I need a good PEO services comparison criteria - how do I best compare different PEOs?

compare range of services and prices
review customer experiences from existing clients
compare PEO fees to reduction in HR expenses

Compare PEOs on cost, peer reviews/referrals, and get a demo of their online management tools. The first is obvious, the second you can do to some extent on Proformative (the Exchange) and the third is critical b/c your main interface is going to be their online platform, and it will either be great or will stink (in my experience). And if it's not a good platform, you will spend hours of aggravation monthly while entering payroll, adding/subtracting users, and doing other monthly payroll and benefits duties. If you get a screaming deal on benefits I guess it overcomes a horrible user interface. But ease of use is not to be undersold!

As for cost, get all quotes to separate out the direct cost of benefits from all of the various fees and adders. In my experience (I have used PEOs many times, but also gone direct many times), PEOs are best for having a one stop shop for all benefits and payroll. In other words, makes life simpler for a busy small company finance exec. However, I virtually never use their services and I don't find many who have, so those additional fees bring very little in return for most folks (but not all, YMMV).

I was part of the founding executive team at one of the largest PEOs in the country. The PEO model offers a solid turn-key HR outsourcing model for small organizations (less than 50). However, picking the right PEO can be a bit overwhelming as the products and services on the surface look very similar. The first question I would pose is what type of company and workforce do you have? This is important because PEOs products and services are geared around particular industries and workforces (ex: white collar technology software company). Once this question is answered, I would set up the following criteria set for your PEO selection.
• Customer Segmentation – What % of companies does the PEO serve within your size / industry?
• Pricing Model - I would strongly suggest that that you partner with a PEO that delivers a transparent pricing model on all products (gross wages, taxes, workers’ compensation, benefits, and service fees)
• Technology Platform – What is the true capability of the platform as it relates to payroll, benefits enrollment & administration, employee /manager self-service, as well as the overall “experience” that your employees will get from the platform. I advise that you get a real demo from the sales associate as the feature check-off list does not tell you the entire story of the system capabilities.
• HR Services – Many PEOs state that they offer HR services and have most of these features in their marketing material. Once again, you need to go well under the hood to see what these “products” actually are and HOW they are delivered. Job Descriptions, Offer Letters, Handbooks, Performance Reviews, Separation Agreements, are just a few examples. The last area is to see what the experience and credentials are of the HR team that will serve you within your industry.
• Benefits – You need to do your homework here. It goes well beyond the carrier and the pricing. Is the benefit platform robust enough to offer a range of plans (medical, dental, & vision) as well as voluntary benefits (life, disability, and others) that are geared toward your workforce. Do not make the mistake that most buyers do – assume you will get a better rate given the PEOs scale or be attracted by great introductory rates just to see your increase go up significantly the next year. (Note: PEOs now underwrite and re-price annually based on client level claim experience for both health and workers compensation. You’ll be assigned the price you earn.) Talk to customers that have been with the PEO several years and ask them what the increases have been year-over-year since they joined the PEO.

• Add-On Service – Does the PEO offer a range of valued added services such as Performance Management, Expense Management, Recruiting, etc? You may not need these services right away but you want to be able to turn to your PEO for these services when the needs arise.

The main challenge that you will have no matter what PEO you choose, is that you may grow out of the model sooner rather than later. For fast growth companies this can happen within a short time depending on your growth and/or funding. Another area is that you can lose some control over some of your HR decisions since the PEO is the co-employer and has risk in these areas. The last area is your company brand – this will be lost in the PEO model. If these areas are important to you there are other alternatives in the marketplace.

Hello-

I just switched from Insperity to TriNet. In the process, I learned a lot about how each of these companies do business. The two things I would emphasize is:
> Transparency of fees
> Spend the time beforehand to understand the benefits model and how your current funding strategy can be replicated within the PEO. PEOs structure benefits differently depending on their underlying agreements with healthcare providers.

Good luck.

You may want to consider hiring a Sourcing Advisor to do the analysis for you. These people have been through the process of comparing PEO's for hundreds of clients and know all of the right questions to ask. Their fees are typically covered through the monetary and time savings they achieve for your organization.

All good advice above. I just spent several days evaluating BBSI for a client, and would recommend them if they are in your area (they're not in every state).

Ken - take a look at Trinet: had a really good experience with them in an earlier small business...