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8 Steps for Evaluating a PEO Partner’s Performance

Business leader uses research to evaluate a PEO partner of interest

Quick look: The growing number of professional employer organizations (PEOs) can make it difficult to select which one best fits your business’s HR needs. By using this eight-step evaluation guide, you can identify which partner truly offers the quality PEO services and support your team deserves.

Partnering with a professional employer organization (PEO) can provide numerous benefits for your business, from streamlined HR processes to cost savings. However, as your company evolves and grows, it’s essential to periodically assess your PEO partner to ensure it aligns with your changing needs and objectives. Use the following eight key steps as a guideline to effectively evaluate a PEO partner’s capabilities and competence.

Step 1: Review Your Current PEO Agreement

An organization’s growth rate is a key identifier of their success. Most companies’ average growth rate is benchmarked between 15% and 45% year-over-year; small businesses aim to grow 10%-25% on average within the same timeframe. To reach those growth benchmarks, businesses must ensure their strategies and partnerships are flexible enough to meet evolving demands. Despite this, some PEOs treat their partnership agreements as set-it-and-forget-it plans instead of adaptable baseline solutions.

That’s why it’s vital to thoroughly review the PEO services and capabilities outlined in an agreement. By comparing these solutions against current HR management needs and expectations, it can be easier to notice relevant gaps in services and opportunities for improvement. These points help you highlight which aspects and offerings are outdated.

Step 2: Assess Service Quality and Responsiveness

Customer service experts know problems can strike at any time. When one does occur, a customer service teams’ responsiveness determines how quickly and efficiently a solution is found. In fact, 40% of customers believe that resolving the issue in one interaction is the most important aspect of a good customer experience.

When evaluating a PEO, assess the quality of their provided services and support. In terms of service, investigate whether their solutions cover core HR administrative tasks such as payroll processing, tax management, full life cycle recruiting, benefits enrollment, and risk mitigation.

Additionally, consider how responsive they are to key inquiries and concerns. 70% of consumers believe a same-day response time is acceptable when putting in a request. Use that benchmark to pinpoint which PEOs meet or surpass this expectation, like how ExtensisHR has an 11-second response time and a 95% same-day case resolution rating.

Step 3: Compare Pricing and Value

Since 33% of business leaders experience challenges or failure due to a lack of capital, companies craft their budget to achieve the best services at the best cost. Such budgeting tactics should also apply when entering an agreement with a PEO partner.

When considering a PEO contract, be sure to measure the costs against the value your business receives. Carefully examine the costs associated with a PEO partnership, including administrative fees, employee benefit costs, and any other service charges. Since certain solutions may require additional costs to unlock extra features, request a detailed cost breakdown in order to properly conduct a cost-benefit analysis for your investment.

Step 4: Consider Scalable Customization

The services and tools integrated by a company should be as unique as the challenges they face. The desire to meet that need is why businesses actively seek out personalization. In fact, 75% of business leaders believe personalization is critical to achieve success.

Businesses also expect PEOs to provide personalization to better accommodate their HR needs. When choosing a PEO partner, check what type of customized solutions are possible. Their ability to tailor PEO services to specific industry and team requirements demonstrates how flexible and better equipped they are to support your team’s long-term growth.

Step 5: Evaluate Compliance Support

Complying with industry and employment regulations is a priority HR tactic that helps organizations protect their workforce, office spaces, and overall reputation. Since 34% of organizations outsource part or all of their compliance functionality, PEOs play a fundamental role in helping businesses navigate complex employment laws and regulations.

To verify your PEO’s track record in ensuring compliance and managing risk, evaluate their expertise in areas such as payroll tax compliance, employee benefits administration, and workers’ compensation. Since only a small percentage of PEOs meet the industry’s strictest compliance requirements, look for a Certified PEO (CPEO) who holds current ESAC Accreditation, CI Accreditation, and is SOC 1 Type II Certified.

Also, confirm that they maintain proper insurance coverage and have robust risk management strategies in place. The more precautionary research you do, the less likely your business will face unnecessary legal and financial risks due to an ineffective PEO’s lapses in compliance.

Step 6: Explore Technology and Innovation

In today’s digital age, technology is amplifying business leaders’ capabilities to track critical HR operations. That’s why 56% of companies are redesigning their HR services to support digital and mobile tools. Though these redesigns can be done internally, an expert PEO partner offers distinct HRIS tech that add ease and efficiency to HR services.

Take the time to research your PEO’s technology infrastructure and strengths. Any HRIS platforms should include user-friendly functions as well as innovative tools. Additionally, a technologically advanced PEO ensures its systems comply with key financial and data privacy regulations. For example, ExtensisHR’s Work Anywhere® platform features multi-factor authorization to protect their users’ identities and activity logs. This platform also has a mobile-first design, letting users access their accounts anywhere and at any time to conveniently cater to today’s digital workforce.

By using a PEO with innovative technology, your business can significantly enhance your HR processes, streamline workflows, and provide a more seamless experience for both you and your employees.

Step 7: Seek Feedback from Employees

Executives aren’t the only ones invested in their PEO partner’s success. Employees rely on their company’s PEO to properly receive paychecks, enroll in benefits, and complete necessary workplace training. Most importantly, employees experience first-hand if that partner misses or meets key HR expectations. Since 89% of HR leaders agree that ongoing peer feedback and check-ins lead to successful outcomes, it’s worth investigating their valuable perspective on this manner.

Gather employee feedback about utilized PEO services and systems by conducting surveys or scheduling one-on-one discussions. While gauging their satisfaction levels and experiences, pay attention to recurring complaints and compliments. Your employees’ input can be an influential factor in your evaluation process, shedding light on how effective and user-friendly your PEO is.

Step 8: Research Alternative PEO Providers

Choosing the right PEO partner can unlock numerous advantages for your business. According to  NAPEO, companies using a PEO experience higher revenue growth and are 50% less likely to go out of business. If your evaluation results show your current PEO isn’t meeting your team’s HR needs, it’s time to thoroughly research alternative providers.

There are a number of factors to consider while researching alternate PEOs. Track records of excellence in the form of accolades to help indicate a PEO’s reputable standing. ExtensisHR, for example, is recognized by the IRS as a CPEO due to its stellar services and consistent compliance with multi-industry standards. Other factors to research include solution offerings, industry specialties, tech scalability, and overall client reviews. Some partners like ExtensisHR also offer service transparency by allowing customers to schedule in-depth demos and one-on-one meetings to demonstrate how their PEO services meet business requirements.

Doing this research educates you on what PEOs can do and helps pinpoint a PEO who better fits company needs when your current partner’s capabilities fall short.

Let ExtensisHR Be the Right Fit for You

Conducting a regular PEO evaluation is an essential tactic to ensure your company is receiving optimal HR support. After all, such evaluations inspire ExtensisHR to provide transparent and comprehensive offerings, including but not limited to:

  • Fortune-500 level employee benefits
  • Full-scale recruiting at no additional cost
  • A designated HR Manager and account team for each PEO customer
  • Flexible reporting tools and performance tracking within our mobile-first Work Anywhere® platform

When making an informed decision about PEO, don’t let lack of research diminish your organization’s chances to find a partner who drives HR efficiency and overall business success.

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