also reinforced the findings of earlier research, again showing notably lower employee turnover, higher rates of both employee and revenue growth, and enhanced employee benefit offerings.

Partnering with a PEO will help you get lower rates for group insurance. Your PEO benefits specialist will leverage the PEO’s larger size, meaning you get better rates for your company. Small businesses that partner with a PEO save up to 40 percent on their health insurance premiums, according to the National Association of Professional Employer Organizations (NAPEO).

You may find the advantages far outweigh the disadvantages of using a PEO. According to the NAPEO, businesses that used a PEO grew 7-9 percent faster. They experienced lower employee turnover rates and were 50 percent less likely to go out of business.

PEO Group Insurance

When the Affordable Care Act rolled out in 2010, employers saw a 40 percent increase in insurance premiums. Over the next ten years, healthcare premiums increased another 54 percent, according to the Kaiser Family Foundation. In 2020, average health coverage for a family costs $21,342.

The Affordable Care Act also gave employees insight into the high cost of healthcare. The pandemic drove this point further in employees’ minds. As a result, good benefits are more important than ever for employee retention. More than three-quarters of employees say that benefits are an important part of their overall compensation. Half of employees say they’d consider taking a new job for better benefits.

As a small to medium-sized business, your insurance costs are higher than what large corporations pay. In the past, you may have been forced to provide your employees with less-than-stellar benefits. But partnering with a PEO can lower your costs and provide better options. This is because the PEO negotiates with insurance companies for coverage for all of their clients. You get to pay rates similar to the big corporations when you have PEO group insurance.

The Affordable Care Act did more than raise premiums. Increasingly complicated regulations also increase your administrative costs for health care benefits. An in-house HR team must spend more time ensuring your company remains in compliance. Additionally, an in-house HR team often becomes a sort of middleman between the insurance provider and the employees. When issues arise, your HR staff redirects their time contacting the insurer or deciphering the policy.

PEO Payroll

Payroll administration demands hours that could be spent growing your business. The tasks start with getting withholding information from your employees. From there, you need to track hours and calculate withholdings. You must also track direct deposit information for your employees.

Like any other payroll administrator, a PEO can do all these tasks for you. But there are advantages to partnering with a PEO vs a payroll broker. Your PEO becomes your co-employer. The PEO’s EIN number will appear on all employee tax forms. This allows the PEO to handle tax withholdings and reporting. When tax time comes around, your PEO, not you, will file the litany of related employment tax forms.

But be careful about the downside of PEO tax implications. If you choose a PEO that is not certified by the IRS, otherwise known as a CPEO, you’re on the hook for unpaid taxes. Not every PEO completes the stringent qualifications to become an IRS-certified CPEO. Those that do, however, take on 100 percent of the liability for unpaid employment taxes for your company. Choosing a CPEO is the only way to be confident the money you earmark for taxes makes its way to the IRS.

Another of the pros of a PEO is that you don’t need to employ a Human Resources professional to handle HR administration, benefits and workers’ compensation issues. The average salary for a full-time human resources manager is $68,399, plus an additional 40 percent, or $27,336, for recruitment, benefits, and taxes. The Society for Human Resources Management says businesses need 2-3 HR team members per 100 employees to deliver essential HR services.

Professional Employer Organization Tax Reporting

Partnering with a PEO has important and beneficial tax implications for your company. A PEO will become your “co-employer.” Under this arrangement, the PEO is able to withhold employee federal and state taxes. The PEO then pays the government the withholdings.

A PEO will handle all of your other time-consuming payroll tasks, such as tracking employee wages and other payroll expenses. Your PEO will handle direct deposits and employee classifications. PEOs also take care of all employee documentation and compliance reporting, including new hire paperwork.

But what if your PEO fails to forward employment taxes to the IRS? Some unfortunate companies discovered a significant disadvantage of using a PEO when their provider failed to pay the IRS. Even though you’re entering into a “co-employer” agreement with the PEO, in the eyes of the IRS, you are still the primary employer liable for employment taxes.

That’s why you need an IRS Certified Professional Employer Organization when it comes to tax reporting. A CPEO is certified by the IRS. A CPEO undergoes financial audits, background reports, among other qualifications. Most importantly, once a PEO becomes certified as a CPEO, they assume liability for employment taxes. In the eyes of the IRS, the CPEO is on the hook if it fails to pay your employment taxes.

The PEO will also help handle many of the administrative tasks associated with workers’ compensation.

PEO Cost

Before you decide to purchase PEO services, you should understand how much money and time you’re spending on in-house employee administration. The Small Business Administration says the cost of an employee is up to 1.4 times his salary when you include recruitment, benefits, and taxes.

The time you and your team spend on payroll and HR-related tasks is a little tougher to pin down. A survey by the National Retail Federation found that 69 percent of small business owners feel “overwhelmed by regulations, rules and mandates such as labor regulations, health care mandates, tax codes and safety guidelines.”

The PEO will relieve you of the administrative burden of HR-related tasks. A PEO will also have the expertise to navigate the regulations, mandates, tax codes, and safety guidelines that, frankly, take too long for any layperson to unravel. Your PEO employs a team of HR experts who can navigate the complexities of the Affordable Care Act. They’ll also field questions from your employees. Your PEO will also stay on top of the ever-changing regulations.

Remember, PEO clients average a 27.2 percent return on their investment. A PEO can likely negotiate better rates for all of your employee benefits. Companies that use a PEO experience lower turnover and higher growth. But a PEO may also shield you from unexpected trouble.

The NAPEO recently compared the pandemic’s impact on PEO clients with other small businesses. Its findings suggest that PEO clients were better insulated from the catastrophic impact of the pandemic. PEO clients were twice as likely to have received Paycheck Protection Program loans. Most importantly, PEO clients were 91 percent less likely to still be temporarily closed and 60 percent less likely to have permanently closed.

