Staff Management

Professional Employer Organizations: Improve HR & Office Efficiency

By Steven Faith, OD

August 26, 2015

SYNOPSIS

Boost office efficiency and staff management with a professional employer organization. Here are the key steps to choose and optimize a PEO.

ACTION POINTS

DESIGNATE TASKS. Assign a PEO the functions of checking payroll hours, vacation accrual, paid time off available, and insurance (medical, dental, vision, life, long-term & short-term disability.

PROJECT COST. Charged per employee, typically. For instance, could be charged $100- $120 per employee per month.

SPECIFY NEEDS. Emphasize what youexpectof the relationship. PEOs may lackexperience working with OD offices.

It’s hard as a practice owner to both see patients, as well as attend to all of your practice’s operational needs, including the human resources services you provide for staff. For that reason, our practice uses a professional employer organization (PEO) to ensure all human resources operations are kept running smoothly.

There’s not necessarily a monetary line you cross in determining when the time is right to outsource. How we look at outsourcing is, if the task is taking employee resources or doctor energy and focus away from patient care, then we outsource the task.

The doctors, clinic administrator and team coordinators in our office enjoy taking care of patients. We enjoy working with and sharing the camaraderie of our staff. We enjoy directing the mission and future growth of our office and business.

We do not enjoy managing a staff’s FMLA expiration time. Or worrying whether the PTO or vacation accrual rate of a particular staff member is correct. Or calculating the tax withholdings for every payroll. Or meeting and deciding yearly which medical or dental plan we will utilize for our staff and doctors. Or wondering if the actions of an employee is an “at will” reason for termination. Or worrying whether the drop in our staff 401k values is a violation of our fiduciary responsibility as the administrator of our 401k plan.

And if we never have to complete another Form 5500 again, we will be happy business owners forever. If you don’t know what a Form 5500 is, you need a PEO. Editor’s Note: The Form 5500 is a series of employee benefits compliance, research and disclosure tools for the Department of Labor.

The support staff at Livermore Optometry Group.Dr. Faith says a PEO can free the doctor’s and staff’s time to concentrate on seeing patients, while keeping operations, like payroll, more efficient.

What’s a PEO?

PEOs provide small-to-medium size companies with outsourced human resource services, specifically employment and HR management services. PEO’s are not staffing companies. Traditionally, PEOs manage functions such as payroll, employer tax compliance, employee benefits, worker’s compensation and government compliance. Now, PEOs also include access to comprehensive 401k management and all aspects of employment administration like industry salary surveys, employee review tools and collaborative tools in reducing employer-related liabilities.

Assign Tasks to PEO

All of our hourly employees and salaried staff members’ pay cycles are managed and paid through a computerized time system and direct deposit payroll system. We have a fingerprint “time clock,” and the staff are in charge of managing their own payroll hours before each payroll twice per month. All pay is direct deposit, even for the part-time high school and college staff we employ.

All aspects of each employee’s benefits is managed through our PEO, TriNet’s, web site. This includes checking payroll hours, vacation accrual, paid time off available, and all things insurance (medical, dental, vision, life, long term and short term disability, etc.). Our office administrator oversees and manages the outsourcing of the HR for our office, rather than being the HR department for our office. Any changes to laws concerning our staff or industry, changes to benefits, or new resources available to our office, the PEO notifies our staff directly through e-mail or newsletter.

TriNet is the only current PEO we use for our HR management. TriNet also allows us to carve out our worker’s compensation insurance, since our professional rate is much lower through the California Optometric Insurance Services than through TriNet’s national program.

PEO Can Handle Employee Reviews

We are expanding our current employee review process through TriNet. I don’t know a single business owner who enjoys the employee review process. With our PEO relationship, we have an electronic review system for our office and staff. This includes evaluation forms and communication, electronic management of the employees current and past salary and reports of their entire employment package benefit.

But, best of all, we have access to a regional and national database of salaries for every one of our office employee positions. This database gives us and the employee a chance to objectively review their current employment package versus other similar positions in our area. With a new resource tool, we can designate employees into specified teams and have each team member evaluate and contribute to the review of the whole team through anonymous electronic methods. We can even use this new tool to have the staff evaluate and give feedback to our doctors anonymously.

