The PEO Industry Footprint is Growing in Florida and Michigan

The PEO industry is growing – there is certainly no doubt about that. Consider that a few short years ago, a large percentage of even the most informed small to medium sized business owners had no idea what a Professional Employer Organization (PEO) was, and certainly had not considered working with one. That’s changed, in a big way: Changes in the marketplace, uncertainty surrounding health care, increases in Workers’ Compensation costs and other factors have given PEOs greater visibility, and a more central role in safeguarding the success of growing businesses.

A recent study conducted by McBassi & Company estimates the PEO industry’s gross annual revenues at between $136 and $156 billion. The study further cites between 156,000 and 180,000 PEO client companies, and somewhere between 2.7 and 3.4 million employees receiving services from PEOs. Obviously, none of these are small numbers, and virtually every current and emergent trend would indicate that they are likely to continue to rapidly grow in the near-term future.

While the industry’s overall national growth is impressive in and of itself, the study includes another remarkable, little-noticed fact: Two of the states leading the nation in the numbers of PEOs who call them home aren’t necessarily the country’s biggest (although they could perhaps be considered the most forward-looking). Both Florida and Michigan boast impressive numbers of resident PEOs, with Florida leading the pack at 107 – beating out much more populous states, including New York and California. Meanwhile, Michigan’s PEO census nearly equals New York’s at the low estimate (47 vs. 49) and handily beats it at the high-end estimate (59). Michigan is similarly neck-in-neck with population- and business-dense California.

To us, that means several things:

Businesses in states with economies hit hardest by the 2008 economic downturn, as both Michigan and Florida were, have found that PEOs offer both competitive and survivability advantages that they can’t afford to ignore.
States forced by adverse market conditions to adopt new approaches to business are leading the way in demonstrating the efficiencies and economies of scale that PEOs make possible.
States where PEOs prosper, and where by extension the increased operational efficiencies PEOs have to offer are more easily leveraged by small to mid-sized businesses, will play a strong hand in reshaping the HR landscape in the coming years as the PEO/HR outsourcing model is further proven in practice and gains in prominence.

We have to say that these are developments we’ve seen coming, and have had a hand in helping to make happen. Trion maintains a strong presence in both Michigan and Florida – the consequence of our early recognition of these states’ potential as powerful centers of activity with high growth prospects. We also were quick to recognize that these states’ unique business climates and unique business needs lend themselves particularly well to serving as environments where a truly professional, efficient PEO could effectively serve its clients, and prosper in doing so.

The PEO business is growing ever stronger in the mitten and sunshine states, and Trion is pleased to be helping to lead the charge.

Taking Care of Business for 2016 and Beyond

We are now nearly two months into 2016. For many business owners, the close of 2015 was an opportunity to take account of where their business stood – what it had accomplished in the past year, and where it’s likely to go in this one.

From our perspective, our year-end analysis found the overall US business climate to be an interesting one—a mixture of good and bad news, with both bright and daunting prospects on the horizon. By nature, Trion is a company that thrives in times of change and challenge, but that certainly doesn’t hold true for the majority of businesses. Stability, order, and a logical progression of events create the best overall business climate, but 2015’s close found all three in somewhat shorter supply than many companies might like.

Here’s where it seems we stand. On the plus side, the economy is still enjoying general growth overall, though it is faltering in some sectors and growth never really started in others. The unemployment rate is edging back towards something resembling normal levels. Interest rates remain at historically low levels for the moment. There are few signs of significant inflation, and we’re just starting to see some slight upward pressure on wages.

That’s the good news. Now, the other side of the coin.

Nobody has to tell you that globally we are experiencing tremendous uncertainty and upheaval—the broadcast news networks will certainly never let you forget it. Headlines are filled with terrorist attacks, plunging oil prices, downed airliners, military skirmishes throughout the Middle East and dotted throughout Asia. We’re facing the distinct possibility that US troops may be called to take an active role in Syria; the US is simultaneously in significant diplomatic and economic disputes with Russia and China; and there’s no clear favorite in sight for next year’s presidential elections, leaving considerable uncertainty as to future tax and economic policies. From a business owner’s standpoint, any and all of these circumstances have the potential to be disruptive.

As a business owner, you can’t control national or global events – but you have at least some control over your response to them. That control is amplified when plan ahead for them, and are ready to make changes on the fly as consumer sentiment changes, economic conditions shift, prices rise, or supply chains contract. Just as in the natural world, adaptation is the key to survival, and the advantage goes to companies ready to right-think, right-size, and right-strategize for the times they’re in and the times to come.

As human resource services specialists, that’s what Trion is all about. A big part of our business is helping our clients adapt constructively to change and meet emerging business challenges head on. We work to give companies the flexibility to adapt, both responsively and proactively as needed, making sure they have the right number of the right people in the right positions to get the job done—and freeing management up to focus on handling today’s urgent business needs, strategizing to meet tomorrow’s demands, and laying the groundwork for stability and success, no matter what the coming years may bring.