Conclusion

The reality of employee management may cast a shadow on your dreams when you’re a business owner. But an HR partner can tackle the tedious, yet necessary, administrative tasks that are bogging you down. Once you have a trusted ally who can navigate the burdens of HR administration, you can go back to focusing on your core business activities.

Audit Your Recruitment Process Marketing Content to Delight Job Seekers

Use this audit checklist to evaluate and improve the effectiveness of your recruiting process-related content.

I’m not the first one to say that recruiters, human resources professionals and marketing specialists should team up to create content that engages top talent in your recruitment process. However, how many of you have actively engaged in measuring the impact of that HR/marketing “bestie” partnership?

If you don’t have a benchmark from which to grow, your organization will have a tough time figuring out which recruiting content is worth the investment of time and money.

Maximize the effectiveness of your recruiting content with a periodic audit of your hiring process-related promotional assets. Establishing KPIs for content will make it easy to quickly identify existing content gems, as well as guide you in developing additional content that will resonate.

Auditing your recruitment content is as easy as 1-2-3

Let’s examine the audit process and recap with a free recruitment process marketing content scorecard.

1 – Determine your recruitment content audit’s focus

You can’t decide if you’re investing your time and resources to produce recruitment content wisely until you settle on the scope of your audit.

Don’t sweat it if you can’t tackle a comprehensive audit in your first attempt. If you can–great–though it will depend on your recruiting volume and what you’ve previously tackled in terms of content analysis.

It’s okay to segment an otherwise comprehensive audit into smaller sub-audits–just have an overall plan in place for which audit type should be attempted first.

Potential content audit focuses:

  • Employment brand quality: consider whether your recruitment content is well written, and whether it aligns with what you’ve defined as your organizational employment brand.
  • Hiring process stage: analyze whether a specific hiring process stage is addressed in each of your content assets, and if job seeker questions characteristic of that stage are answered by the content.
  • Job board optimization and search engine optimization (SEO): review your job listing rankings on third party job boards and recruitment content performance on external search engines to identify improvements that will create better digital awareness for your employment opportunities.
  • Content compliance: examine whether your content meets any industry- and/or government-related compliance requirements for your organization, including an analysis of your career content’s ability to attract a diverse set of job candidates.

2 – Settle on your audit evaluation factors

Your recruiting content evaluation process will be based on the type of audit you select. The audit factors must be easily measurable and align to your project scope.

Because this audit is a wonderful opportunity to connect the human resources and marketing teams in your company, ask the project champions from each of those departments to determine the ideal recruiting content audit criteria.

If we select a hiring process stage audit as an example, then HR and marketing might jointly evaluate factors like the content’s

  • alignment with overall employment brand,
  • specific hiring stage focus (e.g. awareness, consideration, conversion, retention and advocacy),
  • attempt to answer stage-appropriate job seeker questions,
  • call-to-action for the next step in the hiring process,
  • current distribution and promotion method by stage type, and
  • likelihood of being easily utilized by hiring stage stakeholders

As you prepare for an audit, you should also plan your intended project deliverables. Aside from a quantitative score for each recruitment content asset, deliverables can include other action steps to enhance content quality.

Potential hiring process stage content audit deliverables:

  • Documentation of all current content assets by hiring stage
  • Content gap analysis for certain hiring process stages
  • List of questions that individual content assets should answer at each hiring process stage
  • Action steps for your content library – content to retain, revise, create or expire
  • Template for creating content for each hiring process stage
  • Distribution strategy for each asset based on hiring process stage and content type (e.g. owned media such as your own career site, earned media such as a guest blog placement on an industry website, or paid media such as a sponsored job listing on a job board)

3 – Rank your recruiting process content

After you’ve married the appropriate content criteria with each asset, you’re ready to score your recruitment process content!

Please recognize that some things can be quantitatively evaluated (e.g. how many out of X job seeker questions are answered?) while others are subjective (e.g. does the narrative’s language support our employment brand initiatives?).

Now’s your chance to create your own evaluation form to standardize your existing and future recruitment content.

Need some help designing your employer’s scoring process? ExactHire created this recruitment process content scorecard to help you hit the ground running.

 

ExactHire Recruitment Process Content Scorecard

Recommendations that resonate

Your audit data is chock full of ideas on where you can start making an immediate impact on your recruitment process marketing. Best of all, it’s backed by a standardized content scorecard.

Use your scorecard analysis to spot trends. Does one aspect of your hiring process consistently fall short? Could others help implement some of the action steps due to their expertise in one stage of the process?

Backed by your audit data, you’re on your way to constructing a high-level recruitment process content strategy that will reinforce your employment brand and help convert more new hires.

ExactHire and BountyJobs Partner to Connect Employers to Search Firms

ExactHire, provider of robust applicant tracking system and employee onboarding software solutions for small and medium employers, recently announced a strategic partnership with BountyJobs, Inc. BountyJobs is a leading third-party recruiting platform for collaboration between employers and search firms with over $2 billion in placement fees to recruiters and the world’s largest recruiter marketplace.

This strategic relationship with ExactHire is one of the latest in the fast growing BountyJobs partner network, seeing 500% growth in 2018 and resulting in the largest partner network of any recruitment marketplace. This network connects innovative technology providers focused on improving the way companies recruit, attract and retain talent. This mix of partners has been hand-selected to help support the key constituents of the 2-sided BountyJobs Marketplace; employers and recruiting agencies. The BountyJobs solution is available as a featured job board within ExactHire’s HireCentric ATS.

ExactHire helps businesses improve HR outcomes with integrated applicant tracking and employee onboarding platforms. Tools for automated job posts, applicant management, and custom reporting dovetail with a platform that eliminates paperwork and task redundancy for employers and new hires alike. And now, through ExactHire’s partnership with BountyJobs, clients can extend the candidate search beyond traditional job boards with convenient access to a network of over 10,000 third-party recruiters. The result is a fully optimized hiring and onboarding process that produces better applicants and enhances the employee experience.

