The PEO Revolution - SOI A Professional Employer Organization
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Learn how businesses are using the power of professional employer organizations to improve productivity and profitability. SOI is a leading professional employer organization (PEO) for small and medium-sized businesses (SMBs) serving as a trusted partner in integrated human resource (HR) compliance, risk management, employee benefits, employment practices liability insurance (EPLI), and payroll processing. SOI is based in Charlotte, NC and supports tens of thousands of worksite employees throughout the U.S. For a free comparison quote: soi.com Facebook.com/soipeo Twitter.com/soi_peo Service areas include (not limited to) Dallas, Houston, Austin, San Antonio, Phoenix, San Diego, Los Angeles, San Francisco, Irvine, Chicago, Denver, New York, New Jersey, Atlanta, Nashville, St. Louis, Jacksonville, Tampa, Orlando, Miami, Ft Myers, Ft. Lauderdale, and West Palm Beach.
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The PEO Revolution - SOI A Professional Employer Organization
- 1. The Changing Landscape of Employment
- 2. The Employment Landscape • Dynamic and ever changing • Trends • A retrospective look – A glimpse at the future of employment – What exactly is changing? – Why is it changing? – What is affecting the change?
- 3. Trends Affecting Employment • Competition to attract and retain valuable employees • Pressure to attract new customers and retain old ones • Pressure to optimize employee performance • Tighter cash flow and fewer financing options • Uncertainty related to health care and workers’ comp • Increased employee litigation • Escalating governmental compliance burdens • Increased employer taxes especially SUTA
- 4. A Retrospective Look • “Traditional” arrangement • Employer managed “all aspects” of the business including, but not limited to: – HR and Personnel: Recruiting, hiring, training, handbooks, policies, managing, coaching, termination processes, etc. – Benefits: health insurance, retirement plans, workers’ compensation, etc. – Administration: Payroll, tax compliance, unemployment, deal with employment-related legal matters, etc. • Managed “all other” aspects of the business
- 5. A Few Types of Outsourcing [relative to the employment model] • Outsourcing: • ASO – Administrative Services Organization • BPO – Business Process Outsourcing • HRO – Human Resources Outsourcing • RPO – Recruitment Process Outsourcing • TBO – Total Benefits Outsourcing • TPO – Training Process Outsourcing • BTO – Business Training Outsourcing • PEO – Professional Employer Organizations
- 6. PEOs Businesses today are increasingly using the power of PEOs to improve in action productivity and profitability. PEOs are among the fastest growing business services in the U.S. since the…
- 7. 50% of U.S. employees will be employed by PEOs by 2020.
- 8. PEOs Businesses today are increasingly using the power of PEOs to improve in action productivity and profitability. Professional Employer Organizations (PEOs) improve productivity & profitability by assuming the administrative functions of an HR department. Employee benefits Payroll Employment administration Risk management Workers’ compensation
- 11. of small business employees 40% with individual health plans pay $1,000+ in annual deductibles.
- 12. The cost of Social Security, Medicare & 78% of employees Unemployment insurance account for 35% of all wages/salaries in the US! 1960 2000 2011 consider health insurance the most important 10% 21% 35% benefit! FACT: Without PEOs, many small businesses simply could not afford to offer a comprehensive and reasonably-priced benefits package. Average annual cost of regulation, paperwork, and tax compliance for companies: Less than 20 employees: Less than 50 employees: Less than 500 employees: $7,000 per employee $5,000 per employee $3,400 per employee
- 14. Business owners spend too much time on HR administration services. From 1980 - 2000 the number of Owners of SBE/MBE spend up 67% labor laws/regulations grew by to 25% of their time on nearly 67%. 25% employment paperwork.
- 15. 48% 41% 37% 37% To reduce cost of To free up time to focus on To reduce the cost of To improve recruitment & healthcare & benefits core business competencies HR administration retention What PEOs Offer Healthcare Benefits 97% Payroll and Tax Administration 97% HR Technology 84% Employee Services 79% Termination Processing 70% Retirement Benefits 59% Training 52% 0% 25% 50% 75% 100%
- 16. 90% 80% Percentage of Companies 70% 60% 50% 40% 82% 69% 72% 71% 30% 55% 43% 46% 20% 37% 10% 0% Satisfaction with quality Satisfaction with Satisfaction with time to Satisfaction with of hire healthcare benefits fill employer brand PEO No PEO
- 17. 10,837,269 small businesses in the U.S. 12,679,604,730 Most small business owners work more than 50 hours per week Estimated hours worked by U.S. small business owners each year: 28,176,899,400 Up to 45% of small business owners’ time is spent on HR tasks each year if all U.S. small businesses worked with PEOs When asked ‘What would you do with time saved by outsourcing HR tasks?’ Small business owners responded: dedicate more time to dedicate more time to running 42% growing their business 50% their business 8% other
- 18. Your Unemployment & workers’ compensation savings when working with a PEO Small business owners save approximately Company Size 1-25 employees Percent Saved 100 HOURS up to 100 employees A MONTH by outsourcing HR tasks to a PEO. What would YOU do with the extra 100 hours a month gained and money saved by using a PEO?
