How a PEO Can Help Staffing Firms in Uncertain Times

Contributed article from Sophia Spinelli of E3 HR, Inc.

When thinking of economic uncertainty and its impacts, a few industries come to mind first.  Real estate and retail are two obvious ones, as consumers face fluctuating market prices, inflated interest rates, and make more budget-conscious purchases that greatly impact small business owners. 

The staffing industry is, by contrast, an industry that faces impacts relatively unseen by the public. But it is important to understand how the staffing industry has been impacted by factors such as a particularly tense election year, inflation, and minimum wage regulations – and how a PEO can help business owners address these issues.

The Vicious Cycle

The staffing industry has fallen into a rather cyclical financial dilemma.  The cycle is as follows: Staffing projects are scarce and, as a result, staffing companies must lower their prices to gain an advantage over their competitors, ultimately struggling to make a profit due to these lower rates.  Essentially, the staffing industry, like many others impacted by the current economic downturn, finds itself in an overly competitive market with little demand for what they offer. 

How a PEO Can Help

In times of shaky economic standing, this is where PEO services can help. By offering staffing firms security in workers’ compensation, financing, and human resources, a PEO can greatly relieve a staffing client of their administrative burden.

Workers’ Compensation

Obtaining workers’ compensation insurance from a PEO that understands the staffing space can be a very effective way to grow your business and control costs.  The right PEO can be more adept at providing multi-state coverage, layering in additional codes for existing clients all aimed at expanding the client base. Most importantly, PEO companies will create a tailored workers’ compensation solution which often results in major cost saving for the client. PEOs can buy workers’ compensation insurance rates in bulk at a reduced cost and then offer these reduced rates to their clients.  Finally, PEOs will partner with staffing companies to provide various safety services while aggressively managing claims.  Together the goal is to enhance or supplement existing safety procedures and protocols aimed at controlling and reducing costs. 

Payroll and Payroll Tax

A staffing firm can confidently entrust their finances to a PEO knowing that their administrative duties will be properly managed.  PEOs will lessen the financial burden of processing payroll, handling garnishments, and managing payroll tax administration.  PEOs also specialize in employee retention, utilizing high-quality HR practices which will reduce employee turnover rates. In an uncertain economy, it is crucial to maintain a tight-knit and supportive culture in the workplace.  PEOs will work with clients to cultivate a healthy work environment and provide better benefits to the clients’ employees. 

Safety & Claims Management

Claims management and the overseeing of safety protocol are two services a PEO offers that will dramatically decrease extra costs related to risk for the staffing industry.  Safety services will include visits to client sites to analyze potential risk factors, research into previous claims caused by site hazards, and the provision of best practice training taught by an OSHA certified professional. The safety team uses an IIPP (Injury and Illness Prevention Program) to assess all safety factors involved in your business plan.  With an IIPP tailored specifically to a client’s program, a staffing company can prevent workers compensation claims and costs in the future.  A PEOs safety team also serves as a reliable support in a staffing client’s corner, to assist them in all safety needs for perpetuity.  They will address any pitfalls that arise and make trips to the clients work site as needed for continual hands-on safety evaluation.    

Conclusion

In an unstable and ever-changing economic environment, PEOs allow their clients to simplify their business.  Staffing companies can run their business knowing that their PEO partner handles the risk, covers cost uncertainty, and provides the support their employees need and deserve.  

About the Author

Sophia Spinelli is currently employed as the Marketing Representative at E3 HR Inc., a PEO company based in New Jersey that offers employee administration services across the nation.  E3 HR, Inc. provides services to industries including staffing, construction, manufacturing, distribution, and more. Learn more at.e3peo.com.