A Scalable Solution for SMBs

“The recruiting, candidate assessment, and employee onboarding software offered by ExactHire is a scalable yet robust platform for SMB and mid-size organizations,” said Jerry Aubin, CEO at BountyJobs. “This cloud-based resource optimizes HR processes into a simple solution for both hiring and succession planning.”

“We are always looking to improve candidate sourcing for our clients, and we realize that sometimes using a third-party recruiter is necessary,” said Harlan Schafir, Co-Founder and Chief Visionary Officer at ExactHire. “Our partnership with BountyJobs offers ExactHire clients a streamlined approach to engaging with recruiters and sourcing exceptional candidates. We’re excited about the partnership for ExactHire, but more so for our current and future clients. This is a valuable addition to our services. It differentiates us from other HR software providers.”

How to Connect with BountyJobs

The new relationship, which marries data-driven hiring solutions and traditional talent acquisition, creates an innovative approach for employers when making critical hires. To take advantage of ExactHire’s partnership with BountyJobs, access the Featured Job Boards area within the Job Board Favorites tab within HireCentric’s Jobs Dashboard. There, you’ll be invited to initiate a relationship with BountyJobs. Or, follow this link directly to connect with BountyJobs today.

ExactHire HireCentric BountyJobs Featured Job Board

 

HireCentric ATS BountyJobs Referral | ExactHire

 

For full details on this new strategic partnership, please see the original post on PRWeb.

Talking HR Technology on the JoyPowered Workspace Podcast

Have you jumped on the podcast-listening wave yet? If not, now’s your chance to listen to ExactHire’s own Jessica Stephenson talk with JoDee Curtis and Susan White, co-hosts of the “The JoyPowered™ Workspace Podcast,” about considerations for choosing and implementing HR Technology. Topics include making a business case for new HR technology, what to seek in a software application, and how to determine if a vendor’s customer support is really as exceptional as they say it is. Check out the podcast recording and episode Q&A highlights below.

HR Technology Podcast Episode Q&A Highlights

Tell us about your company, ExactHire, and what services and technology they provide.

We develop software that automates and improves the hiring process. Specifically, that includes HireCentric applicant tracking software and OnboardCentric employee onboarding software. We also have relationships and some integrations with a handful of employee assessments. All of our applications follow the Software-as-a-Service model, commonly known as SaaS.

How do you make a business case for incorporating more or new HR technology in your organization?

Making a business case starts with a discussion on how change can make the company more profitable. One of the primary reasons making a business case to senior management remains a challenging task is because the language and analytics traditionally used by HR professionals may not be as compelling to others in leadership roles. For instance, while turnover percentage and time-to-fill are reliable indicators to many in the human resources arena, these HR metrics don’t necessarily translate well to CFOs, COOs, or presidents.

For example, when adding applicant tracking or employee onboarding software, some HR leaders focus primarily on justifying these new applications by focusing on efficiencies gained and/or staff time saved. While these points certainly have merit, they also fall outside the common terminology of many finance and operations leaders. Because efficiency and staff time saved in HR are difficult to quantify and not as directly attributable to the bottom line, these savings may be discounted or dismissed entirely.

However, focusing on what direct impact those efficiencies can have on the revenue growth or profitability of the organization changes the conversation completely. Identify the KPIs that impact business outcomes and then paint the picture of how those business outcomes can be positively changed as the result of new technology implementation. Don’t forget to record benchmark levels for your KPIs and organize your findings for senior management. Consider a SWOT Analysis in which you are illustrating strengths, weaknesses, opportunities and threats, and then spread the word to gather internal support from those who will be most heavily impacted by the software application.

Should HR technology revolve around an employer’s payroll system? Thoughts on integration vs. same system?

We certainly encounter employers pondering this question frequently, and what’s right for one organization won’t be ideal for another. There are advantages and disadvantages to each approach, so I’d suggest asking these questions to help determine which approach might be best for your employer.

  • First, what are the overall priorities of your organization, and for your HR department? For example, how important is recruiting relative to other HR functions? What about employee onboarding? If hiring is not a high volume activity, then that probably points you in one direction versus another.
  • Second, how much hiring will your organization do over the next year or two? Your projected volume is going to impact your choice, and it might also tie into the next question…
  • Which is…what specific applicant and/or employee data do I want to be pushed into payroll? So, once I’ve hired someone, what exactly from the applicant tracking or recruiting side should push into payroll? And, once those items are pushed, will I still need to key in additional info such as Social Security Number, birth date, etc. because an ATS wouldn’t necessarily house that kind of sensitive information. That’s a bigger question on the ATS side than the onboarding side. That is, if you’re pushing from an onboarding application into a payroll module. Make sure you understand what that is and make sure you understand how important it is and how much of it there is.
  • Looking at features, does your hiring volume necessitate you to consider a more robust system that has the bells and whistles you need with a better user experience; or, is end-to-end integration the most critical need?
  • How will your needs look next year or in a few years compared to today?
  • And finally… price, is there a notable difference between the options? If there is, what is the opportunity cost of choosing one solution over another… in terms of sacrificing a more robust feature set or conversely in time spent importing data in lieu of an integration option.

What should companies look for when choosing an effective technology partner?

  • Support. Be honest with yourself about your organization’s support needs, as well as how much implementation assistance will be required. Will your ongoing support needs be satisfied with a 3-day wait for the support tickets you submit, or do you really need same-day assistance in most cases? Consider the tech-savviness of your internal product champions, as well as your end users.
  • Training. Find out what training includes in the beginning? One session for all admin users? Sessions specific to restricted users too?  What else? What about when your department has turnover later on? Do you have access to recordings of your training sessions? How often is the product’s online knowledge base updated? Are there other resources you can use to get help: newsletters, Q&A sections, videos, animated GIFs in training tip sheets, etc.?

