Looking at PEO (professional employee organization) providers - just wanted to get a sense for who else is out there other than TriNet. I only know about TriNet from Feld's AskTheVC blog: http://www.askthevc.com/blog/archives/2008/05/what-kind-of-be.php and I wanted to get a better feel for what else is out there and what questions I should be asking since I don't know what I don't know.
We just completed the process of selecting a new PEO for Blue Fish. We looked at Administaff, ADP TotalSource, and TriNet.
For the past 10 years, we've been with Administaff, one of the originators of the PEO concept. They are considered the "cadillac" PEO provider - they tend to be the most expensive option, but they have a higher quality offering than the others. One of the things that makes Administaff's offering better than the others is that they self-insure through United Healthcare. This means that while they take the insurance risk themselves, United Healthcare administers everything, so to the employee, it feels like a normal insurance plan, but Administaff controls their own rates and policies. As a result, they are able to offer a higher-end plan than the other PEOs. The downside of Administaff is that they bundle all of their services together, so you often end up paying for services you don't use. We were happy with their service, but decided to switch because we wanted to save money right now.
TriNet focuses on professional companies (like technology firms) and uses technology to automate their entire business. They have the same number of "worksite employees" (customers) as Administaff, but HALF as many regular employees to run their company. Basically, they are twice as efficient as Administaff, and they pass the savings on to you. TriNet uses Aetna as their insurance provider and gives you several plans to choose from. I was impressed with TriNet, but ADP was a bit less expensive, and their sales rep was more helpful.
We selected ADP and are in the process of switching to them now. They allow you to purchase several of their services a-la-carte, which gives you a savings if you don't use them. For example, Administaff includes recruiting services in their basic package, but ADP let's you pay for it only if you need it. ADP lets you choose between Aetna and United Healthcare.
I've already had several issues with ADP, so I advise caution. The main issue I have with ADP is that they have too many rules and policies restricting how I can run my business, and these policies were not revealed to me until after I committed to them. For example, new employees are not allowed to have insurance until the 1st of the month following their hire, new employees must wait 3 months before they can participate in the 401(k), employees only have 2 health plan options to choose from. None of these limitations exist in the Administaff plan we are leaving.
All that said, we are saving almost over $5,000 per employee per year by switching to ADP, so we're still going to do it. But when the economy improves and we are less worried about cost and more interested in quality, we'll look at TriNet and Administaff again.
I agree with Bob McKenzie's assertion above "There are other options besides continually changing PEO's."
There are very specific circumstances when it makes sense to use a PEO. Most small businesses would fare far better, both from a product and cost standpoint, by going with a customized unbundled solution under a single platform.
By going this route you get to choose your health insurance company (or companies), your payroll provider, HR consultant, Workers' Comp carrier, Retirement plan and manage it all under a single platform. And you aren't in it alone, you have a specialist that helps you choose the best of each of these services for your organization. This usually results in dramatic cost savings over a PEO and allows you to get rid of the things that don't work and keep the ones that do.
Somehow, PEO's have been missold to start-ups (particularly in SF and South Bay) over the past five years or so.
I worked for Groupon..You know, Groupon, the fastest growing company EVER according to Forbes? They use a PEO called EMSI, Inc. out of Naperville, IL. EMSI has an on-site (at Groupon in Chicago) HR person who handles all the HR/benefits/payroll needs and questions employees have, which is excellent. I never had a problem with my benefits or payroll since working there, and now that I am starting my own internet based company, I am going to use them for my HR as well!
This is a great thread. I just called Administaff, now called Insperity, and their minimum supported company size - at least for health insurance - was 5 full-time W2 employees in case anyone is considering them.
Also interesting for research was the National Association of Professional Employer Organizations (NAPEO)NAPEO link
I am a broker of PEO services. Just to add a couple of points to Andrea's very sensible comment:
Great feed back people! So many areas to comment on, we shop PEO's and standard market strategies. If you switch to a PEO make sure just like you should if you had health insurance or workers' compensation insurance, shop it, they all go up and everything is negotiable. If you have been with a PEO for a few years chances are you have a savings if you shop it and negotiate it. When we price compare we do find ADP/Asparity are the highest and hardest to unbundle to detect cost - they will do it, but you must push them. Use the big PEO firms and the small because leverage is power - decide who you want and push the price. If you don't want to do this work hire a contingent based consultant to do it for you. When speaking with most PEO providers we ask who is choosing a PEO, they all agree tech firms who are small start-up that do not want the hassle of HR and may have rapid growth and have to offer high level benefits, and with rising insurance rates you may see some troubled companies that can go with a self insured PEO and capture a better deal with the insurance cost provider. By the way, many insurance agents are now selling PEO too. Be savvy though and shop as many as you can or get someone to do it for the best advantage.
There are other options besides continually changing PEO's. Get out of the co-employment arrangement altogether and watch your costs go down significantly. Additionally, you will have more control over your unemployment as in a PEO, you are lumped together with so many other companies that it is impossible to control your unemployment costs. If you go independent you may also save on your workers comp rates as you may also qualify for W/C discounts and premium dividends that the PEO does not offer.
Then ask yourself if the administration fees outweigh the cost of group insurance for your employees.
Go independent and save a lot of money. Work with a firm that specializes in HR to oversee all of the services provided by the PEO.
If you ask around amongst startups you'll probably hear our name "Ambrose" - we have numerous startups (& VCs) as clients. Look in to www.ambrose.com to learn more & you can get a quick quote. You can also go to www.esacorp.org (Employer Services Assurance Corporation) as it talks about Accredited PEOs and allows you to verify who are the accredited ones in your state.
I will say that TriNet is a very good firm & you'd be well taken care of with either Ambrose or TriNet - just comes down to the service model that fits you best (we never treat clients like a # - that's the whole point of providing a dedicated, single point of contact to your entire firm). The other PEOs (including the big names) aren't very well set up for startups & often will refuse to work with a small group.
A fewquestions to ask are:
Thanks guya, I will be looking into some of yoru suggestions, But I've also come across a couple other's that look competitive with regard to cost's and service. surepayroll, APex payroll, Paypros, paycycle. Just a couple other names to throw into the mix. I am currently aquiring quotes from each of these and hopefully we will make a decision soon . We are a small start up looking for payroll services.