Is there a role for local HR firms with a PEO?
I am sure my last post has successfully pissed-off all my HR consultant friends. But…I stand by it…for VC-backed startups.
However, there are some things to remember. First of all…most small businesses are not VC-backed startups. Second, most small businesses have less than 10 employees. By-the-way…this obviously includes startups at the very beginning.
In general, PEOs will not work with companies with less than 7-10 employees. This leaves a significant portion of small businesses un-served. However, the owners of these smaller businesses need HR advice and services also. This is where HR consultants have their advantage. Once they are in, if they do a good job, they can grow with the company.
However, if a company (especially a startup) does choose to work with a PEO, there does remain a role for HR consultants. PEOs are great in providing payroll, medical benefits, forms, advice, etc. But…by their very nature, they operate through centralization and scale. They are unlikely to be hyper-local like an HR consultant. They cannot be on site very often. But employees need someone to talk to. Often…an 800 number is not good enough.
When a company works with a PEO, they need to assign an on-site coordinator -- somebody to be the liaison between the company and the PEO. Usually this is the person employees approach first with HR issues. Often it is the CFO. But…even this diminished HR role is not a good use of the CFO’s time. This is where an outsourced HR consultant can still help when a PEO is involved. Being the employee contact, working on projects with the PEO (like an employee manual), and helping manage the PEO-company relationship.
Now I have probably succeeded in upsetting my PEO friends as well. OK…so if everybody is upset with me, I have probably been fair and balanced.
Deciding on an HR consultant is a big, expensive decision. I think Jroym is right if the company is working with a small PEO, or with some of the larger PEO's where HR advice and support are not a focus. My company (TriNet)focuses on helping venture-backed and privately-funded clients get the most from their investment in people, so we hire and train top-quality HR Professionals to serve as human capital consultants for our clients. Typically, our client CFO's treat their HR consultant as the HR VP -- the consultant is involved in all key HR decisions, from hiring through termination of employees, setting up performance management programs, etc. Our clients rarely see a need to hire HR consultants -- in fact, most clients who have an HR consultant find that their services are not required after they join TriNet.
ReplyDeleteJack Midgley, VP Products, TriNet