You want to rule the world and make your product available in every part of the world. For that, you need compliance and a permit. Let’s face it. It would be best if you administered all of that. Why?
- The use of outsourced payroll services jumped by 15%.
- Staffing services and onboarding experience increased by 11%.
- Executive recruiting has gone up by 8%
- Benefits outsourcing and consulting experts increased by 4%.
But if you don’t want to commit to the PEO services?
Then first, let’s determine why you need PEO services.
Benefits associated with PEO services
You are spending double the time on HR administrative tasks. Take, for instance, payroll processing. A mechanical job where there is no room for mistakes.
From a statutory standpoint, determining the right payroll deductions while undergoing the calculation process is important. But it is unhealthy for your business if you waste so much time in calculation. Is it?
The answer will always be negative. Why do all the things when the work can be outsourced?
Startups in the early stages are on the verge of pinching pockets. They need the luxury of sales and funds. Startups or firms in the initial stages of operations can get away with this. But as more financial years pass, it becomes more unrealistic to be the company as a do-it-all. It hampers scaling and leaves you exhausted.
What if we give you the option of eliminating HR tasks from your plate without hiring a full-time human Resource team?
MME can do all this for you. Right from payroll processing, managing HR tasks of your company, hiring right-fit employees, workers’ compensation, calculating benefits, and filing taxes on behalf of employees, we can do all the paperwork. All you have to do is book a call with our team.
Still, trying to satisfy enough for you? Let’s back this up with sordid data.
According to Technavio, 56% of the market growth will happen because of PEO services. Also, the site believes that the market will experience a growth of 10.91 billion $ between 2021 to 2026. Thanks to PEO services.
All the more reason to hire PEO services. They will only transfer work from your plate and get it done. But small firms, as well as large MNCs, shy away from hiring.
We will be detailing three mistakes of entrepreneurs and myths believed by them who refuse to take PEO services. Furthermore, in some cases, we are offering a solution.
So what are we waiting for!!!
Mistakes Committed by Entrepreneurs By Not Hiring PEO Services
Mistake 1: Not Choosing the Right-Fit Employees
Business is booming and giving you an exhilarating feeling. Your product has a great lineup of loyal customers. Sage has created its fanbase. But with great sales comes greater responsibilities. This means you must hire and trust people enough to avoid making mistakes.
This is where a bonafide company starts making mistakes. Really? Yes. In the first 5 years, most companies shut down their businesses. Hefty number, but true.
When starting, money is not a commodity that is free-flowing in accounts. Everything needs a budget crunch. You want an Ivy League student, but there are two hindrances.
First, there is a good chance they have their startup. Next, they will ask for an excessive amount of money. Both of which you cannot offer. Now you would start making the first risky mistake.
While 36% believe that finding and hiring talent is a humongous task.
All three mistakes can roll into lawsuits at a later stage.
Giving away Equity Like Snacks
Everyone does this at one point or another. It is like writing in some imaginary entrepreneurial book that if you don’t have money, give away a percentage of your equity. Don’t do this ever. What you think will save cashflow would cost you headaches, heartache, loss of sleep, and even lawsuits.
It’s one thing to give to a potential investor and another to an employee. The investor has something you need to grow, while you have something that will give the investor some money. It’s a win-win situation for everybody. In the case of employees, you would be saving some cash. But it comes with its share of problems.
- You can only do so many slices of the company. In the end, you also get little as everybody else.
- When you divide the share repeatedly, everyone else will be unhappy.
- Working for 30% or 40% is more than just worth it. Sure, it will make you a millionaire. But the time of becoming one will be increasing.
- Sooner or later, someone will think they should get their money. The problem will be you won’t be happy. This is where lawyers will be called. Not an ideal situation for anybody.
- If also they would like to work for sweat equity now, chances are they wouldn’t come later.
Above are likely scenarios every entrepreneur has gone through. They won’t want anyone to make that risky mistake again if you can’t afford to pay them. Either do it yourself or get a local university intern to help.
Unprofessional Employment agreements
You are gelling with someone. You think the other person is on board with the vision you have for the company. So far, so good. But how do you feel after a few months?
With no experience in hiring, it is plausible that interviewees can say the right words to land the job. During that phase, entrepreneurs are entrapped and Fail To put down employment terms, conditions, rights, and responsibilities in a written document.
Employers can skip signing the paper when they have got the candidate. But they would feel the need when the hire starts lacking in Some qualities or takes the job for granted or worse blue mooning.
