Jane had it figured out, or so she thought. As CEO of a sizable start-up, she made the decisions that keep most of us awake at night. Her gut instincts had served her well since childhood. Why would it fail now?
On a drizzly December morning in 2019, somewhere in downtown Detroit, Jane made her riskiest decision yet. She stepped into her office, opened her laptop, and typed:
“Our company is moving in a different direction. With regret, we no longer need your services.”
She had just emailed her Professional Employer Organization (PEO) responsible for recruitment, payroll, and benefits management for her 50-strong workforce. The three-year relationship was over, but she’d saved the company a couple of thousand dollars, so she was happy.
Jane knew what she wanted. It was as clear as crystal. She was going solo and assembling a small payroll team. She had taken control and brought human resources back in-house, blazing the HR trail alone.
Then the pandemic hit.
The Risks of Going It Alone in HR
Jane’s small HR team buckled under the pressure of social distancing, self-isolation, working from home, the CARES Act, and other incoming rules and regulations. Jane was trapped in a labyrinth of standards, guidelines, and legislation — profoundly complicated concepts that kept Jane’s team so busy they didn’t see the worst coming.
Everything went to pieces, and then it got worse. Jane’s team hadn’t created the COVID-19 preparedness and response plan that was now a legal obligation in the State of Michigan. There was no reopening program, no health and safety protocols, no paid leave for workers impacted by COVID, no personal protective equipment, no social distancing, and no proper ventilation.
So the Michigan Occupational Safety and Health Administration (MIOSHA) fined Jane $7,000.
Jane swallowed the fine and continued to tread water while the pandemic lingered on, sales slumped, and orders tapered off. Like 70% of small business owners, Jane applied for the Paycheck Protection Program (PPP), a federal loan program covering payroll costs during the pandemic. But she filled in the wrong forms, and her PPP lender declined the application.
Jane struggled to pay her team. So she applied for a credit card, then another, and then another, watching her debt spiral.
Yesterday, Jane closed her start-up for good.
More Than Paycheck Protection: The Benefits of Using a PEO
While no one could have predicted the chaos caused by the pandemic, Jane underestimated the protective value of outsourced HR. To her detriment, Jane believed PEOs do little more than form-filling and complaint-collecting.
From time to time, you might be tempted to cut costs by cutting ties with your PEO. But a PEO has unparalleled experience and expertise in all things HR, providing a valuable partner during any disruption.
It’s a flawed misconception that PEOs remove control and create unnecessary distance between the small business and its HR functions. A reliable PEO like America’s Back Office (ABO) works with you to outsource your way to HR success while retaining full control.
A PEO can help you navigate the incredibly murky waters created by the COVID-19 pandemic:
- Develop a preparedness plan to avoid OSHA/DOT/DEQ fines.
- Secure paycheck protection loans to protect workers.
- Create a COVID-secure workplace to save lives.
The centerpiece of ABO’s post-pandemic strategy is our COVID-19 Preparedness and Response Plan, which includes invaluable tips for infection prevention and control, worksite monitoring, employee education, and screening. It’s the most critical HR document you need right now.
Contact us today to learn more about the plan.
Your Preparedness and Response Plan is another weapon in your fight against COVID. It’s all about reducing risk: the risk of regulatory non-compliance, the risk of employees catching the virus, and the risk of damaging your hard-earned reputation. Use it alongside our remote work policy, telecommuting checklist, sick leave policy, furlough policy, and other COVID-19 resources available online.
How America’s Back Office Can Help
Jane’s story isn’t unique. It’s the oldest tale in the book. CEOs and business owners who do HR themselves want to save a little money, and then the unthinkable happens. We’ve seen it time and again.
“Smaller companies often don’t have the budgets to support the necessary personnel, and sometimes HR issues can be so thorny, it takes experts to navigate them successfully,” says Forbes magazine. “But, in many cases, even if a business is able to staff an HR department, it’s not always considered the best allocation of resources.”
So many businesses overlook the value of a PEO like us until it’s too late. But the value speaks for itself:
How a PEO Benefits Businesses
- 12% experienced lower employee turnover
- 50% were less likely to go out of business
- Businesses experienced average savings of 21% compared to in-house HR
- Businesses saved, on average, $450 per employee compared to in-house HR
- 9% grew faster than competitors
- 96% would recommend a PEO to a colleague
- 70% reported increased revenues
(Source: America’s Back Office)
Prepare your workplace for COVID-19 and avoid fines for non-compliance. Call 1-877-423-7736 to set up an HR consultation.
Before You Go
Jane couldn’t have foreseen the disruption to her business. But she could have future-proofed her business with continued outsourced HR.
The HR industry is in a constant state of flux with legislation, guidelines, and circumstances changing rapidly. Ending the relationship with your PEO removes a protective layer around your business, putting the company and its employees at risk.
Prepare for the future with a PEO that understands your business.
Click here or call 1-877-423-7736 to set up an HR consultation.