Five Signs It’s Time to Switch Your PEO

PEOs vary in the range of services they offer and some may have limited service offerings compared to others. Perhaps your business has outgrown the services offered by the current PEO or you need additional HR services that they do not provide. When considering a PEO, it is crucial to thoroughly assess their service offerings to ensure they align with your business’s needs and priorities. Conducting a detailed evaluation and discussing your specific requirements with your PEO provider will help you identify any limitations in their services and make an informed decision. Here are some examples of situations where a PEO may lack desired service offerings.

• Limited benefit options—Certain PEOs may offer access to a limited selection of employee benefit plans. For instance, they may provide access to only a few health insurance options, leaving your employees with limited choices that may not align with their needs. Other benefit gaps might include not offering:
  • Retirement plan services as 401(k) offerings
  • Employee assistance programs, which offer mental health and counseling services
  • Wellness programs to help employees improve and maintain better health
  • Commuter benefits
  • Adoption reimbursement
  • Disaster relief reimbursements
  • Travel reimbursement for health care access
  • Educational reimbursement
  • Pet insurance
• “One size”—Certain PEOs may provide a one-size-fitsall approach with limited flexibility to tailor HR solutions to your specific needs. This can be problematic if your business has unique HR needs.
• Minimal training and development—If your company values employee training and development, you may find that some PEOs may offer limited resources for employee growth and skill development.
• Limited HR compliance support—PEOs vary in their expertise and resources for supporting clients so they can comply with employment-related rules and requirements. Some may not have the capacity to help with complex HR compliance issues, which can be a concern for businesses in heavily regulated industries.
• Limited support for different worker types—Some PEOs focus exclusively on domestic employees HR services and do not provide support for international operations or independent contractors. If your company operates globally or has international workers, a PEO with limited international capabilities may not be suitable. Likewise, if your PEO does not provide support for paying independent contractors you may find their service offerings lacking.

Technology and software limitations can be significant reasons to consider switching your PEO. In today’s business landscape, efficient and reliable technology plays a crucial role in HR and administrative processes. Outdated or inefficient HR software and technology from your PEO can make it difficult to manage HR functions. Here are some technology and software limitations that may prompt you to switch your PEO:

• Outdated systems—If your current PEO relies on outdated or legacy software systems, it can lead to inefficiencies and security vulnerabilities. Modern technology is essential for streamlined HR operations.
• User interface—A difficult user interface (UI) can be a valid reason to consider switching your PEO. The user interface of the PEO’s software and HR platform plays a crucial role in the overall user experience for both your HR team and employees.
  • A difficult UI can slow down your HR team’s daily tasks, leading to reduced efficiency and productivity while negatively impacting employee satisfaction and engagement. This could lead to low adoption rates of self-service portals, where employees and HR staff avoid using the system as much as possible, defeating the purpose of engaging a PEO. It can also lead to difficulties in generating accurate and timely HR reports, hindering data-driven decision-making.
  • A cumbersome UI may lead to data entry errors, incorrect payroll processing, and other mistakes that can have legal and financial consequences for your business.
• No mobile app—In today’s device-driven world, having mobile-friendly app is crucial. If your PEO’s technology lacks mobile accessibility, it can be inconvenient for both employees and managers.
• Platform capabilities—These include inability to integrate with your existing business software and systems, data security concerns, scalability to meet the volume of user demand at peak times such benefits open enrollment, and system reliability measured in uptime.
• Benefits administration challenges—Technology limitations can make it difficult to administer employee benefits effectively, which can result in open enrollment errors, delays and communication issues.
• Customer support and training—Inadequate technology can result in the need for frequent support requests and training for employees and HR staff. Difficult-to-use systems may necessitate more extensive training for HR personnel and employees. And depending on your contract, a difficult UI may result in an increased volume of support requests to the PEO’s customer service team, which can lead to time spent dealing with these support requests instead of focusing on your business.

Measuring or quantifying poor service quality from a PEO can help you make an informed decision about whether it’s time to switch. By tracking these metrics and documenting poor service quality issues, you can determine if switching to a new PEO is the right decision. It is important to communicate your concerns and expectations with the current PEO to give them an opportunity to address and rectify the issues before deciding to switch, because continued poor PEO service quality can negatively impact your business. Here are some ways to measure and quantify poor service quality in areas like payroll processing, payroll tax filings, benefits administration, response times, and customer support:

• Error tracking—Maintain a detailed record of errors or mistakes in payroll processing, payroll tax filings, or benefits administration. This can include incorrect employee salaries, tax penalties or benefits enrollment errors. Quantify these errors by calculating the budgetary impact they have on your business.
• Benefits administration issues—Quantify problems with benefits administration, such as large or unexpected increases in costs, gaps in coverage options, open enrollment difficulty or delays in processing employee benefits. Keep a record of how these issues impact employee satisfaction and retention.
• Response time metrics—Measure the response times for inquiries, escalations, complaints or requests submitted to the PEO’s customer support. Record the average time it takes for them to acknowledge, respond and resolve issues. Monitor the timeliness of payroll processing and payroll tax filings by tracking how often they are delayed or filed late. Calculate the percentage of late submissions or payments. Review your service level agreements (SLAs) with the PEO, if applicable.
• Employee surveys—Conduct regular surveys among your employees to gauge their satisfaction with the PEO’s services. Ask specific questions about payroll processing accuracy, open enrollment and customer support responsiveness.
• Benchmarking—Compare the PEO’s performance metrics with industry benchmarks and standards to determine if they are falling below acceptable levels.

Customers engage with PEOs to get greater value out of their HR spend than performing these functions and services themselves. It’s only natural then that PEO customers explore the costs concerns that revolve around the pricing structure, transparency and the overall budgetary impact of using a PEO. Unexpected or continuous increases in PEO fees that are not justified by improved services or additional offerings often include:

• Cost predictability—Predictable costs help with budgeting. Fluctuating fees or unexpected cost increases can be a concern for businesses. PEOs typically charge service fees based on a percentage of payroll or a per-employee-per-month (PEPM) basis. But when PEO fees are based on payroll amount, employees’ raises typically mean increased PEO fees with no commensurate increase in services or value. This can make budgeting for PEO fees more difficult to predict.
• Lack of transparency—Customers may struggle to understand exactly how they are being charged for PEO services, especially as their workforce grows. In addition, customers may have experienced hidden or unexpected fees that are not clearly disclosed in the contract, such as recruitment support, training, reports or customized HR solutions.
• Cost of errors—Calculate the cost incurred by your business to rectify errors or inconsistencies caused by the PEO’s mistakes. This can include penalties, fines, time spent by your HR team addressing issues and any reputational damage.
• Ratcheting employee benefits cost—The cost and structure of employee benefit packages can be significant concern. Customers want to understand how the PEO manages health insurance, retirement plans and other benefits, as well as the impact on their bottom line. If your benefit costs are rising faster than the average, maybe it’s time to look at how another PEO may manage benefit costs in a more predictable way.
• Contract terms and exit costs—Customers may be concerned about long-term contracts and autorenewal clauses, as these can affect their ability to control costs. Customers should consider the costs associated with exiting their relationship with a PEO. If you aren’t completely sure your existing PEO is right for you, early exit fees might be a concern before renewing with them.

TriNet offers access to a team of HR professionals who can provide guidance and expertise support on HR-related matters. This can be especially valuable if you do not have dedicated HR staff.

• TriNet is certified by the IRS and accredited by ESAC
• Outsourcing HR to TriNet can be cost-effective.
• TriNet, can help streamline administrative tasks, helping you to save time so you can focus on growing your business.
• TriNet can assist with the complexities of managing HR across new geographic locations.
• TriNet’s services can scale as you grow.

TriNet provides access to a wide range of cost-effective employee benefits that can help you attract and retain talent. These include:

• Health, dental, vision and retirement plans offered through industry-leading carriers
• Critical accident and illness policies, auto and home policies, commuter benefits and more
• 401(k) plans
• Tax-optimized expense reimbursements for medical travel, education, employee disaster relief and child adoption through our Enrich™ product line

• Create, file and send Form W-2s to your employees, including electronic Form W-2s and TurboTax™ integration
• Administer manage unemployment insurance benefits, including plans, payroll contributions and claims handling
• Collect and remit federal, state and local taxes for payroll administered through TriNet

• TriNet helps you navigate complex employmentrelated rules and requirements and HR compliance, helping you to mitigate risks. By accessing TriNet’s expertise and support, you can stay on top of everchanging employment-related rules and requirements
• TriNet’s team can help you manage employmentrelated claims through our EPLI coverage.

• TriNet’s leading HR technology platform helps to simplify HR processes, including online employee self-service portals and a mobile app
• Employee experience matters. With TriNet, you and your employees can easily manage benefits, view pay information or update personnel self-service tools files.
• Our Solution Center live help to answer your employees’ questions on TriNet-sponsored benefits, flexible spending accounts, payroll, retirement questions and more.
• TriNet’s Workforce Analytics HR software helps you turn your HR data into actionable insights to help you make informed business decisions
• Our Integration Center includes pre-built integrations with popular applications so you can make intelligent and informed decisions using data that connects with one another.