Failing To Understand Each Other
You have got your employees the coolest office they can imagine. Working in a rustic barn-like office, open cubicles convey approachability, free-flowing beer, and an arcade to hang out. But the employees are working for peanuts.
Do you think they will still be happy?
They don’t want cool things. They can live without all the other perks at the office. But they would appreciate a raise.
In case you need clarification about the paying market standards. All you have to do is, make a Google search. Find out the pay ranges in your area for that position.
It will save you a lot of frustration as you can be more honest about the pay. With honest numbers, you will retain talent in your competition.
The above 3 scenarios can easily be avoided when MME hires you. We know PEO services can be expensive.
But think about the benefits associated with it. PEOs can be the best solution to growing a company’s needs and negotiating employee benefits. If you think price can be an obstacle, you are mistaken.
For creating a high turnover, don’t believe in saving every penny. A penny well spent can turn itself into thousands.
If you still want some more detailed mistakes. Watch this video: https://www.youtube.com/watch?v=A5xy7VNtpkw.
# Mistake 2: Whether To Employ Or Not?
In today’s times, small firms to big house MNCs think permanent employment comes with problems. Right from Benefits, perks, gratuity, and ESI to Provident Fund. How to escape this without giving any tax?
Freelancing/ contractors or sub-contractors.
Suppose you can save hundreds per year by Freelancing. Then, think again. Determining whether or not to hire on a contract or permanent basis can significantly impact business.
The PEO services agreement is a unique contract in which international companies can hire workers in countries like India without establishing local entities. The agreement is specific about the work and the compensation paid to the employee. But on a contractor basis, the arrangement is reversed.
Often, the lines between employer and contractor can be blurred.
Generally, contractors or sub-contractors run their businesses as freelancers or sole traders. The key difference between contractors and permanent employees is that the contractor offers specialized services. They can use their processes, internal tools, and strategies to complete the tasks their clients require.
Permanent employees are employed in the business and hold no jurisdiction over when, what, how, and why they complete the task.
The differences between permanent employees and contractors look like this:
Permanent employees
and Contractors
Fixed salaries based on an hourly/ daily basis
Think of contractors as freelancers. The work is strictly project-based, and the length can vary from weeks to years.
General tasks with project/ campaign work
Project-based with fixed deadlines
Leave entitlements like annual leave, sick leave, etc.
No leaves
Employers pay taxes on employees’ behalf.
They manage their tax Deductions. Usually, outsourcing to other tax consultants.
Training is provided for upskilling or filling skill gaps
No training is provided. Usually hired because of their specialist skills.
Why is Classification Important between Employees and Contractors?
There are certain legal obligations to be aware of when employing contractors in India. There could be a breach if you don’t classify your contractors properly. You could be accused of tax evasion.
When a business treats its employees as contractors, it could be liable for penalties. If the Indian Income-tax gets wind of it. Then you will be penalized and pay a fine.
When you work with PEO services, they are responsible for hiring, drawing up employer agreements, and reimbursing them with salary. But for that, permanent employee status is essential.
Why hire permanently when the same benefits can be availed in Freelancing?
There are definite advantages to hiring contractors, like having flexibility and agility. Bit permanency has more advantages. Particularly when hiring remote workers through PEO services.
Stability
Permanent offers a sense of stability that makes it more appealing for professionals. They know when the next paycheck will come. They know where their career trajectory is going.
Also, when the contract is signed, the staff is bound by law that ensures the employer. The employees are legally obligated to give their notice of resignation before a month. Permanent jobs appeal to professionals.
Employers can also benefit from contracts as they can use their skills for the long term. It is stable for employees as for the business and teams.
Career Development
With permanency, there is a scope for role development and career progression. They can work up to the ranks within the business and take on leadership roles in the future. Hence become irreplaceable members and play key roles in business growth.
Freelancing/ contractor jobs offer little stability. You can never work up to leadership ranks.
Talent Retention
Job permanency and longevity offer talent retention. This ensures that talent remains high and skilled professionals remain in business. One added benefit of talent retention is minimal expenditure on upskilling and training.
Think about all the money saved when there is no staff training. Additionally, it takes more than a month to train a staff. This means you are getting more business hours.
Loyalty
When you care for employees, they reciprocate their gratitude by caring for the company. Permanent workers get more involved, passionate, and loyal. They immerse themselves in company culture and social events.
Unlike freelancers who move on to the next company after the contract or project is completed.
