Why Do Businesses Change PEO Providers in January?

Companies can switch their PEO (Professional Employer Organization) providers at any time they’d like, but it often seems to happen at the beginning of the year. For the most part, businesses change PEO providers in January for three primary reasons:

  • Tax Benefits: There are tax benefits to making certain types of changes at the beginning of the year or quarter, so January is often chosen.
  • Start Fresh: Since business owners often see a new year as a fresh beginning, January becomes the catch-all for many changes.
  • At the beginning of each year, many companies will enact a brand new budget plan that includes additional expenditures.

When to Start Planning Your Transition to a New PEO

If you decide to transition to a new PEO, you should at least give yourself a few months’ lead time. You need to make sure you’ve spent ample energy evaluating your current PEO and looking into the background and integrity of the new one. There are no hard and fast rules, but you should probably give yourself at least a few months to transition so you can get all of your affairs in order, including selecting employee benefit packages, signing the contract, informing your employees, etc.

How to Evaluate Your PEO for a Potential Switch 

If you plan to change PEO providers or have at least considered it, then you should first evaluate your current PEO to ensure that it’s the right move for your company.

Here are a few important details you should consider:

Gains Since the PEO Partnership

While it’s true that companies partner with a PEO to lessen their day-to-day burden, the primary goal is to improve the business and its financial outlook. Before you decide to search for a new PEO, take a look at the gains your company has enjoyed since the current one started working with you. Just remember that it can take several months, or maybe up to a year or longer, before you see a dramatic effect.

Fitting Your Company’s Needs

Regardless of the gains you’ve seen so far, you need to evaluate whether or not your company’s needs (and those of your employees) are being met. PEOs deal with a variety of issues such as payroll servicesworkers’ comp, and employee benefits, just to name a few. If your employees seem to be happy and you don’t have any major complaints, then you might not need to switch.

Cost Changes in the New Year

Like all things in the current economy, there’s a possibility that some PEO companies will hike their prices for the new year. Or perhaps the amount of money that you can spend on certain services has changed, and once the new year rolls around, you won’t be able to afford your current PEO’s services. Just keep in mind that PEOs will often work with you on certain items, so check to see if they can offer you any discounts.

Expediency in Handling Issues

One of the basic rules of any reputable PEO is that they handle employee issues efficiently and effectively. Take a look back at how the PEO has dealt with a variety of issues such as payroll changes, tax requirements, workers’ comp claims, etc. Perhaps you simply need to have a discussion about them not fulfilling what they’ve promised. Or, it may be time to go somewhere else.

Any Red Flags You’ve Noticed?

You always need to be on the lookout for red flags that come from either your own observations or reporting from your employees. These could include anything from acting dismissive when dealing with an employee issue or a PEO representative being rude to your workers. If they’re not acting in a way that you find admirable and responsible, then perhaps you shouldn’t be working with them anymore.

The Opinion of Your Employees

We’ve touched on this in a couple of points above, but it definitely deserves its own focus. How employees interact with the PEO is absolutely paramount. If you’re thinking about switching to a new PEO  reach out to the employees, preferably one by one, and ask their opinion. This is especially helpful for employees who have had direct or indirect dealings with the PEO.

Contact Vested HR to Change PEO Providers to the Very Best 

If you’ve decided to change PEO providers, Vested HR is the perfect destination. If you have any questions about the benefits of our PEO or our PEO HR services and solutions, reach out to us at (727) 474-2114 today. We strive to treat all of our clients as humans and not simply numbers or accounts in our systems. It is our goal to provide what your business and employees need to enjoy working for your business and be proud to represent your company.