5-Set Questions to Choose a Dependable PEO

Businesses decide to choose a PEO for two fundamental reasons: first, they direly need the services of a highly experienced co-employer to execute their administrative HR functions at a world-class level.

Two, they need time to focus on the more strategic and revenue-generating tasks that will take their organization to the next level.

However, they soon discover that finding a genuinely dependable PEO partner isn’t always as simple as they had imagined.  

When a good PEO can do a remarkable job of taking the burden off your business, choosing a PEO that is a mismatch with your company in terms of culture, or partnering with a financially unstable PEO, can spell trouble both for your company and your employees.

The internet is rife with unpleasant stories of PEO engagements gone awry. Therefore, to ensure the best fit possible between your company and this close partner, it’s worth the investment to conduct a thorough analysis of your potential PEO. 

Here are five vital steps you must take to forestall the danger of choosing the wrong PEO. 

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Question #1: Are you licensed and accredited? By whom?  

Reputable PEOs meet the highest standards by subjecting themselves to the scrutiny of governing institutions. So, begin your research by making sure the company is accredited, licensed or registered as appropriate and in good standing with global and national organizations. 

If you’re looking to partner with a Nigerian PEO, for instance, the PEO you sign-on must be accredited by the following: 

1. Human Capital Providers Association of Nigeria (HuCaPAN): HuCaPAN is the umbrella organization of registered/licensed recruiters in Nigeria, also referred to as Private Employment Agencies (PEAs). They are the regulatory body in charge of developing and promoting standards and ethical practices in the recruitment, deployment and Management of Manpower in and outside Nigeria. 
2. Chartered Institute of Personnel Management of Nigeria (CIPM): CIPM is the nationally recognized umbrella association for Practitioners of Personnel Management in Nigeria. They are the primary certifying body for all HR practitioners in the country. 
3. Association of Outsourcing Professionals of Nigeria (AOPN): AOPN is the umbrella association that oversees the institutionalization of professionalism in the practice of outsourcing in Nigeria. 
4. National Association of Professional Employer Organizations (NAPEO): And if the PEO is genuinely global in its outlook, it will be an active member of NAPEO—the Voice of the PEO Industry. NAPEO is one of the few globally recognized PEO certification bodies.  

So, before you sign on the dotted line, you may want to ask: Are you a certified professional employer organization? 

Question #2: May I speak with your current customers? 

The proof of the pudding is in the tasting. If the PEO is a reputable one, its reputation will speak for it. Besides, they will be more than happy to share references with you.

So, ask for four to five current customers’ contact information, ensuring the list includes a mix of long-term and newer clients. Consider it a significant danger sign if your potential PEO dawdles over this request or has difficulty putting together such a list. 

Some questions to ask the PEO’s current clients include: 

• What motivated you to join a PEO? 
• How many PEOs did you review before choosing this one? 
• Why did you choose this particular PEO? 
• How has the PEO helped your business? 
• What do you wish you had known before you joined the PEO? 
• What are this PEO’s weaknesses? 
• How long do you plan to stay with the PEO? Why? 

Question #3: Does the chosen PEO have a solid online presence? 

A solid online presence gives organizations credibility. The same is true for PEOs. So, look to social media and search engines for a sense of the PEO’s public persona.

First, check its LinkedIn, Facebook and Twitter pages to see what it says about itself. Next, search these sites for references to the company’s name, the CEO and its salespeople. Then, visit the company’s website to have an authentic feel of their level of seriousness. 

Social media is one of the best places to discover if customers have complaints, what those complaints are and how the company responds. 

In addition to this, investigate what the PEO’s employees say about it online. Has the PEO won any awards? Is it recognized as a leader in the industry? If its employees and current customers seem satisfied overall, and if the company responds positively to online questions and concerns, there’s an indication you’re likely to have a similar experience. 

Question #4: What is the financial strength and security of the PEO?

Request a copy of the PEO’s latest audited financial statements. The audited financial statements should show that the PEO has an adequate net worth, working capital, and sufficient financial reserves. 

Be also sure that an outside source verifies their financial statements and operations. Wherever possible, ensure the PEO’s financials are reviewed and approved by an objective auditor. 

An independent audit will include the independent auditor’s opinion on whether the PEO’s statements are materially accurate, complete and fairly presented per generally accepted accounting principles. 

Question #5: What is the history of the company? 

When every PEO puts its best foot forward and presents itself in the best possible light, you can access the truth about a PEO’s reputation through the wealth of information online.

If a PEO doesn’t have any online presence, consider it a minus for them. From their social media presence to news stories to court records, you can quickly ascertain the reliability of every PEO (if you know how to search).  

In addition to the information you get online, you should supplement your research by talking to a representative of the PEO to verify what you’ve read and find details that may not be found online.

Here are some questions to consider: 

• When was the company founded? How long has the current leadership team been in place? 
• How many years has the company offered PEO services? Are its PEO services its core offering or a sideline to another business? 
• Where is the company headquartered? How many other offices does the company have, and where are these located? 
• How many corporate employees does it have? What are their credentials? 
• How many clients and worksite employees (i.e., employees of client companies) does it have? 
• What does the company stand for in terms of its mission and values? 
• Does the PEO have HR professionals in your company’s key locations? If not, what is their expected response time? Should you need them onsite. 
• How does the PEO prefer to communicate with its clients?  
• Would it be possible to meet the people who will service your account? 
• How many clients does an account representative typically handle? 
• Can you see your service agreement? 

The answers you get to these questions will give you a better understanding of the corporate personality of the PEO. You will know for sure whether your cultures will be aligned in a co-employment relationship. The questions will also help you determine the stability and sustainability of the PEO. 

Summing it up, 

Choosing the right PEO can stand your business out from other competitors. PEOs do this by offering your organization and employees high quality and competitive HR services. But, even then, the benefits don’t end there.

The efficiency that a good PEO brings into your company frees up your time for more revenue-generating and strategic functions.  

However, these benefits can only be realized when you succeed in partnering with the right PEO. Therefore, whatever effort you put into doing thorough checks on potential PEOs will be well worth it.