- 19. facebook.com/soipeo twitter.com/soi_peo linkedin.com/company/soi URL: www.soi.com Phone: 800.572.2412 Fax: 704.426.1121 Email: CCD@soi.com SOI Corporate Headquarters
- 20. Thank You!
Notas do Editor
- Thank you for your time today, the title of this presentation is “The Changing Landscape of Employment”.
- This is the agenda we will cover in today’s presentation. With respect to the employment landscape, and by landscape, we mean “model”, you will see in this presentation that employment as we know it is dynamic, ever-changing and actually evolving to a point where certain models are “revolutionizing” the concept of employment in direct response to the demands of employers and employees alike. We will take a look at how employers used to manage the day-to-day activities associated with their businesses and discuss some trends and then move into some discussion regarding what the landscape looks like today and how it is evolving. Along the way we’ll discuss what is driving change and why it is changing and what models are essentially affecting the “demand for change”.
- These are but a few of the current trends and situations affecting our clients and I’m sure you can think of many more. Although unemployment is at an all time high in many parts of the country, finding good, qualified people to fill open positions is still tough. Pressure to attract and create new customers generating net-new revenue is also a challenge during an economic slowdown, retention of existing clients is crucial to sustaining growth. In order to maximize business performance, pressure is also high on ensuring employees are performing at peak ability. Available cash and fewer financing alternatives limit the business’ ability to take advantage of opportunities. The direction of health care legislation scheduled to go into effect in 2014 is creating uncertainty in the marketplace and employers are dealing directly with ever-increasing employee litigation, governmental compliance mandates and increasing tax burdens. The question is how and what are the best alternatives to address these?
- Before we begin our discussion of the ever-changing employment landscape or “models, let’s quickly review how businesses addressed the “business of business” the “old-fashioned way”. This is how business operated for years and in some cases still do today. ”Retrospectively speaking, the “traditional” model of employment has the employer at the top of the organization pyramid managing a very wide variety of processes and sub-processes in the interest of “running the day-to-day” operations of their business. This included “all aspects” of the business from HR and Personnel related processes, such as recruiting and hiring, day-to-day coaching, discipline and management, to benefits such as healthcare and medical insurance plans, retirement planning, workers’ compensation, etc, in addition to the administration of payroll, taxes and compliance for all state and federal requirements. If there were issues related to unemployment or legal claims against the company the employer dealt directly with these as well. Oh yes, they also managed all other aspects of the business such as sales and marketing, service, organizational planning, production and delivery, finance and accounting, etc. The problem with this model was the demands of the “non-core” functions in many cases weighed as much if not more in the cost of time than the “core” functions of the business, which produce revenue to keep the business “in” business.What was the single most important solution to this problem? The best way to ensure the business operated at peak efficiency and maximum profitability? In one word…Outsourcing.
- One way businesses improve productivity, efficiency and maximize profitability is to use an outside company and outsource the services they need. Outsourcing enables you and your company to:Avail yourself of the specialized skills and services you need mostProvide a scalable solution, which is in most cases very cost-effective. There is no shortage of outsourcing models ready to assist dependent upon your specific need and/or required skills for services such as, payroll, compliance, human resources, recruiting, training, etc. Some types are very specific with regard to the services they provide, some share risk and others don’t. These are some of the more common forms of outsourcing specific to the employment relationship. Of the available types of outsourcing companies available today to assist you in addressing these issues, which type is best suited for your business? The answer is It depends on what you are trying to accomplish and what specific problems need to be addressed. For purposes of this presentation, we are going to contain our discussion to PEO, since it’s what we specialize in and we also won’t have enough time to cover each of these in detail, including their differences and commonalities.
- How many of you are familiar (by show of hands) with what a PEO is? Did you know PEOs are among the fastest growing business services in the US since the 1990’s? The industry is currently experiencing a period of relatively high growth in difficult economic times, in the 20% range.
- Did you also know that by the year 2020, about half of all employees will be employed through a PEO? What is fueling this growth and expected penetration within the small to mid-sized business sector?
- So here’s the trend of what is happening and why so much continuedindustry growth is predicted…Small to medium-sized businesses (again the small business administration SBA, categorizes businesses that have fewer than 500 employees as small businesses) are leveraging the power of PEOs to both improve the productivity and profitability of their business. The owners and managers, as well as mainstream employees are all more productive, because the PEO enables them to concentrate on what they do best, running the important aspects of their businesses that produce revenue as opposed to administrative distractions, which drain resources and cost the company in time. PEOs also help the business to be more profitable, since they create economies of scale by pooling their many clients typically representing tens of thousands of worksite employees together. These economies produce better plans at better rates on products such as health and medical plans and workers’ compensation insurance. Additionally, access to better, more cost-effective plans enable you as an owner to attract and compete for top talent. Top talent will likely follow the best benefits program all other things considered equal.
- We believe this trend is what is creating more of a “revolution” than an evolution. It’s a revolution because it is changing the way we do business. And it can be a “game-changer” for your company, here’s why…
- The vast majority of US businesses are fewer than 500 employees. And this is what they are facing…Long hours, increasing governmental regulations, leading to higher administration costs and drastically increasing healthcare and benefits related costs.
