When company owners consider hiring a Professional Employer Organization (PEO), two common questions tend to spring up: “Are there any real differences between certified and non-certified PEOs?” and “Is certification really that important?” The answer to both questions is a resounding “Yes.” Here are five reasons why you should do business with a certified PEO:
(1) Certifications are not mandatory; they actually require extra work.
First things first: it’s important to understand that PEO certifications are not the same as business licenses. A PEO does not need to be certified in order to provide the services that they advertise, nor do they need an accreditation to officially call themselves a “professional employer organization.” Thus, by definition, a certified PEO is a PEO that has already gone above and beyond the call of duty. They’re not just meeting the minimum standard—they’re genuinely good at what they do and are invested in helping their clients thrive.
(2) A certified PEO has proven that it’s consistently reliable and trustworthy.
PEO certification is not a one-time deal; companies cannot just get accredited once and then be in good standing for life. No, a PEO can only keep its accreditations if it consistently performs in a manner befitting these titles. And if the PEO fails to do this, then it can—and will—be stripped of its honors. When you see that a company has held an accreditation for a number of years, then it’s a good indicator that the company in question has a sincere commitment to maintaining best practices and raising the bar.
(3) PEOs tend to grow and thrive post-certification.
According to McHenry Consulting, Inc., a large number of the PEO industry leaders earned their certifications when they were small or mid-sized businesses. Correlation does not equal causation, of course, so it would probably be incorrect to assume that these companies grew as a direct result of their certifications. But certifications are still fairly good indicators that a PEO is serious about the work it does and is a reputable company with which to do business. When a PEO becomes accredited, it’s essentially saying to prospective clients, “We’re not leaving anytime soon. Let’s work and grow together.”
(4) With certification comes financial security.
Be honest: would you trust a bank with your money if that bank weren’t insured by the FDIC? Probably not, because if anything happened to that bank (a robbery, structural damage, fraudulent activity by management), then your money would be gone and you’d have no recourse.
Working with a non-certified PEO carries with it a similar risk; if they fare poorly or use underhanded practices, then you’re essentially on your own. However, PEOs that carry a seal of approval from the Employer Services Assurance Corporation (ESAC) are guaranteed to perform “key employer responsibilities [for] their clients, employees, insurers and regulatory authorities.” This guarantee is backed by $15 million in surety bonds. More often than not, simply choosing an accredited PEO is enough to protect your investment and your company from financial havoc. But if, perchance, something were to go terribly wrong, then you’d still be safe.
(5) Certifications are not hard to verify.
In a perfect world, you could trust any company representative who said that their firm has received all of the best certifications and accreditations. But we don’t live in a perfect world, and some companies might not be 100% honest about their credentials. It can be tempting, then, to assume that there’s no point in taking a PEO’s certifications into account. After all, if there isn’t a way to verify for sure whether or not a firm’s purported accolades are real and up-to-date, then why bother at all?
But it’s actually easy to learn whether or not a company is truly certified and in good standing with the organization that accredited them. A tool on the ESAC website does exactly this, and all you need to know is the name of the PEO in question. In seconds, the site will tell you if the company currently holds an ESAC certification and for how long they’ve held this distinction. It’s simple, it’s user-friendly, and it’s free—why wouldn’t a business owner use it?
In addition, starting in mid-July, the CPEO designation from the IRS will be just as easy to verify with a quick visit to their site.
If a company has a choice of working with a certified PEO and a non-certified PEO, there’s really no contest: a certified and accredited PEO is the smarter and safer choice. For business owners, these PEO designations should be highly meaningful. They’re your PEO partner’s way of showing commitment to ethical behavior, client satisfaction, and excellent service overall.
Mark Sinatra is CEO of www.staffone.com. Before joining Staff One HR, Mark co-founded Gordian Capital, a private investment company that focuses on making long-term investments in lower middle market companies. He has worked in the private equity, investment banking, consulting, and business process outsourcing industries for the following companies: Credit Suisse, Merrill Lynch, Andersen, RR Donnelley and The Parthenon Group.