Collaboration
PEO services can be difficult when there are contractors. But easier in the case of permanent employees. It is easier to mesh and form solid bonds.
The benefits of permanency are beneficial for employees too. Particularly when hired through PEO services. They can offer job stability and act as a local office or company base. They can share their grievances, if any.
Unlike contractors, permanent employees are granted personal, sick, casual, and holiday leaves. They have their Tax liability made by the employer on their behalf. Many permanent roles offer perks like outdoor medical coverage, gym memberships, shopping discounts, and health insurance. But not for contracted workers.
#Mistake 3: Leasing out PEO companies for long periods
You renewed with PEO services and got your rates. But undoubtedly, it has gone up. But the real question is, did they go up more than you wanted to pay?
Luckily, signing a renewal doesn’t lock you in for eternity. There is always a 30-day out option. The truth is it is the best time to go PEO services shopping.
Why do PEO services need to be switched?
There are various reasons, but the base of it all is non-alignment with the vision. You must focus on your company’s needs and evaluate your options.
Avoid Herd Shopping
Most clients are doing their research and due diligence before renewal. PEO services need to be more relaxed in their pricing. Bit shopping PEO services before renewal gives you more sense of the market.
Strategize and Evaluate
Without renewal, you can take your own sweet time and choose the PEO services that best fit the company’s needs. You can reevaluate more with the costs and judge what’s available with the two PEO services.
Also, it’s a good time to study employee benefit participation changes. You may have downsized, and many employees opted out of health insurance. At the same time, the other option can be that you have outgrown the PEO model.
Align with different medical or health insurance.
As long as it aligns with all the health insurance and the transition of the timelines is easier for employees. You are good to go. As well as your accountant and HR should be on board with the new PEO Services.
You want a change of PEO services. But now yi should be Armed with a list of questions to be asked. This will help in getting confidence and analyzing what is on the table.
Question To be asked when Shopping for PEO services
Some food for thought:
- Do you have a bill that shows exactly the details? Does it clearly state what you are paying for?
- To what extent do you need PEO services in your organization?
- Do you have a single point of contact?
- How comfortable are you with addressing issues?
But know that you don’t have to do this alone. You can entrust this with a PEO broker or a permanent employee who is well-versed with market standards and the company’s vision.
The employee can prepare a detailed financial analysis of current costs and break down the invoice so you can see every cost which fits your needs. This will cut your time by 80%.
But if you still need more. Contact MME and PEO services, and get a detailed list of benefits and payroll management tips with a free consultation.
The Glitch in the Story of PEO Services
Recently a current client of ours left us and chose to start a contract with new PEO services. They are offering a better payroll platform that will see them tons of money per year. Sounds great!!
We said there would be a glitch.
The PEO service could have been more professional, and the client wanted something to do with PEO services. The PEO services want a high penalty for termination. This is also a slick market practice to ensure the loyalty of clients.
A PEO contract should have a 30-day out. It is the right thing to do. Let the PEO services keep your business because they bring value. Handcuffing and pushing them back to the corner is a bad practice.
Continuing the story, the company wanted out of PEO services. They had their reasons. Starting from late payroll management to multiple errors in taxation to unsatisfactory answers to basic questions.
But they were charging hefty amounts for it?
They were almost charging the daily fee for two years. The company was bounded. The client was under pressure during the signing. The problem is subpar service and clunky payroll. As a result, they need to reconsider contracts.
The problem lies in detail: Contracts.
Always review the terms and regulations of contracts. If you are a new client, ensure your new contract doesn’t lock you in an 18 or 24-month term. This practice is always availed in MM Enterprise. We know the process of doing business with integrity.
PEO services are the best route for midsize businesses to have HR resources and employee benefits, usually reserved for large MNCs. But that doesn’t mean all PEO services will charge the same rate.
So how to ensure that you won’t overpay and negotiate with PEO services? Yes, you can negotiate effectively.
So how to get the pricing right?
5 Tips To Lock in the Lowest Price
Get knowledge Of Market Potential.
Shop Around when looking for a PEO. Know at least 3-5 PEO services and their competitive charge of them. It is challenging to onboard a client for PEO. Therefore, they will accept concession charges if you commit in exchange.
Honest About cost
Salespeople, in general, are trained to sell the product. They will entice you with the features of the product. In the PEO services case, there is a specific service, technology, or person.
Refrain from making an emotional decision factoring in the above features. Consider their costs and be straightforward about the cost.