- This is an important and very “telling” phenomenon. In 2009 the average total premium cost for health insurance for a family eclipsed the total annual compensation for a person earning minimum wage. Within the next decade, the cost is predicted to escalate to nearly $30,000. How will employees and employers be able to afford the expense of offering health insurance? What strategies do you currently employ to insulate your company and employees from the skyrocketing costs for health and medical insurance?Do you change carriers annually, plan features and coverage levels, doctor networks? These strategies all have limits to their effectiveness and are considerably disruptive to everyone in the company on the plan. Bottom line… if medical insurance is going to be offered at your place of business, someone has to pay, whether it is the employer or employee. In those cases where the employer is shifting the burden to the employee, the high cost to the employee often results in dropped coverage, jeopardizing the entire group’s ability to meet required participation requirements mandated by the carrier to avoid “adverse selection”, which drives up the costs of insurance even higher. What can you do? How can you reduce, and stabilize costs and insulate your company and employees from drastic rate renewal increases? A PEO can help.
- So, what do we know about insurance and what employees want with respect to benefits? It’s not surprising to know that a wide majority, in fact 78% of employees consider “affordable” health insurance to be the most important benefit offered to them through their employer. Another important fact is as noted earlier, without PEO’s, many businesses simply could not afford to offer health insurance coverage as in integral component of a reasonably and “affordably” priced benefits program designed to attract and retain them over time. Employees have come to expect health insurance and for you as owners to share in, if not pick up the cost for it. Which of course can be very expensive, but what about all of the other expenses associated with having employees that don’t win you any brownie points with your employees, yet are still required from a tax compliance and regulation perspective, these costs are also in the increase. Let’s take a look at the “growing burden placed on employers by the government.
- This slide sums the burden of tax, HR and legal compliance regulation up rather well over time. The sheer volume of laws and regulations imposed on business today is staggering. Keeping up with the “alphabet soup” of mandates and requirements for any sized business is a major challenge and the largest single drain of management resource time and energy. How much time do you devote to the HR related function in your business? If you’re like most employers, it’s much more than you’d like and yet without help, is necessary.
- If you are like most business owners, you are already working more than the “typical” 40 hour week. The vast majority of business owners do work more than 40 hours. In fact a full 25% of owners are working more than 60 hours per week. Factor in the advances in technology fueling communication, such as cell phones, iPads, portable computers and other related technologies, which have enabled us to extend our reach with regard to information and the owner works longer and harder than ever before. This is in stark contrast to the employee who is working less than a 40 hour week on average. It probably won’t surprise you to learn that employee litigation is also on the rise. The federal Equal Employment Opportunity Commission received, 99,922 claims in 2010 – a 60% increase over 2009 (does not include state and local claims).The point is owners are spending way too much time on routine, time-intensive HR related tasks and paperwork, which is driving their “true work-week” up in hours devoted to work to compensate. Avoid the responsibility and you risk being sued by an employee or the government, both risky situations.
- Here are some of the various reasons why businesses see value in a relationship with a PEO. You’ll note that healthcare benefits tops the reason why many companies feel the PEO value proposition is so compelling. Access to affordable benefits is important and a key component to an effective strategy for an employer to attract, compete for and retain great employees. The PEO concept has been leveraging the buying power of large groups for years and helping business owners to achieve their business goals by enabling them to recruit the best employees possible, via a comprehensive and affordable healthcare and benefits package.
- PEOs also help businesses by improving the quality of the the hire of employees they are able to attract to work for their companies, as well as the ability to shorten the timeframes associated with filling open positions, again this and the satisfaction with healthcare benefits directly correlate to higher levels of satisfaction with the employer’s brand, which equates to finding “value” in their position and company relationship. These are commonly known as “the golden handcuffs”.
- With over 10 million small businesses in the US alone with the owner working more than 50 hours per week yields an estimated 28 billion man-hours worked in those businesses. With the owner currently devoting 45% of their time on non-productive, routine HR related tasks it begs the question…What would you do if you had more time available to devote to more productive things. Small business owners responded by saying 42% would devote more time to growing their business and generating more top line revenue and half would spend their time “in it” and doing those things that help it operate more efficiently and effectively thus improving both the top and bottom line.
- A recent study in August of 2011 conducted by The Aberdeen Group revealed that small business owners typically save about 100 hours per month by outsourcing HR tasks to a PEO. So the question for you is what would you do if you could save an extra 100 hours per month in your time and how would you invest any money saved by utilizing the services of a PEO?
- Thanks very much for your time and attention today. If you would like to speak with us further, please contact us. We will be delighted to offer your company a free, no obligation assessment and comparison of how we may be able to save you and you company both time and money. If you are interested in learning more about the subject of outsourcing, we invite you to visit our website and blog. We regularly post relevant articles on a variety of HR related subjects designed to enlighten clients and interested parties in learning additional ways they can reduce risk, improve efficiency, enhance employee satisfaction in their workplace and increase their bottom line. Thank you so much for your time…