What the Transition Process Looks Like
1. Company Analysis
The first step is meeting with a PEO business consultant to analyze the company’s human resources, risk, workers compensation, and payroll needs.The company will have the opportunity to analyze its processes and procedures in all five areas and identify risk factors, liability exposure, compliance issues, pain points, time wasted, employee drama, profit losses, excessive labor cost, benefits expenditures, cash flow issues due to workers’ compensation insurance, and more. At the end of the meeting, the business consultant will make recommendations for next steps. Recommendations may include the following: Continue doing what you are doing, referrals to other companies for a solution, HR consulting solutions or a PEO partnership solution. If the recommendation is to pursue a PEO partnership, then the business consultant will gather some information to put together a plan based on your specific needs.
2. Information Gathering
In order to prepare accurate suggestions for solutions, your consultant will gather some information about your company, such as current benefits and workers’ compensation insurance. This will give your consultant the information to collect quotes and determine if shifting benefits to a different provider is in the best interest of the company. They will also need payroll data, as well as information to perform a credit check. Since the PEO will held liable for the payroll of the company (along with the company), the credit check assists in verifying the company’s ability to pay its employees.
3. Financial Analysis
Next, you will have the opportunity to meet with your consultant to analyze your company’s actual labor costs. Most companies know what their payroll is, but they do not know actual labor cost. In business, there is no such thing as soft costs. This will give you a real understanding of what your total labor cost is.
4. Solutions and Client Service Agreement
Decision makers from the company will come together with your PEO business consultant to review the proposed solutions and analyze numbers to determine if a PEO partnership is the correct fit. If both parties agree, they will sign a client service agreement (CSA) which outlines the duties you and the PEO share in the areas of human resources, risk management, workers’ compensation and payroll.
6. PEO Transition Team
Once the CSA is signed, a pre-orientation is scheduled. This meeting insures that everyone is on the same page and all of the final details are correct. The transition team goes through a checklist for all of the information needed to successfully onboard your company to its new PEO relationship. They will also create a to-do list for any items that need more attention, such as training for the PEO’s online systems, establishing pre-employment screenings, reviewing or developing a policies and procedures manual, discussions with the benefits coordinator, etc. They will create a timeline for the to-do list and schedule appropriate meetings to follow.
An employee orientation is a quick meeting with the entire staff of the company. It is a chance for the employees to meet the PEO team and help them understand the PEO’s role. This partnership is another investment the company is making in its employees. The number one goal is to help the employees feel like the company is investing in them, and the opportunity to work at your company is even better thanks to the new benefits, perks and discounts available to them!
8. Going Live
Ideally, there is at least 30 days from signing the CSA to the first payroll. This gives the PEO time to ensure things are perfect for that first payroll to your employees.
There is no doubt that there is some initial time and effort involved in making the transition to a PEO; however, in the long-term, there is a greater time benefit to making the move from a handful of vendors (HR, risk management, workers’ compensation, and payroll) to having a single trusted partner. Not only should you not be afraid of the process, your company should embrace the benefits of the process itself.
Even companies that choose to not collaborate with a PEO gain invaluable knowledge, areas of concern and/or reassurance from the analysis meeting. In addition, a decent size PEO will have on-boarded hundreds of companies, so you can rest assured they have mastered the process.