Professional Employer Organization helps a Start-up Company Rev

Only the road lie ahead of them!

The founder of an online retail start-up was seasoned, spunky, and ready to take on the world. She raised $3.5 million in her first-round of funding, recruited an all-star CTO and Marketing Director, even got a celebrity to sign on to kick-start the marketing campaigns and thrust the company into popular culture.The plan was working, the speed was building; orders were filled, revenues began pouring in.  There soon became a tremendous need to build a team of employees to handle the high volume of sales, customer service needs, and operations.

Enter the 30 mph Speed Limit…

Our CEO lacks any real Human Resources experience in her career. She is not familiar with the strategic, legal, or administrative considerations that are necessary to be a compliant and successful employer.

She projects to have less than 50 employees for at least a couple of years, so hiring a competent and experienced HR professional is an expense that she and her investors alike can not justify. She knows that she needs a team, but she also realizes that she needs to focus on revenues or their won’t be a team. She can market and sell her product better than anyone else in world, but this HR task looms before her like a mountain, and she ponders the following questions while up late on the internet searching for the magic answers:
How does she attract retain the tech-savvy, intelligent group of employees she knows she will need?
Why does her startup appeal to this class of employees when they also have the options of working with Amazon, Zappos, and Google?
When should she leave the easy-going culture of a startup company behind, and begin addressing company policies, employee benefits , payroll tax compliance, vacation time?

When is all of this work going to get done, and where does she find the expertise to ensure its done right?

Pull a U-turn, and get back on the Thruway!

Luckily for our founder, the problems that stare her in the face have also grilled generations of entrepreneurs before her, and born from the ruins of this universal employment challenge rose the dawn of Professional Employer Organizations.

5-10 new employees had to be in place within 30 days, with an additional 5-10 in the following 90 days. She selected a Professional Employer Organization to work with and was able to immediately roll out:

  • - 6 National Health Insurance plans for employees to choose from
  • - Cafeteria style supplemental benefits such as: Dental, Vision, Life Insurance, and Flexible-Spending Accounts
  • - 401(k) plan, Qualified Transportation Benefits, even an Employee Perks program

The CEO worked with an HR consultant to determine the employer’s level of monetary contribution to each benefit plan based on industrial and geographical averages.Now that the underlying framework necessary to recruit employees was in place, it came time to seek out and recruit candidates. Again the CEO worked with her HR Consultant to construct the specifics of each job she needed to fill, they quickly developed:

  • -Job Descriptions
  • -Employee Compensation Packages
  • -Employee Performance Review Policies
  • -Job Advertisement Placements
  • -Resume Screening Parameters

 When hundreds of resumes began to roll in, it became evident that sorting through the masses was something that would take a lot of time. The CEO set resume screening parameters for each job, and the recruiting division of the PEO sorted through resumes to produce the top candidates for her team to consider. She also decided to have the PEO run background checks, credit, and reference checks for each potential hire. She didn’t have to setup an account with each vendor, she didn’t have to question whether she was getting a good deal; she literally sent an email to her PEO, and they managed the entire process.

Now comes new-hire enrollment and orientation.

For companies not using a PEO the new-hire process can be risky and exhausting. Risky because offer letters, non-competes, employee manual recognition, W-4s, I-9s, etc. must be executed with diligence in order to maintain HR compliance. Exhausting because it typically involves a lot of hand holding and paper pushing.

For our brand new PEO customer the new-hire process is web-based, compliant with all federal and state regulations, and includes no paper whatsoever. The new employee simply receives an email from the PEO with a link to a web portal that will display all benefit options and necessary employee forms. This online enrollment medium is accompanied by a web-conference with a PEO enrollment specialist to walk employees through the entire process.

Cruise Control is set, next stop growth…

Our CEO and her start-up company once feared HR as the eminent challenge that would test her least developed skills sets. However she decided to take the easy road for managing Human Resources and the best part is it didn’t cost a fortune. PEOs use the concept of coemployment and cooperative purchasing to achieve discounts on emloyee benefits, workers comp insurance, sometimes even tax rates. They pass these discounts to their clients to offset the administrative fees the PEO charges to provide their service.

Professional Employer Organizations are the most efficient solutions for a fast-moving start-up company to manage Human Resources. They even the playing field in the competitive world of employee recruitment, keep fast and furious founders in compliance with the law, and save significant dollars in the procurement of benefits and other HR necessities.