Question: As I need to add more staff for my growing small business, I find that interviewing and all the other requirements for getting a dependable employee demand a great deal of time. Does SCORE have any input for effectively cutting down on this process?
Answer: It is true that good help is hard to find and to keep. It’s even more difficult when adding in the administrative burdens of hiring, managing, and paying employees. That’s why many small business owners turn to professional employer organizations (PEOs) for their staffing needs.
But don’t confuse PEOs with temp agencies. PEOs provide human resource services to their small business clients-paying wages and taxes, and assuming responsibility and liability for compliance with state and federal laws and regulations.
In addition, PEOs often provide workers with access to 401(k) plans; health, dental and life insurance; dependent care; and other benefits often out of reach for many small businesses.
According to the National Association of Professional Employer Associations, between 2 and 3 million people in the U.S. are covered by a PEO arrangement.
A PEO can also handle screening resumes and interviewing candidates, and, when appropriate, conducting pre-employment testing to predict loyalty to your firm and success on a specific job. Some PEOs have entire divisions devoted to helping small business owners make the right hiring decisions.
However, according to Georgina Clatworthy, writing an article for Business2Community.com, a small business should consider several factors before going with a PEO.
She says, “The most immediate benefit of utilizing PEO services is saving time and staff. When tedious HR responsibilities are eliminated, managers are freer to focus on core competencies and grow their business. A second advantage is the access to higher caliber benefits packages. Another advantage is the lower cost of worker’s compensation insurance that PEOs are able to negotiate.”
Nevertheless, there are some disadvantages as well. “Despite the numerous merits,” writes Clatworthy, “there are several reasons why a company may not want to outsource its HR management. First is the loss of control that any transfer of administrative power implies. For example, a company’s choice of benefits packages will be limited to those offered by the PEO. Also, the company’s power to hire and terminate workers may be limited.
“A second drawback,” states Clatworthy, “is excessive subjection to business statutes. Many governmental regulations designed for larger enterprises do not apply to smaller businesses. A third disadvantage is the possibility of employee dissatisfaction. Suppose that all one’s employees are summarily terminated and rehired by an unfamiliar outside entity and forced to cooperate with it. This can understandably be a confusing and undesirable situation for many workers.”
To find and evaluate a PEO to suit your needs, consider www.peo.com. This site offers a searchable directory of PEO firms, plus the ability to consult with hiring experts via email.
Another resource is PEOcompare.com. This site provides a wealth of information on how PEOs operate, human resources management, general employment trends, and other related small business issues.
Arizona has PEO companies to help with your hiring needs, so you have the confidence of working with a company that is familiar with Arizona’s laws and regulations. In Phoenix, there is Consolidated Personnel Services (cpspeo.com) and in Mesa, you’ll find Choice Employer Services (ChoicePEO.com).
Just an hour’s drive from Flagstaff, don’t miss the Summer Business Planning Workshop in Cottonwood — five Wednesdays, July 23 to Aug. 20, from 5 to 8 p.m. at the Business Assistance Center, 821 N. Main St. in Old Town. $90 for two people from the same business. Go to http://northernarizona.score.org/localworkshops. Questions? Call (928) 778-7438 or email firstname.lastname@example.org.