What are some things companies should look for when choosing an HR software application?

You must know your true needs vs. your “icing on the cake” wants when it comes to functionality.  Your priorities will be impacted by factors such as

  • your organization’s size and the industry in which you work,
  • security,
  • your compliance needs (for example, affirmative action plan reporting, E-Verify, work opportunity tax credit),
  • your average number of hires per year,
  • whether or not you have a decentralized or centralized org. structure,
  • the budget allocated to HR tech spending,
  • your need to integrate with any existing applications,
  • organizational growth plans, and
  • your potential need to move data from one system to another…in the case that you are leaving another provider, for example.

In evaluating these factors, remember to consider the needs of stakeholders such as HR administrators, hiring managers, supervisors, employees and payroll / finance partners.

How can I get technology vendors to help me develop a business case to senior management?

With evaluating a provider’s support resources as we talked about earlier, I would ask your tech vendor if they have any case studies, blogs, e-books or other content that help provide tips on how to make a business case, as well as specific ideas on which KPIs might be the most well-received by senior management. For example, talk in the language of profit per employee or revenue per employee rather than turnover. Additionally, if it’s important for your tech vendor to partner with you in discussions with your senior management team, go ahead and ask for that.

At ExactHire, we know that the product itself is not the only key to success for our clients. We strive to provide timely content that will help our users make the most of not just their product usage, but also how to tackle thorny HR topics they encounter on the job that might loosely relate to an aspect of our product. For example, tips on I9 audits, the latest on work opportunity tax credits, which states have adopted ban the box legislation or that now restrict salary history questions.

What do you do when the technology that works best for the HR team is not always what works best for the users?

Considering the user experience…both internal admin and hiring manager-level users, as well as applicants or existing employee end users…is critical to successful technology adoption. So, if you are in a position to select a new software application, there are some questions you can ask to assess whether you’re on the right track. Consider to what extent other specific groups in your organization will use the application. It may be more important to meet some groups’ needs than others.

  • How easy will it be to encourage others to consistently use the application?
  • Will you need to do some due diligence to train people on how to use it; or, does your partner do all that?
  • In either case, which will be the most well-received by your employees?
  • Will it be pulling teeth to get others to use the software? Consider the reasons why it may be.
  • Do you have the wrong software? Or, are employees overloaded with work and/or not as tech-savvy in some areas?
  • Where will others use your software? Will they mostly be on their desktop, or will it be via phone while on the go?
    • This answer will vary widely depending on whether you are looking at technology companies, healthcare and/or manufacturing clients, for example. If it’s while on the go, then make sure the interface is mobile-friendly.
  • And, finally, does the software have an employee self-service orientation that will ensure your data remains accurate into the future? That is, employees can make their own changes as circumstances change.

When purchasing technology, how might I project system needs a year from now, five years, to know if the system is easily customizable and scalable?

Like so many things, the answer for what is right for your organization will boil down to how well you know your organization. Be in tune with senior leaders’ plans for growth, what market conditions or legislative changes may impact your industry’s hiring curve, and whether you’re looking for any other functionality as a result of changing compliance needs. For example, in the next few years will you likely become a federal contractor of a certain threshold and subject to Affirmative Action Plan reporting for the first time?

Questions to bear in mind include:

  • Are the software application’s user logins unlimited? Or do you pay per user, or per job posting in the case of recruiting software?
  • Are there other HR modules you may wish to add in down the road? For example, learning management, performance management, etc.
  • If you’re using a single sign-on application available with a full HRIS, are the individual HR modules robust enough for your needs today and tomorrow?

How will we know if it will be easy to get to the data insights we need?

Think about the types of reports you run today, as well as what you wish would be easier to get insights on. Then, ask your tech partner if the available canned reports are sufficient to meet those needs. Find out if there’s a report building tool available to get insights on demand. If not, then what does it look like (in terms of time and cost), to get reports created by your vendor? Is it super time-consuming and/or expensive for those one-off requests?

Is it ok to ask to talk to other clients who are using the system; and, learn how they are using reports or have customized their own?

Absolutely it is. First, I recommend doing your homework and asking your own HR contacts for their feedback on different systems. Then, when you are late in the process with one or two final potential vendor partners, do ask them for references. Additionally, vendors may have existing content in the form of blogs, white papers, etc. that highlights customer use cases and illustrates how they’ve used products to solve specific customization and/or reporting requests.

Technology vendors always seem to think their customer support is terrific and available. What are some questions we might ask to get more specific answers?

I don’t disagree with that statement, so asking questions to get the actual data is important. Here are some suggestions:

  • How robust are the training materials available to learn the system? Better yet, don’t just ask this question…see how easy it is for you to find the training materials from the corporate website or within the support knowledge base. If it’s pretty easy to find materials when you’re not even a customer yet, it will only get better once you are.
  • How is customer support structured, and what is the average response time? I like this question because some providers will have tiered support services that provide more support for more money. Others will have the same level for every customer. If there is a tiered structure, then find out the difference in response time for each tier, as well as whether certain tiers only provide email support without phone assistance.
  • How long will product implementation take? This is a huge one as I’m sure we’ve all heard horror stories about systems that have taken more than a year to  implement! Know that the answer to this question will depend of course on what type of system you are implementing…an ATS should take less time than a full HRIS, of course. And some systems with multiple modules will not be implemented all at one time. So clarify whether implementation is likely to take only weeks or months and months…and then do your homework to validate whether the expectation set was the reality for other customers who previously implemented.
  • Finally, know that you play a huge role in the length of your own product implementation…many times implementations draft on because the customer isn’t responsive even when the vendor is.

What are the biggest internal obstacles to making a change to your HR technology stack?

