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How to Select a PEO or Third-Party Human Resources Company

Operations

Your first step in selecting a professional employer organization is to decide whether to use a big national company, such as ADP TotalSource Inc., Doherty Employer Services, or TriNet Group, or one that operates regionally.

A national PEO is more likely to have accreditation from the Employer Services Assurance Corporation, an accreditation and surety group founded by former National Association of Professional Employer Organizations executives. On the other hand, a local PEO can give you more personal service. Depending on your location, you may not have much choice locally. NAPEO lists only one PEO headquartered in the state of Wyoming, for example. To find a PEO in your area, go to the NAPEO Web site. For PEOs with nationwide services, check out these companies:

There are online brokers and networks that can help you find a PEO and/or put your project out for bid among PEOs. You can also ask other businesses in your industry, particularly if you're looking for a PEO that specializes in your niche. The following are some online PEO brokers and networks you can use to shop for a PEO:

The following are some questions you can use to guide you to the best PEO for your business and to evaluate a particular PEO’s services. These were suggested by NAPEO as well as by business owners and PEOs themselves:

  • Does it offer the type of services you want and need? Does it have the capability to handle fast growth in your workforce?
  • Does the company’s staff have the depth and expertise to deliver on its promises?
  • How does it deliver its services? In person? By phone? Via the Web? A mix of all three?
  • If it offers customer service in person or by phone, how available will your account manager be? Make sure you meet him or her in person. Is she or he geographically close? How often can you expect him or her to visit your office? Can you call him or her in the middle of the night with an emergency? Who's the backup if the account manager isn't available? Is there an 800 number for customer service? Check with current or previous customers to see if they've had any trouble with service.
  • What kind of reports can Web-based PEOs generate? What happens when the Web site goes down? Check with current or previous customers. How happy are they with the Web site? Is it easy to use? Does it crash often? Can you get telephone support when it crashes?
  • What kind of consultation does the PEO provide on strategic HR issues such as recruiting highly qualified executives or technologists? A good PEO can help you position your company to attract and retain top talent.
  • What are its fees and how are they determined?
  • What upfront fees are required? Is there a setup fee? Are you required to deposit a month's worth of payroll into escrow?
  • Are the respective parties' responsibilities and liabilities clearly laid out in the company's client service agreement? What guarantees are provided? What provisions permit you or the PEO to cancel the terms of the contract?

Profile: Tam Harbert