By Christy Hritz
In today’s fast-paced business world, it’s important to allocate resources in the most efficient way possible. Wasting time and money can have a direct impact on your bottom line. One opportunity self-storage owners have to improve their resource distribution is to outsource. The question is, which services are the best to entrust to an outside provider?
Take human resources (HR), for example. You might say to yourself, “I can do this. No need to outsource.” And maybe you’re right. But with all the things a busy storage owner needs to do, is managing HR the best use of your time? Do you have time to keep up with changes like the new Affordable Care Act? Even people who spend all day working in HR are finding the new regulations very time-consuming. Business owners need to spend their time wisely—and on activities that only they can do.
A professional employer organization (PEO) enables you to outsource your HR, employee benefits, payroll and workers’ compensation. There are variations to the PEO model. For example, an administrative services organization acts as a payroll-processing agent, while an HR outsourcing organization provides customized HR services.
PEOs represent a broad range of industries, including self-storage. The average PEO client is a small business with approximately 20 employees. Regardless of your HR knowledge and expertise, you should explore the pros and cons of outsourcing your HR function. Decide for yourself what works best for your business. To get you started, here are the primary advantages and potential disadvantages to engaging a PEO.
Advantages
PEOs are a one-stop shop. Because HR is the focus of a PEO, self-storage businesses can benefit from their expertise, especially in areas such as compliance and legal advice. PEOs can provide employee handbooks, job descriptions, policies and procedures, compensation surveys, and safety training. Additionally, while no one hopes to use it, they can provide guidance with discipline, including employee terminations.
PEOs have buying power. Many organizations take advantage of a PEO’s purchasing power in areas like workers’ compensation and health insurance. Prior to engaging a PEO, a company has to source insurance carriers, negotiate rates, reconcile statements, conduct open enrollment, and answer employee inquires about claims and services. Keep in mind, that’s for each type of insurance being offered—medical, dental, life, disability, etc. With a PEO, it’s all handled for you, including COBRA administration when an employee leaves.
PEOs offer cost savings. According to the National Association of Professional Employer Organizations (NAPEO), companies using a PEO service save more than $313 per employee on administrative costs versus companies that don’t. A PEO allows you to focus on what you do best—run your business and take care of customers. By allocating resources the right way, you reduce costs and free up time to devote to revenue-generating activities, according to the Society of Human Resource Management.
Disadvantages
You have to give up some control. If a self-storage owner is accustomed to having his hands in every little detail of his operation, transitioning to a PEO could be a challenge. For the partnership to be successful, he must remember why he hired the PEO in the first place.
Consider which type of partnership is right for you. For example, you can decide to have a co-employment relationship, where the PEO becomes the employer of record and assumes responsibility and liability for payroll, taxes, benefits, etc., or serves as a payroll-processing agent. Choose the partnership that fits. It’s not an all-or-nothing decision.
The PEO may not know the business. A storage owner should find a PEO that can be effective in the self-storage industry. Today’s leading PEOs employ experienced professionals from a variety of industries who are credentialed in HR, certified in Six Sigma and properly screened for their background. Look for PEOs affiliated with trade associations such as NAPEO and accredited by organizations such as the Employer Services Assurance Corp. This demonstrates a commitment by the PEO to its work and profession.
You don’t want to buy more than necessary. Because PEOs offer so many services, it’s easy to say, “I’ll take one of everything.” Look for a PEO with flexible service offerings. Many are able to carve out specific services such as risk management, safety, workers’ compensation or benefits, which might typically be administered elsewhere. You can start small and add services as your storage business expands.
Getting Results
The real reason for a storage owner to consider any type of outsourcing solution is results. Does engaging with a PEO bring value to the company and bottom line? I’ve already mentioned the savings. Consider these statistics from the NAPEO:
- The employment growth rate of small businesses that use a PEO is 10 percent higher than that of those that don’t.
- Businesses that use PEOs are 50 percent less likely to go out of business than companies that don’t.
- Small businesses that use PEOs grow 7 percent to 9 percent faster and have employee turnover that’s 23 percent to 32 percent lower.
PEOs have the ability to lower costs and increase revenue. They can reduce administrative headaches and allow storage owners to focus on customers. The decision to engage a PEO isn’t about what you can or can’t do; it’s about what you should do to maximize resources.
Christy Hritz is the director of marketing for AlphaStaff, a professional employer organization that offers a customizable suite of solutions for human resources, employee benefits and administration. Founded in 1997, the company has supported more than 100,000 worksite employees in 49 states. Its services include workforce management, benchmarking data, HR information systems and insurance. For more information, visit www.alphastaff.com.