In my experience, they fall into these buckets:

  • Budget
  • The staff bandwidth of your HR department
  • Getting employee and/or hiring manager buy-in to change
  • A lack of desired integration options
  • A lack of awareness about new features available in the market
  • Inertia – the pain of making a move from an existing system

Specific to an applicant tracking system, how might we also consider the candidate perspective?  What is most important and what issues have you had engaging applicants or employees in the past?

When considering the applicant experience, it really comes down to interface and time…particularly in the last few years. So you have these considerations:

  • What is the employment application length and is it easy to navigate?
  • Is there a mobile-friendly interface?
  • Can candidates find your job postings where they would expect them? (e.g. integration with external job boards, social media posting)
    • And on the onboarding side…the time it takes employees to complete new hire paperwork; update employee data.
  • Is it a joy for your workforce to interact with your HR software applications?

We are planning to implement a new HR technology that allows users a more self service model. What are some ways I can get employees to embrace the new technology?

I’m a huge advocate of informal videos and animated GIF images to help people pick up on things easily. Additionally, depending on the make-up of your workforce, you might consider in-person workshops or webinar training to help people understand the types of things they can input in the self-service model, as well as how often they can make changes, how they know the change was successfully entered, etc.

 

Check out the complete show notes for this episode of “The JoyPowered™ Workspace Podcast.”

ExactHire Tech-Based Employee Experience E-Book

 

Payroll Service Bureaus – Are Clients a Flight Risk? [Infographic]

Payroll service outsourcing is nothing new regardless of whether you look at large employers, or organizations that fall within the small- to medium-sized business (SMB) space. However, advances in other human resources-related technologies in recent years have, for the first time, enabled increasing numbers of smaller businesses to automate administrative tasks related to recruiting, employee onboarding, the Work Opportunity Tax Credit (WOTC), background checking and reference checking. And, to do so for a reasonable price.

This presents a challenge to independent payroll providers because larger, national payroll organizations are packaging these additional HR services into a single solution and luring existing clients and prospects away from regionally-focused, independent payroll service bureaus. Want to identify the warning signs that suggest your clients may seek payroll services elsewhere? Check out the infographic below and learn how to spot the red flags that your customers may be a flight risk.

(Click here to enlarge)

payroll-providers-hr-services-infographic

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HR Software Provider Partnership Guide

4 Plays For Payroll Service Bureaus To Close Prospects

Independent payroll service bureaus, it’s time to put on your game face. Your competition isn’t getting any weaker these days, and technology innovation and adoption is moving at a breakneck pace. So, what do you do…sit down and relentlessly review game tapes to study your competitors’ every play? Well, not exactly, but it is critical to understand your competitors’ potential appeal to your existing clients and potential prospects.

In this blog, we’ll take a quick look at how large national payroll providers might try to remedy your clients’ payroll–and general human resources–pain. Then, we’ll examine how each pain point can be turned into an opportunity for your business to compete on a level playing field with the big providers when it comes to serving the needs of your small- and medium-sized prospects and customers.

Don’t Let Prospect Pain Lead to Competitor Gain

Take a closer look at what large national payroll software providers will typically bring to the table in order to win over the organizations in your market.

 

Gain Promised by National Payroll Provider

A fully loaded software platform with a variety of HR service-related add-ons beyond basic payroll.

  • Administrative burden is alleviated.
  • Single sign-on is provided.
  • “Free” applicant tracking module is available to streamline the process of posting new jobs.
  • “Baked-in” new hire paperwork automation exists to make employment paperwork paperless.

Your Pain as an Independent Payroll Provider

  • You’re outmatched when it comes to ancillary HR service software features.
  • Your potential clients are seduced by flashy bells and whistles touted by the national providers.
  • Your prospects are led to believe that only a big provider is going to meet their needs.
  • The national providers aggressively push technology, though you want to keep service as the emphasis for your conversation with prospects.

 

Opportunities for a Good Offense

In this section, we’ll examine each of your pain points as they relate to your prospects being recruited to use national provider solutions instead of your services. In doing so, opportunities for you to score more points in your market space will be presented, as well.

1 – You’re Outmatched Technologically

When faced with the prospect of playing basketball against a squad of seven footers, and you’re only 5’8”, it’s time to run some innovative plays–or, find some sturdy stilts. The challenge is no different when you’re competing against mega payroll software providers that have a one-stop shop software platform to meet every human resource need of your small- and medium-sized business clients.

Your Play: You can make your product offering look “big” as well by partnering with an HR software provider that specializes in systems that fall outside of your core product or service. Not only will your payroll function remain strong as you continue to make it your primary focus, you’ll give yourself additional reach with clients by incorporating options for recruiting, employee onboarding, reference checking, background checking and/or other HR-related tools.

2 – Their Flashy Bells and Whistles are Seductive

The big providers’ long list of customers, features and their share of the market can be impressive accomplishments in the eyes of your prospects. However, upon closer inspection sometimes the sizzle is just a smokescreen for a lack of substance. Specifically, while the big providers give users access to a suite of HR tools in addition to payroll processing, when individually examined these tools may be regarded as afterthought ancillary systems that get added onto the provider’s original payroll code.

Your Play: By forming a strong relationship with a best-in-class HR software provider, your business can match the feature offerings of national providers to get a foot in the door and generate initial interest. However, the especially important benefit of a strong partnership is that your business will have a better track record of customer retention, as it will be providing robust systems with a proven record of continuous development and innovation.

3 – They Throw Their Weight Around

Flashback to fifth grade P.E. class, and I bet your memories include witnessing the biggest, strongest kid always being picked first to be captain of the dodgeball team. The choice was natural as the kid was obviously athletic and a seasoned competitor. Your prospects and clients are thinking the same thing…they want the biggest- and strongest-looking payroll provider to take care of their needs. They want to be in capable hands.

