More than ever, small business owners and managers of nonprofits face unrelenting pressure deciding how to divide their time and energy between core business functions ”“sales, marketing and delivering products or services ”“ and essential administrative, employee-related functions.
Studies show that processing and paperwork for those supportive functions consume, on average, up to 23 percent of the manager/owner”™s time. That high percentage results from his or her limited knowledge and lack of professional experience in handling those tasks.
What”™s more, in addition to the loss of valuable time, the owner/manager faces the very real risk of financial loss. Indeed, a lack of knowledge could be extremely costly to the company when dealing with employee-related laws, regulations, compliance and benefit plans. The thicket of ADA, FMLA, COBRA, HIPPA, OSHA, Workers Comp, unemployment insurance, health, retirement, life, disability and other plans can be full of snares and entanglements for the nonprofessional.
Those inefficiencies ”“ the huge costs in time and money ”“ would create a drag on company performance in the best of times; in today”™s withering business climate, they can be calamitous.
For many small businesses and nonprofits, the Professional Employer Organization (PEO) is the ideal solution. It allows the owner/manager to devote more of his valuable time to the core business of the enterprise. At the same time, it ensures that employee-related tasks are performed by a professional human resources staff carrying out these tasks full time on a daily basis.
There is no hard-and-fast rule as to what constitutes a small enterprise. A small business or nonprofit employing 15-50 people would have an excellent chance of benefitting from a partnership with a PEO.
Here”™s how it works. A PEO partners with a client company/agency to become co-employers of the client”™s employees. The PEO assumes the responsibility and liability for the “business of employment,” including risk management, human resources, employee benefits, labor law compliance, payroll and employee taxes. The client continues to manage the operational end of the business ”“ while it gains a fully staffed human resource, benefits, risk management and payroll department.
Not only does a PEO make an enterprise more efficient, it also offers opportunities for substantial savings as well. For example, employee benefits, especially health insurance, represent a high percentage of the company/agency”™s expenses. Compounding this problem is the fact that small enterprises pay higher benefit premiums than larger enterprises. As a result, small enterprises are often forced to reduce or even eliminate benefits. However, as a partner with a PEO, the small enterprise becomes part of a much larger group, reducing the cost of benefits significantly. This can enable the smaller enterprise to avoid reducing or eliminating its benefit programs, or passing increased premium costs along to employees.
Working ”“ not harder ”“ but smarter, is more vital to an organization”™s success than ever before. A PEO is definitely a strategy that fills the bill.
Gary Lefkowitz is president of Financial Benefits Inc., 26 Cygnet Road, Congers; phone 267-5518 or e-mail gary@FinancialBenefitsInc.com.