Compliance With Underwriting Requirements
When you provide only some information, the underwriter will assume the worst. They tend to quote more. Use NDAs and reference-based diligence.
Understand How Pricing Works
These can have more value than discounts. If a PEO can lock their health insurance renewal, it’s more valuable than reducing their charges.
Professionals make work easy.
Third parties like MME will save you time shopping for multiple perks and employee benefits. Also, our PEO experts will give you access to low pricing, annual reviews, and service-based support.
The bottom line, it’s best to educate yourself before signing up or shopping for PEO services. Using best practices, you can lower the cost substantially.
We have made a detailed discussion about the mistakes made early on by firms and MNCs. We also want to point out that these mistakes can happen to anybody. An HR professional can also make it.
Further, we want to throw light on one more myth. Why do you need HR professionals when you are hiring PEO services? HR professionals can work with PEO services to boost their company’s growth. But you can still use PEO services if you have HR personnel.
How HR Managers And PEO services can make Invincible Team
PEO services are designed so that a small business owner’s life becomes easier by providing HR solutions. So the daily grind of necessary work helps a company’s growth. But what if it already has an HR manager?
The idea of third-party outsourcing can send shivers down the spine of any HR Manager when the business owner tries to sell the idea of working with PEO. It usually doesn’t go down well.
The reactions of anger and resistance are quite common. To an HR Manager, PEO is a job shadowing strategy, not a partner. But once they understand the importance of PEO services, they can be more efficient and improve the company.
PEO services can certainly be an extended HR department for companies that are too small. Hence, a perfect solution for HR management. These services are created to take over mundane tasks like filing attendance sheets, etc. But this is where the confusion of the HR manager lies.
They have studies to work for the company’s growth. Not to fill mundane tasks and become a class teacher and fill out the necessary paperwork for employment. Know what? You can easily outsource the paperwork to PEO services. At the same time, HR mm Managers can do the core HR work.
The Deadly Combination of PEO Services and HR Professionals
HR Managers are generally resistant to the idea of outsourcing to PEO services. They must be educated on the winning combination of Managers and PEO services. But they can handle HR compliance, payroll processing, onboarding and completing paperwork, and benefits management.
These are paperwork tasks that will only leave HR Managers exhausted. But working strategically with PEO services can ensure necessary work gets done.
When a manager has newly joined the organization, they have massive plans. They want to build a workplace culture they can be proud of. They want to implement training programs that help employees find an inspiring career path.
When was the last time you, as an HR Manager, could implement all this? We know zero times as we have many surveys and statistics as proof. Well, here are some of them.
75% of professionals feel that they are working beyond their capacity.
Meanwhile, 42% believe they need more time to do other managerial tasks.
The above sure tells the overworked story. But all this can end if partnered with PEO services.
Growth is Achievable when HR and PEO services work as strategic partners.
The coming year is going to showcase new challenges to HR Managers. Small business has to focus on growth to survive the ever-changing market. Also, the exploding trend of hiring remote workers poses a new challenge for HR managers who must be better versed in this domain.
Every state has its own HR law. The manager needs an ally to help them stay compliant and find great talent. They can be a harmonious force working for the good of the company.
Making them understand the potential of PEO services can go a long way in gaining their trust. No one is replacing your job as they are permanent employees. But PEO services are working with them as strategic partners and aiding them.
Here are some ways of picking the right PEO:
- Make a list of projects you want HR to focus on
- Ask your Managers what the hindrances in completing the project are
- Involve HR in scouting and buying the best PEO services.
- Let Managers ask the due diligence questions.
- Openly discuss the role and working areas of managers and PEO services after the contract.
- Craft a change in management strategy.
- Make your employees aware of the change in strategy.
- Once your HR understands that PEO is not an obstacle but an aid in success, things will be easier to go forward. They will feel better if kept in the loop throughout the buying process. Transparency and honesty is the key to making strategic changes.
Engaging in a Dialogue with HR As Your Decision Team
PEO services will be more than happy to work with the HR department. They work better when there is transparency. There is no reason not to dialogue with the manager throughout the buying process.
PEO services work with many HR departments; this is familiar to them. If a PEO sales representative has a dialogue with the HR Manager, it can go a long way in building that trust. It will help them know that a plan and process are in place for working with an HR team. Thus making them feel relaxed and work systematically.
Are you ready to talk with MME about PEO services? All we are asking for is 20 minutes. We know you will leave our office with a relaxed and assured mindset. We will help you unlock the next levels of your business with strategies and a hardworking attitude.