Your Play: When everyone wants to be on the big kid’s team, it’s going to be hard for the captain to customize his coaching to each individual teammate. So, in the interest of efficiency he may adopt a one-size fits all approach. Your prospects may face the same cookie-cutter mentality once they partner with a large payroll provider.

Therefore, consider reinforcing your own coaching excellence with a partner that rounds out your perceived weaknesses as they compare to your larger competitors. In doing so, give your clients a scalable system that can be customized to their payroll needs and current size, and that also includes integrations to the additional recruiting, onboarding and reference checking tools they desire for improved HR efficiency. Better yet, assure them that these additional modules are provided by a partner that is constantly improving its own core offerings while you focus on your bread and butter – payroll. Everyone wins.

4 – They Lead With Tech; You Focus on Service

Think of your competitors as the flashy, private school team with the latest style of uniform and top-of-the-line sporting equipment. They step on the field and you instantly fight off hearing “We will, we will, rock you” in your head. If your business doesn’t pick up a teammate with the right equipment to compete, then your new internal soundtrack will be “I’m a loser baby” as your customers walk out the door…before they even get a chance to be raving fans of your service. They won’t even know what they missed, because you won’t even get an at bat.

Your Play: Add some dazzle to your own pre-game warm-up routine by bringing a solid recruiting and onboarding software partner to the table to assure your prospects that you can fill the same kinds of HR service technology gaps as your competitors. Only then, will you get the opportunity to elevate the conversation to focus on service comparisons where you can further differentiate your firm.

The level of service your competitors offer doesn’t even rival the stellar support that you extend to your customers, right? By allowing your trusted partner to focus on tech development outside of your payroll offerings, you still have time to make servicing your clients a priority. Additionally, with the right teammate, you determine which is your better play: being first tier support on your partner’s products or introducing your clients to your partner’s close-knit team of U.S.-based support specialists that are used to working with small- and medium-sized (SMB) clients.

Game Time Decision

Your customers don’t want to experience employee turnover as a result of missing out on the latest, most engaging HR technology. And you don’t want turnover in your client base, either. Find a trusted partner that helps you provide best-in-class HR service add-on software to delight your customers. Check out ExactHire’s guide to choosing a partner below.

HR Software Provider Partnership Guide

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Payroll Providers, Distinguish Yourselves!

For independent payroll providers it’s sometimes hard to stand out. Resources are limited and the expenses associated with advertising and expanding new services are prohibitive. For newly minted businesses, it might be all they can do just to get operations up and running efficiently. Meanwhile, very large and established providers (a.k.a. mega providers) are throwing big money into advertising and services in order to expand their market share. What’s a small, independent payroll provider to do?

Option 1: Invest In Marketing, Smartly

While the majority of advertising channels are too expensive for a small provider to consider, some digital marketing channels are nearly free. Great results can be achieved through the use of social media, search engine marketing, and email. But while these channels are free, they are also very competitive and that is why “free” becomes “nearly free.”

Being heard above the noise is no easy task, and so social networks, search engines, and even email platforms offer premium solutions to amplify an organization’s marketing efforts. Examples for each of these include:

  • Display ads (search)
  • Sponsored/promoted posts (social)
  • Targeting/segmentation/automation (email)

Individually, the solutions can be fairly affordable, but investing in premium solutions across multiple digital channels will quickly add up. So, again, the largest providers with more resources to invest will have an advantage over the independent providers.

Option 2: Invest In Your Services

Established independent payroll providers may be seeing their market share slowly recede each year. And unless their clients are going out of business or bringing services in-house, it’s likely that another provider has wooed them with ancillary HR services or software. So while it may have once been feasible for independent payroll providers to survive with the same technology and service offerings, today it’s a different story.

Small- to medium-sized business need more services and they don’t want to juggle dozens of vendors to get it–they want their current providers to offer more. The good news is that with today’s explosive growth and evolution of HR technology, independent payroll providers have an advantage over the mega payroll providers: their size and flexibility.

Envision a speed boat making a sharp turn; now, imagine a oil tanker changing course. As an independent payroll provider, you want to think “speed boat”. A speed boat cannot carry as many passengers as the tanker, but it can quickly change direction and get its people to their desired destination faster–and usually with a smile on their face.

Many mega payroll providers, seeking greater margins, opt to build their own HR software or utilize enterprise solutions for all clients–a one size fits all approach. This might work for some SMBs, but more often, the smaller organizations find the solutions to be a poor fit. Even when these solutions do work somewhat adequately, the technology is updated slowly and with little input or influence from the end-users at smaller organizations. The result is that many SMB clients are saddled with a poor solution that fails to meet their needs, and any improvements to the software are slow in coming.  This is “oil tanker.”

But by seeking partnerships with established, customer-centric HR software providers,  independent payroll providers can quickly offer their clients more of what they need without the overhead of expensive software or the headaches of an enterprise-level customer service department. Clients will enjoy the same efficient and responsive customer service with their HR software provider as they do with their payroll provider, which means that as a client’s needs change, the providers can act quickly to meet them. That is “speed boat.”

Distinguishing Yourself

Although a handful of mega payroll providers control between 50%-75% of the entire market, the remainder is hotly contested by other independent payroll providers. And perhaps it’s this competition that is your organization’s more immediate threat. This begs the question, then: are you distinguishable from the next independent provider?

Regardless of whether you believe that your market share is threatened by mega providers, the threat posed by other independent payroll providers when they partner with HR software companies will only increase in the coming years. Can your organization stand by while other providers are striking partnerships with HR software providers? Or is your organization content to watch your market share slowly slip away as more and more clients realize that they can get more value and better services from another provider?

For payroll providers who wish to distinguish themselves among the crowded field of competition–and to do it without losing any more market share–it is imperative that they start considering a partnership with an HR software provider now. To help, ExactHire has produced a free guide, How to Partner with an HR Software Provider, that walks decision makers through a step-by-step process for approaching, deciding on, and establishing a partnership with an HR software provider.

