Tips for Finding a PEO You Can Trust

According to the NAPEO, there are over 523 PEOs in the United States alone – which is a number that will likely go up as more companies look to partner with trustworthy PEOs. 

When you consider both time and cost savings, outsourcing HR to a PEO is a no-brainer. However, figuring out which one will give you the best returns is much more of a challenge. Companies place a very high degree of trust in PEOs and must be confident that they can rely on them to share that type of partnership.  

While the average ROI of partnering with a PEO is 27.2%, this number varies depending on several factors. Often, a quality, trustworthy PEO will give you a higher ROI, while a bad one will provide you with much less than your target.

So how can you tell if a PEO can be trusted? Here are some things to consider when determining whether you can trust a PEO. 

Tips for Finding a PEO

If you've already decided to move forward with outsourcing HR, you might be wondering how to find a PEO you can trust. Unfortunately, PEOs are uncharted territory for many companies. Most don't even know what to look for in a PEO that will assist with human resource and administrative tasks.

To get value for money from your partnership with a PEO, have the following considerations in mind: 

Disregard Non-Certified PEOs  

PEOs can undergo IRS certification – giving it a level of credibility because they adhere to even stricter regulatory practices than the regulations require. Working with an IRS-certified PEO provides several advantages to businesses.   

While certification does not mean the IRS has endorsed the PEO, it does mean that the PEO maintains specific regulatory and legislative requirements, which include:   

• Having at least one physical office location within the United States
• Presenting a Surety Letter at the time of application
• Submitting annual independent financial statement audits to the IRS 
• Providing an assertion and CPA examination level attestation regarding federal employment tax compliance
• Paying a user fee of $1000 

Certification is also a sign that the PEO takes its responsibilities seriously and is more likely to do its best for you and your employees.   

Ask For Referrals from Other Businesses

Ask other business owners you know and trust what PEO they use and whether they would recommend them. Make sure you ask people you trust and watch for referral bonuses (since that can incentivize people to recommend a lower-quality service). A good company does not need to offer large bonuses to get referrals because they will have satisfied customers willing to speak out.  

Look for Testimonials and Case Studies  

Although case studies posted by the PEO do have some degree of bias in their favor, they still offer insight to help you understand that particular PEO's process. They can help you determine whether it is a good fit for you at the culture and values level.  

You will also get an idea of what results they have achieved in the past and gather evidence of the PEO's experience in your industry. You might want to think twice before going with a PEO if you are their first client in a particular area. 

Ask the PEO for References  

Any decent PEO should be able to provide you with several references. Avoid PEOs that refuse to do so – they may be inexperienced or have issues.   

While the PEO will choose satisfied customers as references, talking to them is still a good idea. They can give you an idea of how suited the PEO is to your needs. If possible, call references in your industry so that you can assess their experience with your specific needs.  

Demand Pricing Transparency  

Finally, please take a look at their pricing model. Ensure that the price tiers or system are crystal clear and that there are no hidden fees or "administrative charges."  

Bad PEOs will try to bait and switch you either on the price or what you get for it, so make sure that none of it is confusing. A good PEO does not need to offer low starter rates and jump them up later, add on fees after you have signed, or nickel and dime you on administrative charges. Instead, they can stand by their prices because they are confident in their offer and advise you on tax charges to ensure you actually save money with tem.  

Another red flag is overly complicated exit protocols. A good PEO isn't worried about you leaving because they know they offer good services. Bad PEOs will try to keep you around by making it too painful to switch.  

Trustworthy PEOs Have Higher ROIs  

If you've been tasked with how to find a PEO for your organization, this checklist provides a great foundation to base your search.

HR is a business overhead cost – but that doesn’t mean it can’t drive profit within your enterprise. Partnering with a PEO you can trust produces significantly higher ROI because they free up more time for your in-house HR team, increase your cost savings, and get more peace of mind. Also, choosing a good PEO in the first place helps you avoid the costly and tedious process of changing PEOs.  

Questco is a licensed professional employer organization that partners with businesses to provide proven HR solutions that help save time and money. Questco delivers the scale and skill to support any business goal. We partner with clients to provide guidance and leadership in crafting human resources strategies.

To learn more about what we can do for your business, contact us today.