Our post yesterday provided an overview of Professional Employer Organizations, and the role they play in supporting small business. Today we will review the National Association of PEO’s (NAPEO) recommended guidelines in working with a PEO.

NAPEO Guidelines

NAPEO, in particular, provides prospective clients with a few guidelines to help them seek out the services of a PEO. Some of these guidelines include:

a) Assess the needs of your company first. Since there are now several PEO companies specializing in different branches, it is imperative that you know exactly what your company needs so that you will not have to pay for services that you don’t really need. Determine your HR and risk management needs, and try to compare the services being offered by the PEO companies.

b) Meet every potential PEO provider. Although there seems to be a lot of PEO companies that are willing to provide you with internet based communication, it will be best that you try to meet these people so that you can gauge their legitimacy and their capability to perform the tasks you need. Other gauges of legitimacy may include:

i. Professional references from clients and colleagues

ii. PEO background – you can check whether the PEO has a history of business competency, actual business certification, permit to operate in the state or country they are based, affiliation to the NAPEO or ESAC, etc.

c) Review the written agreement thoroughly, and preferably have the company’s retained lawyer give you a read-through. There is a difference between a verbal agreement and a written contract. Make sure that you know exactly what you are signing, and if you have any questions about certain policies or feel that the contract should be giving you more, then ask your lawyer (or the PEO) company.

A professional employer organization can certainly be a boon to many companies, but only if yours really needs the services offered, and you have thoroughly checked the contract. Make sure that you are getting what you want and that there are no hidden costs that you are unaware of. If everything is fine, then PEOs can save you a lot of money in providing professional help in areas of employment in which you either lack the skills to carry out properly, or would cost you too much to set up a department to handle.