PAT & NAPEO: PERFECT TOGETHER

December 5, 2021, marked 10 years at the helm for NAPEO President & CEO Pat Cleary. The industry has seen tremendous growth and gained much more recognition over those 10 years. One of Pat’s greatest strengths as a leader has been in securing NAPEO’s seat at the table within the larger community here in Washington, D.C. Through outreach and partnerships with organizations such as the U.S. Chamber and the American Benefits Council, and by managing positive relationships with lawmakers, the media, regulatory agencies, and other associations, Pat has helped educate the larger universe about the value PEOs bring to U.S. businesses.

Q3 PEO PULSE SURVEY RESULTS

NAPEO’s PEO Pulse Survey from the third quarter of 2021 shows that PEOs entered the fourth quarter of 2021 with confidence, as all revenue, profit, and employee metrics improved.

SHIFTING FEDERAL REGULATION IN THE WORKPLACE

As employers begin transitioning away from pandemic mode and toward management mode, they also are trying to navigate the changes to the legal landscape governing the workplace. The government has made this all the more difficult with its ever-shifting rules designed to both address the pandemic and reflect the changes in philosophy in transitioning from the Trump to the Biden administrations. Below are just a few of the recent changes that PEOs should be aware of to better service their clients.

• LEGAL & LEGISLATIVE
• RISK

10 WAYS MARKETING & SALES CAN TEAM UP TO BUILD A ROBUST SALES PIPELINE

Traditionally, many PEOs have relied on their sales teams to generate leads and build sales pipelines to support company revenue growth objectives. Many organizations are finding that this model isn’t sustainable in this challenging post-COVID business environment. The sales team’s prospecting efforts are yielding fewer and fewer meetings with new prospects. This results in fewer proposals being presented, fewer deals closed, and ultimately, anemic (or even flat) revenue growth.

• SALES & MARKETING

FEDERAL APPEALS COURT PUTS FINAL NAIL IN COFFIN FOR BUSINESS-FRIENDLY JOINT EMPLOYER RULE

Laying to rest any doubt that employers would continue to enjoy a business-friendly interpretation of the standard to determine joint employment status, a federal appeals court recently put the final nail in the coffin of the Trump-era attempt to shield businesses from being considered joint employers in a wide spectrum of circumstances. This move clears the way for the current administration to cement into place a broad standard that captures a wide swath of business arrangements into the “joint employer” category.

• LEGAL & LEGISLATIVE

News & Statistics

HEALTHCARE BENEFITS • JOB STRESS • HAPPY ANNIVERSARY! • CENTRAL STAFF SERVICES • VACCINE MANDATE • WHAT POTENTIAL EMPLOYEES WANT

RISK MANAGEMENT & INSURANCE ISSUES

At the end of 2020, management consulting firm McKinsey & Company surveyed 899 C-suite executives about the impacts of the pandemic on business operations. One of their conclusions was that the pandemic had accelerated the adoption of digital processes by three to seven years, with B2B firms like those in the PEO space on the higher end of the spectrum.

• RISK

SELLING A PEO

Investment bankers sell companies by running a “sales process.” This process includes becoming knowledgeable about a company’s business, finances, and operations followed by analyzing that information, preparing marketing information, evaluating and contacting the buyer market, reviewing and negotiating offers, conducting due diligence, and negotiating the transaction documents. And then the transaction closes.

• FINANCE & OPERATIONS

TEAMWORK HR

A passion for growing businesses, helping people, and serving the community are the bedrock principles of Redding, California-based Teamwork HR. Heidi Corrigan leads this 26-person team with an energy and enthusiasm that keeps her team motivated to excel and serve clients.

• PEO PROFILES

UNUSUAL LABOR MARKET FLATTENS PEO INDEX AGAINST GDP

The PEO Employment Index comprises 149 PEOs, 2,000 PEO worksites, and 160,000 worksite employees. It measures the expansion or contraction of PEO worksites through the bi-weekly census data that is collected through the 401(k)-contribution process. Unlike many economic reports that consist of survey data and consequently can be somewhat subjective, the PEO Index is real-time data of actual hiring and terminations at the worksite level. 

AVOID POTENTIAL LANDMINES WHEN MAKING CLAIMS IN PEO PROMOTIONAL CAMPAIGNS

Getting word-of-mouth referrals can set your clients (and company) up for success when you accurately describe your goods and services. According to NAPEO, the number of worksite employees employed in the PEO industry grew at an impressive compounded annual rate of 7.6 percent; however, the PEO industry’s clients still represent only 15.3 percent of all employers with 10 to 99 employees, which means that there is an untapped market of more than 84 percent.

BEING A CHAMPION FOR THE INDUSTRY

Bruce Cornutt is the president & CEO of Florence, Alabama-based Lyons HR. He was elected to the position of chair of NAPEO’s Board of Directors on September 28 during NAPEO’s annual member meeting in San Antonio, Texas. He had previously served as vice chair and is the recipient of the 2017 Michaeline A. Doyle Award, the industry’s highest honor. He recently spoke with PEO Insider to share a little about his professional background, where he sees the industry headed, and how he hopes to guide the association.