Now you have access to the information and tools you need to bring more value to your clients.

Your choice: will you be an “oil tanker” or a “speed boat?”

 

For nearly a decade, ExactHire has provided hiring solutions for hundreds of clients across North America and beyond. If your organization is interested in partnering with an innovative, customer-centric HR software provider, please contact us today.

HR Software Provider Partnership Guide

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Independent Payroll Providers Under Attack!

Payroll providers are under attack! Across the nation, over 240 independent payroll providers are under attack by “mega payroll providers.” Their mode of attack? They offer a slew of low-cost or “no-cost” add ons to their core services in a bid to persuade small- to medium-sized businesses (SMBs) to contract with them. Seems benign enough, but the problem is that many of these add-ons are poor imitators of quality HR tech. They might be compared to the equivalent of kids’ cheap party favors…the ones that are “thrown in” when you schedule your five-year-old’s birthday party at the pricey bounce house playground.

Some of these mega payroll providers are starting to appear like late-night infomercials… “But wait there’s more! Order now and get FREE software for hiring, onboarding, performance management, PLUS a robot to fire your bad hires!” It would be comical if it was harmless, but unfortunately that’s not the case.

Because just like those infomercials, there are times when the HR add-on features and benefits touted by the mega providers are too good to be true. The result is that businesses get a pretty good payroll provider with subpar HR software that may be clunky, limited, and resting on the dull edge of technology. This hurts the health and growth of an SMB, which begs the question: are these SMBs really, in fact, getting a good payroll provider?

Finding True Value

The reason a business partners with any vendor is to free itself from work in which it does not specialize. Efficiency is gained by contracting the work out to a vendor, and the service received is of higher value than the dollars invested–a positive ROI. This arrangement allows the business to focus on its core competencies and reach its objectives more efficiently. However, this only works when the vendor provides value via a superior product backed by responsive customer service. Quite frankly, when SMBs go with a mega payroll provider they may be setting themselves up to lose on both fronts.

Many of our clients’ previous experiences with mega payroll providers were characterized by slow, poor customer service when it came to supporting ancillary HR software products. And the less robust add-on products that those providers hawk can sometimes cause more problems and inefficiencies than they solve. So while an enterprise-level payroll provider might provide some benefits and value through its core offerings, many SMBs will find themselves frustrated and nowhere near nirvana with the big provider “single sign-on” platforms.

But there are other victims too. Reputable independent payroll providers with effective solutions and responsive customer service, but without the resources of a mega provider, are being pushed out of the market. They may feel compelled to internally develop solutions that fall outside of their core focus and that threaten profitability. To say it simply, smaller providers are being forced to be something they’re not, in order to give clients something they ultimately won’t want (imitation HR tech). So what is an independent (non-mega) payroll provider to do?

Partner Up

Of course mega payroll providers are not evil. They are simply leveraging their market position and resources to create more perceived value for prospective customers–nothing new here. The problem is that they are failing to deliver enough value to the smaller and mid-sized clients that they steal from independent payroll service bureaus. So if smaller providers are to stand a chance at competing with mega providers, they will have to find a way to offer leading-edge HR technology, while also protecting profitability and providing real value. The best way to do this is to partner with “best-of-breed” HR tech vendors.

The world of HR tech has exploded in recent years. There are SaaS solutions for nearly every HR task and process you can imagine. However, not all tech vendors are created equal. When partnering with a hiring technology vendor, you’ll want to ensure that the following is true of the vendor:

  • It provides product support and customer advocacy.
  • It is committed to product improvement and enhancement.
  • It provides sales support via print and/or digital marketing content.
  • It prices products competitively, protecting your profit and customer value.

Each of these areas must be thoroughly vetted before making a decision on a vendor. A vendor that simply says “yes, we do that,” but cannot provide evidence to how effectively it can, in fact, “do that,” is not a vendor with which you want to partner. Remember, although you will resell another company’s product, your clients will associate it with your organization. If the vendor fails to impress you, it will in all likelihood fail to impress your clients, which reflects poorly on you and can damage your client relationships.

Plan Your Counter Attack

In today’s market, it is critical for independent payroll providers to partner with successful, client-centric HR tech vendors. Doing so provides value to clients and maintains profitability for the provider. But rushing to find a vendor and entering a partnership without planning or research can be disastrous.

Before launching a counterattack on mega payroll providers, take the time to plan your approach to an HR tech partnership. ExactHire has created a guide to help you do just that. In it, you will be walked through a series of questions to consider before you commit to a partnership or any type of reseller arrangement. Our hope is that this exercise will help you evaluate whether teaming up with an HR technology provider will potentially open doors for your organization in the marketplace.

 

ExactHire specializes in providing small- to medium-sized business with HR software, including solutions for applicant tracking, employee onboarding, automated reference checks, and assessments. Additionally, ExactHire partners with other SMB service providers to help maximize value for growing organizations.

HR Software Provider Partnership Guide

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How Can Payroll Service Providers Protect Market Share?

If you’re a small- or mid-sized payroll service bureau, then you are under siege. It’s not a surprise assault, but rather a slow, stealthy adversary that creeps into your market, much like an ominous freighter on the sea’s horizon. You can see it coming, but have no control over its course and the subsequent impact on your own existence. In fact, your only hope is to proactively launch a counter attack and build up your own clients’ and prospects’ resistance to the wares it is peddling.

So who is your antagonist in this nefarious, naval metaphor?  If you don’t already know, then you will soon, as it’s inevitable that the larger national payroll providers (e.g. ADP, Paychex, Ceridian, Paycom and Paylocity) will begin to make waves in your pond. But they aren’t your only potential foe, as recent newbie market disruptors such as Zenefits, Namely and Gusto (formerly ZenPayroll) carry a new kind of threat as well.

