By John Borrowman, CPC
Borrowman Baker, LLC, BV Staffing + Consulting
When your clients ask for advice on how to increase value in their businesses, don’t overlook the potential of a PEO.
To get a closer look at this intersting tool, we reached out to John Mackle, CEO at Worksite Employee Leasing. Mackle is a former BV professional with Ladenburg Thalmann (now Cassell Salpeter) in Coral Gables, FL.
Borrowman: Give us a quick understanding of what a PEO is and does.
Mackle: PEO stands for “Professional Employee Organization.” Some people may know it as “employee leasing.” In a nutshell, we remove all employee-related headaches and allow a business owner to focus entirely on what he does.
Borrowman: How does that work?
Mackle: We operate in a legal construct known as “co-employment.” So, from the standpoint of the Federal, State or Municipal government, we are the official employer. The PEO is responsible for 941s, 940s, W2s, child support, garnishment health insurance, workers comp; literally everything involved with having an employee that can be such a distraction to the business owner.
Borrowman: So, what’s the connection between having a PEO and increasing the value of a business?
Mackle: Our national association has surveyed PEO clients and found that they grow 7 to 9 percent faster, have 10 to 14 percent lower rates of employee turnover, and are 50 percent less likely to go out of business than other comparable small businesses.
Borrowman: That sounds almost magical. What’s the difference that the PEO makes?
Mackle: It’s just a matter of giving our client more time to focus on his core business. When you have more mental bandwidth to deal with what really matters in your business, you’re bound to be more successful.
Borrowman: I’m assuming that this difference extends to succession planning?
Mackle: Sure. A PEO makes the succession process easier by avoiding the kind of disruption to the workplace and to employees that is always a concern in a merger or acquisition.
Borrowman: I can see the difference a PEO makes to a business owner. But, do employees themselves see any benefit?
Mackle: Absolutely. We have volume buying power from having tens of thousands of employees. That pays off in being able to offer better healthcare benefits, better 401K benefits, and so on. These factors can make the difference in attracting—and keeping—good employees.
Borrowman: Even with all those good things, there must be some misconceptions people have. What about those?
Mackle: Sometimes there can be confusion about what is a PEO and co-employment. Business owners often think that a PEO is more expensive than doing things on their own. When you break down the cost for everything a PEO provides, though, it’s not only more expensive to do-it-yourself, it’s more risky.
Borrowman: Once a business owner decides to contract with a PEO, what’s the thing that surprises them the most?
Mackle: Most of the time, they don’t believe it’s a headache removal. They think a PEO is too good to be true. They look for the fine print, the asterisk. Once they get started with a PEO they don’t believe how much time they get back that they can use to focus on their own businesses.
Borrowman: And how long does it usually take them to come around?
Mackle: Oh, usually about as long as the first payroll cycle.
For more details, or a conversation about how a PEO can increase value in your client’s business, contact Worksite Employee Leasing. Worksite Employee Leasing operates in Florida, Georgia, Texas and Tennessee.