COMMON CONCERNS FOR BUSINESSES RETURNING TO WORK

2020 has changed the workplace environment entirely—and the transition isn’t over. The pandemic has created hurdles that proved the need for ongoing agility at the workplace and in company leadership. These new challenges include returning to work, gauging vaccination concerns, developing hiring plans, and navigating the unique hybrid workplace dynamic. While it won’t be an easy feat, HR leaders must consider responding to the ebb and flow with care while managing employee concerns. Below are a few key takeaways based on our work with several employers that successfully navigated through the unprecedented challenges of the last two years.

CONDUCTING EFFECTIVE VIRTUAL MEETINGS

Just when we thought things were back to normal, we are reminded that change is constant. The PEO sales world is constantly changing and we have to continually look for ways to innovate and that includes conducting virtual meetings.

HIGHLIGHTS OF NAPEO’S 2021 FINANCIAL RATIO & OPERATING STATISTICS SURVEY

The revenue growth rate for all respondents in NAPEO’s 2021 Financial Ratio & Operating Statistics Survey (FROS) was 1.9 percent for FY2020, down from 8.3 percent in FY2019. The operating income per worksite employee was $199 for FY2020, also down slightly from $242 in FY2019. Despite these results, client retention remained strong and gross profit per worksite employee and productivity improved.

MANDATORY VACCINATIONS

Many employers are on the fence about whether to reopen offices, and if so, whether to mandate vaccinations. We now know that employers can mandate that employees be vaccinated to return to offices.

NAPEO GIVES BACK TO SOLDIERS’ ANGELS

The generosity of the PEO industry was on full display at NAPEO’s 2021 Annual Conference & Marketplace in San Antonio last month through NAPEO Gives Back. NAPEO Gives Back’s mission is to leverage the “Power of Many” and leave a local charity in our conference city better than when we came. This year’s benefactor of NAPEO Gives Back was a San Antonio-based veterans’ support organization, Soldiers’ Angels. Soldiers’ Angels provides aid, comfort, and resources to service members, veterans, and their families through the Veteran’s Administration Hospital in San Antonio.

THE EVOLVING EMPLOYEE HANDBOOK

As COVID vaccines become more widely available and individuals reach full vaccination status, guidance and regulations continue to change from a broad patchwork of authorities, including federal, state, and local governments, the U.S. Centers for Disease Control and Prevention (CDC), and the Occupational Safety and Health Administration (OSHA). With these changes, more employees are gradually returning to work in person. Therefore, now is an ideal time for employers to review their employee handbooks and update policies to evolve with workplace changes prompted by COVID and the post-vaccine world.

10 THINGS I USED TO BELIEVE ABOUT SELLING PEO

I got a call a few weeks ago from a salesperson I first met back in 1999. He’s a really nice guy, a little too salesy for me, and he always pursued higher workers’ compensation risk, low-margin business. But still a nice guy. Our conversation went from the usual “How have you been since we last spoke 15 years ago” to the agenda of how could this salesperson get a PEO to write a prospect with a high workers’ comp modifier and save the prospect money. It was a fairly short conversation about the subject, the details too long for this article. However, when we hung up the phone, I realized that this guy was stuck in 1987.

HR CONSULTING

Handling HR for PEO clients can be exhilarating and, at times, intimidating. Each of our clients faces unique challenges, which makes for interesting work. Of course, it’s natural to be anxious about giving clients good guidance. In my prior life as an employment lawyer, one of my firm’s longest-tenured partners was reputed to have said, “If your hands aren’t sweating before a trial, you should probably quit the practice of law.” I think the same holds true for PEO HR teams, where genuine concern is a hallmark of good service.

I-9 COMPLIANCE HEADACHES TO CONTINUE FOR FORESEEABLE FUTURE

As PEOs look toward the horizon to forecast the immediate future, a gathering storm in the form of I-9 compliance headaches may be cause for concern. Several critical aspects of the employment eligibility documentation process are coming into focus—not just for the client companies that PEOs serve, but for PEOs’ own workforces as well. There are several steps PEOs can take now to be in the best position to navigate these challenges.

MY SALES STRATEGY

The PEO space has paved a better way for small and mid-size business (SMB) owners over the last 25-plus years. Personally, from selling payroll alongside PEO at a national provider to being an independent broker, a sales manager at a mid-size provider, and being the president of my own PEO, I’ve spent 17 proud years in the PEO space in one way, shape, or form. Candidly, I will spend the next 17 years pushing PEO forward. With that in mind, there is one question I’ve heard asked and have answered 100 different ways during my years in the PEO space. What is a PEO? In my career in the business, the shocking realization is that the answer changes from year to year, group to group, company to company, and client to client.

News & Trends

NAPEO Gives Back • Attracting Employees • What are Workers Thinking • Tandem Welcomes New CEO • Connect with NAPEO Peers • Workplace Productivity

Q2 PEO PULSE SURVEY RESULTS

Nearly three-quarters of the PEOs participating in NAPEO’s Q2 2021 PEO Pulse Survey reported growth, with 24 percent citing significant growth. Revenue continues to grow and is matching times not seen since 2018.