In this blog, we’ll take a closer look at how your competition is leveraging its strengths to recede your market share. Then, later on in this blog series we’ll examine your opportunities for positioning your business as an attractive alternative to the creeping payroll software providers.

National Payroll Provider Creeper AlertBeware of the Creepers

Of course your competitors aren’t as dangerous as the “creepers” in the video game of Minecraft; however, you don’t want to launch an offensive while unarmed, lest they explode any hopes you have of saving and then gaining new clients. Here’s how you start to sense their presence…perhaps you are a well-respected, service-oriented regional provider that makes sure its customers are more than just one number among many. In fact, your payroll software solution is quite robust and can outperform the payroll functionality of your publicly-traded competitors. Everything is working out well in your market until you start to get creeper-inspired emails like the one below.

Hi Toby,
I hope this message finds you well! I wanted to let you know that in the next month or so, our organization will begin transitioning to a new payroll software platform. Your firm has served us very well to date, but as we look ahead with more aggressive HR department goals, we’re looking for ways to optimize our internal resources, including implementing a system that is designed to bring additional features outside of basic payroll services.

If you are interested in learning more about the specifics of our decision to transition to a new system, I am happy to share more. Again, it’s been a pleasure working with your team over the last few years and we wish you all continued success.

Thanks for your help.
Mimi

That’s what the email actually said, but perhaps all you glean in your moment of frustration is something like this.

Hi Toby,
Your services aren’t keeping up with the “holistic HR” times, so we need to move to a modern solution that will. You’re great to work with, but not so great that we’ll skip out on the chance to run our HR department more efficiently. Sorry ‘bout ya!

Ta-ta,
Mimi
President of the Creeper Fan Club

If you’re still not convinced that your customers are susceptible to the subtle onslaught of new opportunities presented by enterprise-level platforms, then consider the comments noted in the transcripts for Q2 2016 earning calls for both ADP and Paychex.

“In the second quarter, we continued to see very strong demand for our solutions, which is evidenced by our new business bookings growth of 15%. Sales of additional human capital management modules that assist with the Affordable Care Act or ACA compliance continue to contribute meaningfully to this performance, which has exceeded our expectations on a year-to-date basis. As a result, we are now forecasting new business bookings growth of at least 12% for FY16.” Carlos Rodriguez, President and CEO of ADP

“We made good progress across all major product lines during the second quarter. Compared to second quarter of last year, payroll revenue advanced 4% as a result of growth in client base and revenue per check. HRS revenue grew at double-digit rates in the second quarter once again led by our success in selling HR outsourcing solutions to our clients, and total service revenue grew 7%.” Martin Mucci, President and CEO of Paychex

While the above comments encapsulate just one recent quarter’s performance, at a minimum they should spike your adrenaline a bit if it isn’t already pumping. If the major payroll players are seeing notable success in endeavors outside of their original core payroll services, then it’s a certainty that they will continue to pursue them aggressively.

The Lure of Having Features Beyond Plain Ol’ Payroll Software

The economies of scale available to large national software providers have given them the ability to expand their offerings into other verticals complementary to payroll. And while you don’t care if they sell their top of the line platform to Fortune 1000 companies, you do need to be aware of how small business-focused sales teams are luring your local clients away. Here are two tactics involved.

Insurance, PEO and ASO Services

Think about the huge customer lists of the “big boy” providers, coupled with the vast internal resources available. They can train and certify employees to offer additional services, as well as to develop add-on HR systems that complement their payroll application. With staff available to offer insurance benefits and a built-in warm lead flow of clients, it’s no surprise that companies like ADP and Paychex are succeeding in up-selling insurance to existing clients to then fund their efforts to convert new customers by poaching from your pool.

They take it a step further to make a ripple in the small- and medium-sized business (SMB) space, as well, by offering PEO (Professional Employer Organization) and ASO (Administrative Services Organization) services to alleviate the stress felt by companies that are strapped when it comes to internal HR resources. In fact, ADP’s PEO business, ADP TotalSource, is the largest PEO in the United States according to its Q2 2016 earnings call transcript.

You may not want to go near the PEO business with a ten-foot pole; however, you do want to keep your SMB clients from switching their payroll business to a large competitor. However, if that competitor makes the rest of your client’s HR duties easy and all you are bringing to the table is payroll, then you are fighting an uphill battle. Your competitors have the money and resources to make their entire HR services platform top of mind for your clients.

Free HR Software

If I told your clients that I had human resources management software that they could have for free, what would they say? Some might be reluctant because there’s no such thing as a free lunch. However in the case of how Zenefits and Gusto are disrupting the insurance and benefits space, the client would learn that these organizations get paid by becoming the broker of record when they sell insurance to the client. The commission on these transactions more than makes up for the cost associated with giving their clients “lite” HR software for free. It’s no surprise they’ve captured a lion’s share of new customers in the few years since their entrance.

And while Zenefits, in particular, has been momentarily tarnished by the major compliance faux pas of eluding some states’ regulatory requirements for insurance sales, it will likely bounce back as it continues to be supported by major VC money and a new CEO. Plus, rival Gusto has gallivanted into the market without skipping a beat on a similar go-to-market model.

Go With Your Flow, Don’t Fight Against the Tide

It’s not very productive to battle the current that is bringing major competitors into your space, as you can’t control their approach. However, you do have options for bringing additional HR efficiency to your clients and their organizations.

Stay tuned for more details on those opportunities in the next blog in this series. Or, if you can’t wait, contact ExactHire to learn how your payroll service provider organization can partner with us to bring enhanced hiring and onboarding software functionality to your customer base.

HR Software Provider Partnership Guide

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North Shore Trip – August 2015 – MV American Integrity at Sunrise by pmarkham (contact)

Tiny Creeper Statue by post-apocalyptic research institute (contact)