What to Expect When Beginning a PEO Partnership

If you’ve made the decision to partner with a professional employer organization (PEO), you’ll be developing a strategic co-employment and HR relationship that can benefit your company in numerous ways. For an increasing number of small to mid-sized businesses, working with a PEO is the best way forward as they strive to stay competitive in an intense labor market.

So, it’s all good. But it’s also a significant change – and change can be stressful or anxiety-provoking, unless it’s handled proactively, smartly, and efficiently.

What to Expect When Starting a PEO Partnership

Expect some uncertainty.

To help ensure a seamless transition into your PEO partnership, start by acknowledging that, for your employees, it will most likely incite questions, uncertainty, and apprehension. After all, they’re about to become co-employees of a second organization, one that’s totally separate from the one that originally hired them.

Create a transition management team.

While your PEO will provide ample information and assistance, the transition will go more smoothly if you create a team dedicated to managing the process on your side. Remember, you own the relationship with your PEO – and by extension, are in charge of the transition process.

• Among your team’s first duties should be deciding which aspects of HR you want your PEO to take on. This is essentially an HR needs assessment; it may be a good idea to conduct it in tandem with your PEO.

Be respectful of your employees and keep communication lines open.

Keep your employees in the loop so there are no surprises as you move forward with your PEO relationship. Keep their needs top of mind and communicate regularly about related plans, expectations, and activities.

• Be as transparent as you can, so as not to disrupt service to your employees. This will enable them to stay focused on their work, rather than on any worries they may have about benefits, paychecks, or other HR matters.
• Explain why you’re transitioning to a PEO and focus on the benefits to your employees and your business. Be sure your message points to employees outline why the switch to a PEO will make their jobs and lives better. For instance, focus on how they’ll have more and better benefits and/or why there will be fewer payroll errors or better training and development programs as a result of the change.

Document and keep records.

From your initial agreement with a PEO through planning and every step and agreement, keep detailed records and make them accessible to all affected parties. Avoid any ambiguity in this regard.

• Be prepared to submit whatever records are necessary for your PEO to begin working for you. These may include year-to-date wages, 401(k)/pre-tax benefit contributions, unemployment taxes paid PTO balances, and others.

Looking to Start a New PEO Partnership?

It may take a little extra work upfront as your company finalizes its PEO relationship, but it will be more than worth it in terms of your ROI, once things are up and smoothly running. If you have additional questions or simply want to learn more about PEOs and the possible advantages to your business, contact Key HR today.