Finding and hiring new employees is consistently cited as a primary business concern for security dealer and integrators, especially small business owners. Aside from the vetting process, recruiting and hiring new employees comes with a host of issues for a typical small business – payroll management, withholding taxes and additional accounting and reporting responsibilities are just a few. Less obvious, but more onerous are concerns about risk management in such areas as compliance with human resource laws and worker’s compensation, not to mention the obvious risks involved in security operations.
These and other essential HR responsibilities can be a distraction from the core business of developing sales and controlling expenses. Whether you have a large staff or just a few employees, many small business owners have found that co-employment – or employee leasing – has proven to be a workable solution.
How it Works
Employee leasing companies – more correctly known as Professional Employer Organizations (PEOs) – serve as co-employers with their clients. The PEO assumes the administrative responsibilities, such as payroll management, healthcare benefits and retirement plans, disability insurance, worker’s compensation coverage and claim resolution, assistance with termination, and supervisory training.
The Benefits to the Business
A business owner/manager may prefer to do their own interviewing and hiring of new personnel; however many “may not have the time and the necessary interviewing skills to recruit employees,” explains Bob Kustka, president of CHR Partners, an HR consultant. “Even hiring a salesperson can be a time-consuming job, and hiring the wrong person can be a costly mistake. The right PEO will have the necessary recruiting and assessment experience to take that responsibility off your hands.”
Once you enter into a co-employment agreement with a PEO for one or more employees, the firm takes over full responsibility of payroll administration, including preparation and timely delivery of payroll checks – either via hard copy check or direct deposit. Most PEOs will do all of the computations and make the payments of state and federal payroll taxes, and even provide a full slate of healthcare and other employee benefits.
Terminating an employee is one of the most dreaded tasks for any business owner. When the employee is part of a lease arrangement, the PEO will often handle that difficult responsibility, or work with the business to make certain that all applicable HR laws are carefully observed.
The sheer size of many PEOs gives them a buying power advantage not available to smaller employers. “This is especially true in areas such as worker’s compensation and health insurance,” explains Jasen A. Burcham, National Sales Director for PML Worldwide, one of the country’s oldest PEOs. “We employ professionals in these specialties and they are able to administer benefits more skillfully and negotiate better deals than small employers would be able to do on their own.”
The Benefits for Employees
While specific employee benefits tend to vary among PEOs, most will provide a benefit package superior to what can be offered by the typical small business owner; in fact, many times the owners themselves can join in on the benefit package if they choose to.
The PEO takes responsibility for timely and accurate payroll delivery and the provision of such employee benefits as health insurance, retirement programs, even stand-alone dental and vision plans.
“Our co-employment arrangement has allowed us to provide our employees with a package of benefits that we could not have afforded on our own,” says Scott Colson, owner of an Ironworking business in Mississippi.
It is important to understand that there is a cost to leasing employees. The leasing company serves as the HR department, and most PEOs set their fee as a percentage of the payroll administered. “This is a legitimate charge when you take into consideration the amount of work and expense taken over by the leasing company,” Colson says.
“Charges among PEOs will vary, which is why it is important to shop carefully if you are considering leasing,” Burcham says. “The greater the risk factor is for such things as worker’s compensation, the higher the fee for leasing. Also, the employer’s history of worker’s compensation cases will affect the fee.”
When investigating potential PEOs, your first stop should be the National Association of Professional Employer Organizations (NAPEO), which includes a tool to help find a provider: www.napeo.org/peo-resources/tools/find-a-service-provider.
Of course, no one knows the work culture and environment of your business as well as you do. One of the things to be careful about in working with a PEO is that you do not allow the impression that there is a middleman between you and your employees.