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Greater heft: PEO's can deliver big benefits to small firms.

Byline: Jessica Perry

When a disturbed employee at a small, New Jersey-based cafeteria services company hanged herself in the company's hallway one night and was discovered by employees as they came to work the next morning "there was mass hysteria," said James Bell Sr., CEO and founder of AbelHR, a Professional Employer Organization (PEO).

"Fortunately, one of the benefits we offer to client companies is an EAP (Employee Assistance Program), and we were able to get a squad of counselors dispatched to help the employees cope with the tragedy."

Workplace suicides aren't common: nationally, 275 were recorded in 2017, down from 291 in the prior year, according to government records. But Bell's example does highlight how PEOs which are essentially the employers of record for a host of businesses are able to leverage the buying power that comes with a high volume of employees and deliver big-company-sized benefits to smaller firms that they might not be able to offer on their own.

Bell said that it doesn't always require a tragedy to spur employees to seek out professional counselors. "Life today is increasingly stressful," he noted. "When employees feel pressured and they know they can talk to someone, they'll usually feel better. And when that happens, their productivity usually improves. My people worry about this stuff so a business owner doesn't have to."

PEOs generally don't make hiring, firing or other operational decisions for their client companies, "but we basically become co-employers," Bell explained. "From an insurance and benefits standpoint, they're our employees. And since we have hundreds of business clients across the country, with thousands of employees, we have more pricing leverage with providers."

Small firms, which typically offer three or fewer health plan choices, can offer a suite of 10 or so, "often on better terms," he added. "We can also arrange to send out a safety engineer to make a complimentary inspection of a firm's premises and make recommendations, which may lead to a reduced insurance rates."

[box type="info" align="alignright" width="50%" ]A provider's advice for small businesses

"Small business owners recognize that offering a comprehensive health and dental benefits package is a critical investment in their workforce that also provides a competitive ad-vantage," said Dennis Wilson, president and CEO of dental benefits company Delta Dental of New Jersey & Connecticut Inc. "To find the most cost-effective solution, small busi-nesses must first investigate a range of benefit models and then select a plan which is tailored to their budget and to the needs of their employees; focuses on preventative and diagnostic care; and offers access to the best network of high-quality providers."

They can "compare different plan designs to identify what is most cost effective and select the right employee cost-share ratio to encourage efficient utilization," added Carin Hep, Delta Dental Small Group and Individual Programs sales director. "At Delta Dental, we work with employers to evaluate the best plan designs based on evidence-based research and current utilization trends, and focus on finding a solution that delivers value, quality and excellent service." [/box]

Beyond benefits

The "new generation of workers, including millennials," want a different kind of employee experience, said Andrew Widholm, zone manager Northeast at Oasis, a Paychex company. "In addition to using our economy of scale to offer Fortune 500 benefits to smaller companies, our human resources professionals also help companies with issues like developing a culture that encourages work-life balance, and assisting a client's own HR department to be more proactive."

In addition to making benefits like medical, dental, vision, 401(k), health insurance and even pet health insurance available to smaller companies, "Oasis can set up online processes for onboarding, new-employee processing, direct-deposit and other functions," he added. "These services and others can make a big difference to employees and to the employer."

In one case, a growing central New Jersey-based financial services company found it was routinely losing good people after a year or two, once their job skills had been developed. "They would hire people, train them, and then lose them," Widholm said. "After they contracted with us, we took a close look at a number of issues, including the way their leaders managed employees. Then our HR team developed a series of programs for them, including management and leadership training, and employee communications. There was a significant, positive change in morale, with reduced turnover that benefited the client company's bottom line."

As regulations including New Jersey's Earned Sick Leave Law and a mandate requiring residents to maintain health insurance coverage get increasingly complex, "The PEO industry continues to grow as more companies become aware of the benefits," said Kristen Appleman, vice president Health & Wealth at ADP TotalSource. "Nationally, we partner with more than 12,000 businesses, and more than a half-million worksite employees. In New Jersey, we cover a wide range of industries, including IT, manufacturing, and property management, which often involves multiple states that may have their own reporting and other requirements."

When a PEO is the employer of record, "even small business can access medical, dental, vision, disability, retirement and other benefits that they otherwise wouldn't have the time or administrative staff to handle," she said, "We handle businesses that have just a few workers, to ones with thousands. It's important for companies to offer robust benefits, because in this period of low unemployment people have choices and it's not always just about the money."

Offering robust benefits

Another PEO, Extensis Group, services 16 different industries, including financial services, professional services, technology, and marketing-media-advertising, "and we zero in on each one," developing a thorough, customized knowledge base, said Extensis President Dan Sheridan. "We can design appropriate products and services for our clients most of which are between 20 and 100 employees because we understand them and their industry."

About five years ago, STOPit Solutions a technology company providing software and services to educational institutions, businesses and governments globally to mitigate, deter and control inappropriate conduct had fewer than five employees.

"STOPit was rapidly growing, and needed to attract developers, coders, and salespeople," noted Sheridan. "Those kinds of employees are in high demand, but STOPit didn't have a robust benefits plan to attract and retain them. We helped them to devise a suite of benefits that appeal to a diverse workforce that includes workers with families who want comprehensive medical benefits with low out-of-pocket costs and a more affordable EPO (Exclusive Provider Organization) product," with a higher deductible and lower out-of-network reimbursement.

Extensis also enabled the client company to offer other benefits, like a 401(k) plan and three dental plans, which Sheridan said helped STOPit to significantly grow its employee base.

"Besides making it easier to attract and retain talent, employees with robust benefits are usually more satisfied and engaged," he said. "That leads to more productivity and higher profits for a company."

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Title Annotation:Professional Employer Organization
Author:Perry, Jessica
Publication:NJ Biz
Geographic Code:1U2NJ
Date:Mar 11, 2019
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