Administaff
cardaly
5 Posts
The small company I work for is considering a coemployment agreement with Administaff. Researching them online, I have found no real negatives, yet financial guru Jim Kramer doesn't like them for reasons including the number of companies cancelling their agreements with them, suggesting there must be some downside. What, if any, problems has your company experienced using Administaff?
Comments
This is
just a personal opinion... I have used them for multiple small
companies. They are a good HRO solution that provides full HR support
including Benefits, Payroll, Recruiting (limited), Training, & Employee
Relation services. They charge a % of payroll for their services and
sometimes it is rather difficult to understanding their true pricing
plan. They are a large publicly traded company, so you may find them
a bit bureaucratic at times; but you get out of them what you ask for. If
you want them to help you design a personalized handbook, they will do it at no
additional cost (you just need to ask for the services). They have a lot
of resources online and they will also send Account Executives to your office
to better explain what they do. Good luck.
Here is a post I made back in February (do a search under PEO on the forums and you might come up with more)...you can assume that you know who our PEO was....
From personal experience, we were the client of a large PEO in Texas until the end of 2005. I was hired by my company with the express desire to pull all of our benefits/payroll/HR out of the PEO. The first thing I did when I came in was to estimate, as best I could, the cost savings. The amount I came up with was $75K annually...and that included taking into account my HR/payroll/benefits salary and assuming the highest tax and workers compensation rates. We had no more than 25 employees at any one time, so the savings was considerable at $3000 per employee. This was with keeping basically the same (or better benefits). We added STD/LTD and dropped vision coverage.
But the proof was in whether I could actually save the company that much money each year. I was able to accomplish it in 2006 AND 2007 and saved over $80K each year. And 2008 looks to be about the same ($80K over 2005 PEO prices which I am sure have only gone up). So it was very expensive for us to be in the PEO.
Some considerations:
(1) Although a lot of companies move to PEOs because they think they will get better group health or workers compensation insurance rates, we did not find that to be our case. The COBRA amounts were higher than what we were small group quoted at the time we pulled out.
(2) We found that the PEO had significant turnover and there was a different person to talk to depending on what the issue was. I had a two-sided piece of paper with names and contacts. Our "client manager" was not helpful in any knowledge -- she just passed us onto the specific group (payroll, 401k, etc)
(3) There was a lack of deep knowledge in any one area. Mistakes were made and covered up. We found quite a few when we requested records (especially on the 401k) when we pulled out. It was actually kind of scary.
(4) While they state that they assume a lot of the liability and responsibility for employment decisions, based on conversations with the DOL in late 2005, mistakes made by the PEO were considered mistakes made by the employer. Had any of our 401k participants decided to sue based on the 401k mistakes, we would have been equally liable.
(5) In most PEOs, there are specific packaged benefits. We found that there were a lot that we didn't use and no one at the PEO was reminding us they were there. For example, job descriptions and compensation surveys. Or tuition reimbursement. Things we were paying for but employees never used.
I don't ever see us returning to the world of PEOs. It would take one that had excellent knowledge and customer service skills to get me to even let them in the door to present their abilities. But I have high expectations of both myself and others. I am not their target client by any means. They were probably happy to see me go. Because I looked way below the surface and saw things that they didn't want anyone to see!
added now --- there are times when a PEO is valuable, but honestly if I were choosing a PEO, I would not consider the one you mentioned at all.
[quote user="HRforME"] (4) While they state that they assume a lot of the liability and responsibility for employment decisions, based on conversations with the DOL in late 2005, mistakes made by the PEO were considered mistakes made by the employer. Had any of our 401k participants decided to sue based on the 401k mistakes, we would have been equally liable.[/quote]
As a side note, and something important to consider in negotiating with a PEO or most any other service provider, is that their assumption of liability only matters if they promise in writing to assume it in meaningful ways and if they have the clout to back that up. For example, if the contract has them holding your company harmless, indemnifying it for any losses, providing funding or an actual legal team for your defense, and providing you with a certificate as named insured, then your bases are covered if the insurance carrier is reputable and the policy is verifiable and if the PEO has the $ to carryout their other obligations under the contract. While it's true that the complainant could still sue your company under such a contract, the cost still goes to the PEO. However, that won't save you from headline damage if the PEO botches a case on a sensitive issue such as discrimination. In matters of reputation/headline liability, it's one thing to botch a 401(k), which is easily repaired with money, but it's a completely different thing to allow or cause someone to lose their job because of the color of their skin. Your company's name will be in the headline, the PEO's brand will be in the clarfications/apologies section on page Q-37 a week later.
HRforMe,
It sounds like your company made a great moving by adding you to the team! As a PEO Broker, I'll be the first to say that a PEO is not a good fit for everyone. Many times they (PEOs) sign up new accounts under the assumptions that becuase they are a small company they cannot get access to less expensive benefits and work comp which is not always the case. I applaud you for tackling the task of understanding their pricing and breaking it all out. Many PEO's can make it very confusing to do while bundling everything into their administration fee and the owners are often left frustrated becuase they have no clue what they are really paying. I have seen many PEOs that don't even pass the savings on taxes when the wage limit is met and the taxes drop.
Administaff can do a great job for the right company but I'll emphasis, they are VERY expensive. You mentioned the fee being close to 3k per employee, I personally have continuosly seen their fees around 2-2.5k per employee per year. Most smaller non-public PEOs pricing models are based anywhere from $800-1500 per employee per year, which often they can bring you a huge increase in service while serving a significant reduction in price. I happen to a big fan of the smaller, local and more flexible PEOs.
HRforMe, I don't doubt at all that you will ever consider a PEO again, you dont need it. Keep rockin'. I look forward to interacting with more of you day yb day.
I am the first to come back here and state that I had an issue where I needed information from the unnamed PEO above....from the 2005 401k plan year. I called Friday morning at 8:00am and got an email response with exactly the info I needed by 8:10am. I was greatly impressed with the change over two years ago....but I still wouldn't highly recommend them...just that it looks like the 401k part might have gotten better.
I posted another message about my last few days....somedays, I wish I had a PEO to depend upon! But I love what I do and honestly if I ever lose this job, I can honestly see going back into consulting for smaller firms -- either to help them find a PEO or to help them setup their own HR dept. I am on my third test case as I type!
Are you in wonderful State of Texas too? There are at least 3-4 of us out here.