Trion Solutions is a NAPEO Member

To Trion Solutions’ clients, it’s no secret that our company is constantly striving to improve itself. We have the same mania for optimizing efficiency, cost savings and company performance within our walls as we do for our client companies. What can we say? Trying to do things a little bit better—better than the other guy, better than we did yesterday—is in our DNA: A big part of Trion Solutions’ identity and operating methodology are grounded in the concept of continuous improvement.

That’s for a pretty good reason: When it comes down to it, business improvement is the main “product” we have to sell. Naturally, it makes sense to start with our own company.

In our experience, it’s paid off well:

Trion Solutions has grown consistently, becoming one of the nation’s most stable, successful, and highly reputed human resource services companies.

As such, it seems only appropriate that we formalize our quality and service commitment in a clear, unequivocal way. While we are accustomed to acting independently, and have had great success through doing so, we make it a point to pursue memberships and certifications from the organizations that are doing the most to advance the integrity of our industry and the quality of our services.

The National Association of Professional Employer Organizations (or NAPEO) is the largest national organization devoted to PEOs and human resources services companies such as Trion. In recent years, NAPEO has emerged as “the voice of the PEO industry,” advancing public knowledge about PEOs, supporting public policies that make sense for PEO companies and workers, helping to establish industry best practices, and supporting the integrity of the industry.

Nearly 1,000 PEOs currently operate across the United States; as is the case in most industries, quality, stability, and integrity can vary greatly from one company to the next. NAPEO’s Code of Ethics helps to ensure that reputable PEOs adhere to common baseline ethical standards with regard to the services they provide and the treatment of their employees. NAPEO supports ethics, good corporate conduct, best practices, and expertise amongst participants. This helps assure prospective PEO clients that the company they’re considering working with will truly work on their behalf, and will conduct its activities honorably and professionally.

NAPEO’s standards align closely with those of Trion Solutions. We have built our business on a foundation of professionalism, integrity, and expertise, and we applaud all efforts to improve our industry and the results we are able to achieve for our clients. That’s why we are glad – and proud – to be a NAPEO member.

Within our own sphere of influence—in our own company, and in the companies of our clients—we are working hard every day to achieve many of the same goals NAPEO is striving for: A better PEO industry that delivers better results for PEO clients.

NAPEO serves a vital role within the human resources ecosystem and within the PEO industry. As an active and engaged NAPEO member organization, Trion is doing its part to advance NAPEO’s quality agenda, creating a winning outcome for all concerned: Integrity, sound business practices, and industry stability are good for our industry and our clients—and ultimately, they’re good for the economy and for the country as well.

Helping Staff Cope with Change

CHANGE. For some, it’s a word associated with challenge and excitement; for others, it inspires revulsion, resentment, or dread.

Considering the degree to which the American workplace has changed over the last quarter century, both answers are understandable. Some change has been for the better; some decidedly for the worse. And some could be either, depending on your perspective. But two things seem certain: The last few decades of change have been rapid and transformative, and continuing rapid change seems inevitable and unstoppable.

Fortunate people and fortunate companies have managed to ride the tide of change up to this point – but each workplace upheaval leaves some fallen by the wayside. Adaptability, it seems, is no longer optional for survival. So how do we help our businesses deal with change? It turns out that in large measure, helping employees adapt helps companies adapt too.

Here are a few steps that will help your company and your people navigate the road ahead, whatever it may bring:

Foster collaboration. When it comes to change of any kind, some people are early adopters while others tend to stick with the familiar. Left to themselves, people addicted to familiar routines tend to be outpaced when workplace changes happen. In a collaborative environment, however, employees have the opportunity to share knowledge, ideas—and crucially, mutual encouragement. When it’s time to adopt new processes or technologies, that interactive and collaborative dynamic goes a long way towards making the transition smooth.
Plan for change. From the organization’s highest levels, make it a point to expect change, anticipate it, and welcome it when it arrives. Leaders have the opportunity to set the tone for their subordinates, and to create plans to help employees adapt as needed. Whether it’s developing extensive retraining programs, or simply being prepared to give employees authoritative information about coming transformations, planning ahead helps avoid operational disruption and employee resistance.
Compensate for adverse results where possible. Does a coming change mean that some employees will be affected adversely – working longer hours, losing a title, or losing a job? It’s not always easy or even possible to balance the impact of such outcomes, but when it can be done it usually should be. It’s no secret that performance is keyed strongly to morale, and even if some expense or effort is required to sustain morale during business transformation, the investment is usually well worth it over the longer term.
Encourage dialogue. People fear what they do not understand, and fear is a lousy basis for a good attitude on the part of your employees. Inviting questions, giving straight answers, and encouraging discussion can help your employees to come to grips with transformational workplace events like mergers, automation, efficiency drives, downsizing, or restructuring. Even when the answers you give aren’t exactly what people wanted to hear, giving straightforward responses inspires confidence, encourages loyalty, and helps employees overcome fear of the unknown.
Acknowledge – and appreciate – your team’s strengths. People tend to appreciate others who appreciate them. When change is coming, express your confidence in your staff’s ability to handle it productively, and thank them in advance for their willingness to adapt and for helping to make the transformation as smooth as possible. After the fact, show your appreciation – where deserved – for cooperation and a job well done. Not only will this make current changes easier for employees to swallow, it builds a basis of trust you can call upon the next time a significant shift is coming.

