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Tips for Transitioning into a PEO Relationship

So, you’ve decided to hire a Professional Employer Organization to help handle the employer side of your business. You’re not alone; the PEO industry has boomed over the last decade, and no wonder. PEO clients grow faster than average, have lower employee turnover than average, are more likely to be profitable, and have double the median annual revenue growth on average.

So, congratulations on the new relationship! But … what now?

The transition stage can be a time of great uncertainty and anxiety, especially for employees who are suddenly becoming (technically) co-employees of a wholly separate organization. However, when managed wisely, the transition process can be virtually painless.

What does the transition stage include?

Certain responsibilities for the employees, such as employee payroll and taxes, must be formally moved from the business to the PEO. That includes some processes related to those employees, e.g., the adoption of new tech systems or platforms.

The employer should create a dedicated transition management team.

The PEO, as your new partner, will serve as an invaluable resource for information and assistance. However, the transition will go more smoothly if the employer also creates their own team to manage the process on their side. Remember, the employer owns the relationship with the PEO and any other service providers, and thus they also own the transition process.

Be respectful of the employees.

This is a time of uncertainty, and often anxiety, for the employees involved. You want to ensure that the transition to the PEO does not disrupt service to the employee, so that they can continue to focus on their work rather than on their worries about benefits and paychecks. Keep their needs in mind and maintain open communication.

Maintain open lines of communication between all stakeholders and parties.

It bears repeating: avoiding disruption demands open and adequate communication. If the transition process presents possible pitfalls, it’s only to the extent that the employer, the employees, and the PEO fail to communicate adequately about expectations, activities, and requirements with each other.

Finally, document and keep records.

Ambiguity and uncertainty are the enemies of a good, seamless transition. They create fertile ground for problems. From the initial agreement with the PEO through project planning, every step and agreement should be recorded, documented, and made accessible to all affected parties.

For more information about managing the transition, see the article “Outsourcing the HR Function” from the Society for Human Resource Management or contact CoAdvantage directly.

 

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.

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