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How do you evaluate a PEO?

There are a million criteria you could evaluate when looking at PEOs and a million different ways to weight them.  The goal of this article is not to come up with a one size fits all criteria for PEO shopping, but rather create a common framework form which to evaluate PEOs. 

 

I like to break down the criteria into 3 buckets:

Insurances

Service

Technology

 

Notably absent from this is Price, which… if that’s your main criteria… we should probably talk about options other than PEO as well.

 

Insurances: PEOs offer a plethora of insurance options for employers and employees alike.  Insurance at its core is a transfer of risk.  So aligning your company and your employees’ risk tolerance should be the primary goal here!  Questions like: do my employees care what healthcare carrier we us?  Have I had bad experiences with specific worker’s comp carriers in the past?  Is a 50K/100K deductible for EPLI insurance way too high for my company? Should all be asked and answered prior to shopping for PEOs as PEOs will very often only work with specific carriers and within specific plan structures.  One of the recent trends in PEO has been the ability to carve out specific insurance lines from the PEO construct which allows for more flexibility with respect to who you work with and how you shop for PEOs.  It’s one of the reasons having a PEO broker that is also a licensed broker is so important, we can step in and place the insurance lines that the PEOs are not competitive with and operate in the PEO environment to make it as seamless as possible.

 

Service:  HR at it’s core remains a human-centric business.  The bots haven’t replaced us yet, and it may be quite a while before they do!  So while a PEO allows your HR team to be more strategic, you want to make sure that the HR admin falls onto a capable PEOs plate with people that can fix problems when they arise.  Every PEO of a reputable size will have bad reviews online as well as good.  It’s a space akin to internet service providers in that when things are going well you almost forget the PEO is there… and that’s the whole point!  However, when things go wrong, HR teams take to the forums and ratings sites and let their feelings be known.  The truth is, that every PEO has good and bad employees and we always recommend meeting your service team prior to buying!  Getting a clear understanding of the role they play and what they will and won’t do is crucial to getting the most out of your PEO relationship.

 

 

Technology

Did they build their own or are they reselling white labeled software?  How well do they integrate with other vendors you use?  Are they SOC I and/or SOC II compliant?  Do they service their own software?  Do they have an app?  How are the reviews and do they have the functionality you need to operate successfully?

 

All questions we can help you navigate to get you to the end result of selecting the right provider at the right price with the right insurance coverages for your needs.