Change is seldom easy, but it is often necessary—and as the whirlwind pace of modern business shows, it is always coming whether we like it or not. Companies that not only survive but thrive are usually the ones that lay out the welcome mat for change, and which help their employees to do the same.

Getting Back To Business: HR Outsourcing’s Big Advantage

Running a business isn’t easy. As almost any CEO can tell you, doing their job right means doing several jobs right – and doing them all at once. All too often, many of these jobs consist of burdensome HR activities that don’t generate revenue, drive sales, or build competitive advantage, but which are nonetheless essential to daily operations.

As necessary as it is to keep on top of payroll, tax, regulatory compliance, workers’ comp and other activities, these do nothing to advance the business. In fact, the time devoted to them is time taken directly from strategy, promotion, revenue generation, relationship building, customer service and other core functions of a company. Time spent on administrative matters doesn’t just cost money – it costs opportunity. The attention, resources, and working hours devoted to these tasks isn’t used to create, innovate, expand, or sell – and the lost opportunity to do so may well be taken by the competition.

More and more, companies are recognizing the enormous burden that HR administration is placing upon them – and they’re doing something about it. Outsourcing is becoming a key element in many growing companies’ success strategies as they recognize the unique benefits it provides:

Efficiency. Outsourcing HR to a professional solution provider enables businesses to streamline operations and focus efforts where they matter most.
Economies of scale. Professional HR practitioners are an expensive, skilled resource; it makes more sense to leverage a shared resource than hire in-house personnel.
Limitation of liability. By outsourcing HR functions, companies can shift a great deal of legal and regulatory liability to the outsourcer, particularly in regard to Worker’s Compensation.
Expertise. The best HR outsourcing firms are specialists in what they do, with exhaustive procedural, legal, process and regulatory knowledge that few in-house departments can match.

Companies with outsourced HR functions quickly reap the rewards of this new management model – and the differences they see are reflected in their growth trajectories and their bottom lines.

A white paper published by the National Association of Professional Employer Organizations shows that companies that outsource HR functions experience a 9% higher employment growth rate than those that don’t. In addition, they show a 4% higher employment growth rate than in the overall economy.

At Trion, we’ve helped countless clients get their opportunity mojo back. We know from firsthand experience that for a company to succeed to their greatest potential, its senior management must remain focused on business-building activities. We make it our job to make that possible.

Is Your PEO Licensed? It Better Be

In the Human Resources field, September is significant for more than just the Labor Day holiday. For PEOs, it’s also the deadline for renewal of State of Michigan licenses.

Professional Employer Organizations operating within the state are required to receive their licenses by September 1 in order to remain compliant and to avoid an escalating range of significant penalties. Since the PEO licensing law took effect in 2012, the net effect has been a steady reduction in the number of PEOs doing business in the state. Increasingly stringent requirements and the need to maintain over $100,000 in working capital have forced many smaller and less reliable companies from the market.

While the numbers of less stable, less established PEOs have diminished as a result, a considerable number remain – including some that try to sidestep licensing, and the licensure requirements, altogether. Such companies typically work with a small number of employees and clients, and do their best to remain “under the radar” where regulations are concerned. They manage to maintain stable, longstanding relationships with their established clients – until suddenly they don’t.

When an unregulated PEO fails, the ripple effect can affect many people outside of the organization – most notably the PEO’s client. Apart from the considerable and immediate legal ramifications, a company can suddenly find itself saddled with a wide range of unforeseen obligations and burdens – liability issues, unpaid wages, unpaid premiums, unfiled paperwork, and more – that can put its very existence at risk.

The 2012 licensing law was enacted in an effort to prevent such scenarios. In the wake of some catastrophic PEO collapses prior to regulation, there was a broad consensus that something had to be done to protect workers and businesses alike from underfunded, incompetent, or unscrupulous outsourcing firms. The 2012 regulations sought to establish a baseline capability and quality standard for professional employer organizations, and the annual licensure provides a measure of protection for companies that entrust their vital human resource functions to outside providers. Companies that can’t or won’t meet the licensing standard undermine that protection.

Companies operating within the law have advanced the PEO industry, and have provided immeasurable benefit to the business community. Today’s best PEOs have helped their clients improve efficiency, improve compliance, and cut costs, helping to strengthen the business community as a whole. But “Caveat Emptor” – “Let the buyer beware” – still applies; where non-licensed PEO’s continue to operate on the margins, there is still the potential for disaster for client companies that neglect to do their due diligence.

Sure, the prospect of saving a few dollars, cutting a few corners, or not disrupting an established business relationship can be appealing – but an unlicensed PEO can be putting your business at mortal risk. Now more than ever, it’s essential to check a PEO’s licensing status before starting – or continuing – a working relationship. The licensing standards aren’t just some arbitrary bureaucratic hassle; they’re a vital layer of business protection, and can literally make the difference between stability and insolvency. So check out your PEO, and make the switch to a stronger, more stable, licensed company if you need to. The business you save may be your own.