HR outsourcing: private employer organizations (PEOs) cut costs, add value for employees, and eliminate administrative headaches.

As businesses in all areas of the search high and low for ways to cut costs and improve their bottom lines, it is time for club managers to take stock of one of the most popular administrative trends of the last decade--human resources outsourcing. From managing payroll to ordering group health care insurance, there are many reasons to consider taking these functions out-of-house, if you haven't already.

"This is definitely something that more clubs should be doing," said Mike Viola of Oasis Outsourcing, a club industry-specific subsidiary of the Wackenhut Corporation. As its core function, HR outsourcing allows a business to contract out elements of its human resources operation such as payroll, staffing, insurance, workers compensation, and benefits. "There are many businesses who are already doing maybe one or two of these things at a basic level," said Michael Berger, district manager in the St. Louis office for Administaff, one of the nation's largest HR service companies. "They may be using a payroll service, but that's about it."

Private Employer Organizations (PEOs)

Companies such as Administaff and Oasis Outsourcing fall into a higher niche of HR outsourcing services otherwise known as Private Employer Organizations, or PEOs. A PEO bundles all of the human resources functions of a company into one full-service product offering. "Instead of contracting all of these services on an a la carte basis, we aim to provide a fully-functional HR department for small to medium-sized businesses," Berger added. "And with the collective resources of our 4,500 corporate clients, we're able to provide all the features usually associated with a Fortune 500 company."

When evaluating the personnel management needs of your club, it is important to understand the key service areas. According to Mike Viola of Oasis, these are;

1) Payroll Processing. "This includes all the main functions of generating payroll, tax returns, new hire reporting, etc."

2) Human Resources. "For a typical country club, it doesn't make sense to have a six-figure HR director on staff. So what Oasis offers is access to a host of senior HR professionals. We can generate employee manuals and handbooks, and we can also provide supervisory training in such areas as wage and hour rules, dealing with sexual harassment, and teaching interviewing skills for prospective employees."

3) Benefits. "Life, vision, 401ks, dental, disability, etc. All of these policies feature the same sorts of benefits extended to the employees at Fortune 500 companies, because PEOs offer group rates and eligibilities on enrollments. We also handle Cobra and bill reconciliations."

4) Workers' Compensation. "All of the workers enrolled come under our workers' comp policy. We even handle fraudulent claim investigations."

When considering the scope of HR services that PEOs provide, it may seem like overkill for a small, private club. "It really has nothing to do with the size of the organization," explained Administaff's Berger. Admittedly, there are many companies who enlist with a PEO strictly for the benefits they receive through buying via economies of scale in a consortium. "An owner may just looking at the amount paid per month on salaries, insurance, benefits, and workers' comp insurance, and is just be looking to utilize the group rates in this area alone," he said.

However, Berger added, "PEOs also help employers maximize the investment they've made in their employees. The other issue is employee retention through the quality of your HR offering. You have to think about how hard it would be to replace your employees in the event that they leave the company.

"For example, in an office of six anesthesiologists, you have a group of highly-skilled, highly-trained people that are important to your 'business.' The more valuable your employees, the less likely you'll be able to tolerate turnover. Therefore, the more valuable your employees are, the more you'll want to invest in them."

Though the "skill" of your club's employees may not be as pronounced as that of an anesthesiologist, Berger said, "It all depends on how the manager perceives the value of his employees to his business. Are the employees are reflection of the business? Is your head waiter a prime motivator in pushing food and beverage sales; is she the immediate point-of-contact in the service experience? If yes Men I'd say that that person is pretty valuable."

Hiring a PEO

Upon hiring a PEO, it is important to remember that in essence the employees of your club become the "employees" of the PEO, in that it is the PEO that cuts the checks to your staff. The industry often refers to the relation between the PEO and its clients as those of co-employers." Nonetheless, Oasis Outsourcing emphasizes that the client is still responsible for the direct control and daily activities of workers, and, most importantly, the client remains responsible for keeping track of actual hours worked and reporting those hours to Oasis for processing through its online portal. In terms of pricing, PEOs generally charge in the area of two to four percent of the organization's total payroll.

"When a club logs onto our secure site, they can view their information and input payroll hours directly. Our system gives users access to over 100 different reports, keeps track of sick days, and even allows employees to log in and see their paychecks online," Viola explained. "At our company, we'll take anywhere from a minimum of 10 employees all the way up to 1,500. Once a client signs an agreement with Oasis, we setup an orientation with all of the employees in that company so they become familiar with the way we operate. get everyone entered into the master payroll system. A report is generated from this, and then a club can tweak and make adjustments on a worker-by-worker basis."

The continued developed of online technology and Web interfacing has been a boon to the PEO industry. "The use of our online capabilities has really allowed Administaff to provide a richer customer service component without increasing the price of the service," Berger said.

Administaff actually has a two-pronged customer service philosophy is has officially termed as "high tech-high touch." The high tech part of the equation refers to the wealth of Internet resources available through Administaff's website, which contains its online library of reference materials and other static information. Conversely, high touch embodies the company's commitment to providing face-to-face or over-the-phone strategy sessions with Administaff associates to help clients meet their goals. Included in Administaff's high touch philosophy is the availability of their training specialists who are able to provide specialized instruction and workshops. According to Berger, Administaff provides three key vehicles for supervisor and employee training:

1) Online library. Users can access a wide range of articles and other written materials via Administaff's website.

2) Group training sessions in local offices, Administaff offices are located in major cities throughout the country, and in this way as a meeting place for groups of empI0yees to receive face-to-face orientation and instruction.

3) On-site training. For groups with six or more people, Administaff will make arrangements to send their training specialists to the client's place of business, if so desired.

Even with all the benefits that PEOs can provide, there are some firms out there who unfortunately do not have their clients' best interests at heart.

"I guess the most important thing for managers to be wary of are PEOs who seem to offer 'too good to be true' savings. These are the kind of savings on such things as insurance and workers' comp that could not possibly be sustained over the long term," Berger explained. "If someone comes in showing you rates that are dramatically different than their competitors, these should send up immediate red flags."

Berger also suggested looking for companies that are publicly traded and are willing to provide references of their clients. If it is at all possible, try to access their financial reports to see if they're on the up-and-up. In short, be as intelligent with selecting your PEO as you are with any other vendor who services your club.

A quality PEO can help your club save money and add value for your employees. But it takes a commitment from management and an understanding of the club's unique needs to make the most out of any outsourcing relationship. "It's all about allowing clubs to focus on their core competencies," Viola said.