10 Jul Management Perspectives: Outsource HR
PEOs meet unique needs of start-up and early-stage companies
In any company, an entrepreneur’s role is to establish leadership, set business goals and prioritize steps to reach those goals. For owners of start-up or early-stage companies, those activities must be accomplished in a compressed time period that requires their full, unwavering attention. Capital must be raised, strategic goals mapped out and clients served. A business owner has to concentrate on developing a solid business plan, hiring a strong management team and establishing cash flow.
Adding human resources management and administrative chores to the mix can overwhelm even the most resourceful of entrepreneurs. With a myriad of other responsibilities and the need to move quickly when opportunities arise, a business owner has little time for filing payroll tax reports or staying abreast of ever-changing federal and state employment laws and regulations.
David Oltman, chief operating officer for Orion Mobility, wanted to focus squarely on getting his company off the ground, not on writing job descriptions and handling payroll. Launched in February 2003, Orion Mobility offers complete relocation software solutions and expense management/tax gross-up services. The software company has offices in Chicago and Connecticut.
“I simply didn’t have time to deal with setting up all of the human resources and administrative details,” Oltman said. “It’s not that those things aren’t important, because they are. It’s just that my priority was starting this company out on solid footing.”
More and more, owners of early-stage companies are turning to the services of a Professional Employer Organization (PEO) to handle the “business of employment” so they can focus their time and energy on the “business of business.”
A PEO helps a business lay the foundation for solid human resources practices while a company is still young. Functioning as an outsourced human resources department for small and medium-sized companies, a full-service PEO provides instant HR infrastructure, allowing business owners to outsource time-consuming employer responsibilities. In turn, an entrepreneur can focus on developing the business through increased sales, new products and services, and improved customer service. PEOs also allow companies to “insource” important functions such as benefits management, training and development, and recruiting and selection assistance. A PEO oversees payroll processing, workers’ compensation claims management and other employer-related administrative matters as well.
With 24 employees, Orion Mobility was too small to warrant hiring a full-time HR staffer, Oltman said. So he chose instead to enter into a co-employment relationship with Administaff (NYSE: ASF), one of the nation’s leading personnel management companies.
“Working with a PEO saves me the cost of having to hire an HR person,” Oltman said. “I have all the full resources of an HR department at my disposal. There is a team of specialists available to handle my needs.”
Those resources included help in drafting policies and procedures for the company’s employee handbook and handling Orion Mobility’s recruiting efforts.
“Our Administaff specialists developed our employee handbook, and they help to make sure we adhere to it,” Oltman said. “And because we’re still growing, we rely on them to help with recruiting by placing ads and doing background checks.”
Using the services of a PEO also has enhanced Orion Mobility’s recruiting efforts. “It allows me to better compete for talented employees because they receive a great employee benefits package,” he said.
Administaff provides employees quality benefits, including medical, dental, vision, prescription and 401(k) plans; life and personal accident insurance; short-term and long-term disability plans; an employee assistance program to help with short-term counseling needs; and educational and adoption assistance.
What’s more, as a small company, Orion carries a growing burden as the amount of federal and state laws and regulations, paperwork and taxpayer compliance issues continues to climb. Since 1980, the number of laws that apply to employers has doubled. The “alphabet soup” of federal laws – FMLA, COBRA, ADA – threatens to drown even the most vigilant business owner.
Just as important, Oltman says, is the savings his company realizes by not having to support an HR staff. “Selecting a PEO was a good move for us. When you factor in the costs of having an in-house person handle the same function and responsibilities, there’s definitely a savings for a small company. And the knowledge and experience they bring to the table is invaluable. I wouldn’t want to go it alone.”
John Valle is a district manager with Administaff, and Gary Breden is a sales consultant with one of Administaff’s Chicago offices. Gary can be reached at email@example.com For more information, call 1-800-823-8075 or visit www.administaff.com .