Project Cost of PEO

We pay $120 per employee per month. This is in addition to any benefits costs we have regardless of who manages the benefits, us or a PEO. For us, it is the equivalent of a full-time staff person managing our HR department, but without the HR headaches on site. What we have possibly increased in outsourced PEO management fees we have more than saved in benefits costs. For example, our medical benefits premiums went up only 5 percent last year versus 12-20 percent annually without a PEO.

We have also saved in the management and compliance fee structure of our office 401k program. With our current arrangement, the yearly Form 5500 and discrimination testing is included in our Transamerica TPA (Third Party Administrator) agreement. And our 401k administration fees are lower under our PEO than when we were managing our 401k program ourselves due to the leveraging of TriNet’s relationship with Transamerica Financial Services.

Find Ideal PEO for You

We found TriNet through a PEO broker who analyzed our business and developed a list of PEO’s consistent with our needs and benefit desires. We have used a PEO since 1994, and had some experience in what we were looking for. At that time, however, the PEO we worked with had more of an “employee leasing” arrangement than comprehensive PEO. We then interviewed the PEOs and their list of references to settle on TriNet. We did not find TriNet through an alliance group like PEN, but TriNet and PEN are in the process of developing an independent optometric office PEO program for its members.

When interviewing a PEO, make sure they understand what the OD expects of the relationship. Just as most ODs have not had experience with a PEO, most of them have never had a relationship with an OD. We are different than other similarly sized businesses, and have distinctly different owner and employee issues than many of the PEO’s other white-collar or blue-collar client businesses.

Most ODs have a particular way and style they manage their business and their staff. Practice owners can be very subjective and egocentric in their decision making process. The PEO will force much more objectivity, and sometimes present a non-personal face to the employer-employee relationship, which often is necessary for liability and legal reasons. That new face might be painful for some doctors depending on the relationship they have with their staff. We have found, however, that the objectivity of a PEO keeps our relationship with staff more focused on patient care, and not staff care.

We switched from our previous PEO since it was a northern California regional entity and was bought by a larger national company. When interviewing the new national company we found that it didn’t fit our style as well as TriNet did (which is also a national company).

Designate Staff Members to Communicate with PEO

We have designated two point persons for our regular TriNet interactions–one of our six doctors and our office administrator. Our administrator handles most of the traditional HR management issues that come up in our office while the managing doctor is the higher order liaison and communication line for the other doctors. The administrator and managing doctor have access to the administrative portion of our TriNet web site. HR Passport allows us to monitor all areas of our office benefits, schedules and salaries, and also gives us a snapshot of any HR report we need 24 hours a day.

Our administrator needs to understand our computerized time-clock system, manage the payroll “oopsies” that all of our staff create occasionally and then coordinate with our bookkeeper for the ACH payroll transfer twice a month. The administrator is also the director of all things HR. Meaning, she coordinates and directs the staff to resolve their own issue with our TriNet representative and does not usually need to get directly in the middle of the problem. She is the HR co-manager with our TriNet representative.

Steven Faith, OD, is a partner of Livermore Optometry Group in Livermore, Calif, and a member of the advisory board of Primary Eyecare Network (PEN). To contact: livopt@pacbell.net

Click to comment

You must be logged in to post a comment Login

Leave a Reply

To Top
  
Subscribe Today Free...
And join more than 25,000 optometric colleagues who have made Review of Optometric Business their daily business advisor.
YOUR EMAIL
FIRST NAME
LAST NAME
  
Subscribe Today Free...
And join more than 25,000 optometric colleagues who have made Review of Optometric Business their daily business advisor.
YOUR EMAIL
FIRST NAME
LAST NAME
Subscribe Today for Free...
And join more than 35,000 optometric colleagues who have made Review of Optometric Business their daily business advisor.
Subscribe Today for Free...
And join more than 35,000 optometric colleagues who have made Review of Optometric Business their daily business advisor.