This webinar will provide an in-depth look at the benefits of outsourcing HR to a Professional Employer Organization (PEO). John W. Allen, President and COO of G&A Partners, will discuss how small and mid-size businesses can take advantage of outsourcing their human resources and administrative functions. He will also answer some common questions in regards to PEOs and their services. This webinar will explore: What kinds of companies are outsourcing their HR? What types of organizations should be outsourcing their HR? Why are they outsourcing? What HR or administrative functions are they outsourcing? How & when are they outsourcing? To whom are they outsourcing? The webinar will conclude with a Q&A session between John W. Allen and webinar participants. This webinar was posted on October 20, 2011 and presented by President and COO John W.Allen.

1. John W. Allen, G&A Partners
The Benefits of
Outsourcing HR

2. What do these companies
all have in common?
• ABB
• Bank of America
• Best Buy
• BP Amoco
• British Telecomm
• Cap Gemini
• Credit Suisse
• General Motors
• Goodyear
• International Paper
• Levi Strauss
• Motorola
• Proctor & Gamble
• Prudential Financial
• Sony
• Sun Microsystems
• TXU

3. And what about these
governmental entities?
• U.S. Defense Finance & Accounting
Service (DRAS)
• U.S. Office of Personnel Management
• United States Postal Services
• Transportation Security Administration
• State of Florida
• State of Texas HHSC

4. They all outsource HR

5. Agenda
• Who’s outsourcing?
• Why are they outsourcing?
• What are they outsourcing?
• How & when are they outsourcing?
• To whom are they outsourcing?
• Q&A

6. John W. Allen
• President and COO of G&A Partners
• 25 years of management consulting
experience
• Has been responsible for providing
support services to organizations
valued up to $5 billion and with as
many as 46,000 employees.
• Specializes in providing
administrative services to emerging
growth companies.

7. Amazing Facts
• In 2003 HRO transactions impacted an
estimated 2.8 million employees, or 4% of the
U.S. workforce
• In 2004, the Top 22 HRO deals covered over
700,000 employees
• HRO revenues grew to $61 billion in 2005
• HRO Today reports continued growth in 2006
and 2007

8. Why are they outsourcing?
• Reduce costs/Increase EBITDA
• Gain access to cutting edge technology
• Avoid additional investments
• Provide more self service tools to employees
• Focus HR on strategic vs. tactical

9. What are they outsourcing?
• Payroll
• Health and welfare administration
• Recruitment
• Compensation planning
• Performance planning
• Learning management
• Relocation
• Records management

10. To whom are they
outsourcing?
• Accenture HR Services
• ACS
• ADP
• Aon Consulting
• ARINSO International
• Ceridian
• Convergys Employee Care
• ExcellerateHRO
• Fidelity Employer Services
• Hewitt Associates
• IBM Global Business Services

11. The trend is clear – the big
boys are outsourcing HR, but
what about the rest of us?

12. The Million Dollar Employee
http://www.milliondollaremployee.com/

13. If growth in the PEO industry
is any indication, small
businesses are outsourcing
more and more of their HR
functions too.

14. • Number of PEOs has grown from a handful in mid
1980s to more than 800 today.
• Number of co-employees has grown from 10,000
in 1984 to over 3,600,000.
• Gross revenues billed by PEO Industry grew from
$5 billion in 1991 to over $51 billion today.
• Wall Street estimates annual growth rate of 20%

15. What’s driving businesses, large & small, to
outsource HR?
Why the Growth?

17. Using a PEO helps you focus
on what you do best!

18. Growing Burden of Regulation

19. $1,152 per year
Average administrative cost
per employee
($414 - $6,274 per year)
Bureau of National Affairs

20. Average administrative cost per
employee
• 6% - 12% of payroll (SBA & US Chamber of
Commerce)
• 8.45% of payroll (UT-Austin)
• $600 to $750 per annum per employee (major
insurance company estimate)

21. So what is a PEO?

22. How does a PEO work?
1. Service Contract
2. Employment relationship
with/and responsibilities
of the PEO
3. Shared relationship and
employer responsibilities
4. Employment relationship
with/and responsibilities
of the client

23. What services does the PEO
provide?
• Payroll Administration
– Provides time & attendance solutions
– Issues paychecks and W-2s
– Accrues vacation, sick and other leave
– Withholds and deposits taxes
– Withholds and remits garnishments & premiums for
employee benefits
– Files all payroll tax returns

24. What services does the PEO provide?
• Employee Benefits Administration
– Group Health Plans
– Group or Voluntary Dental, Vision, Life, AD&D, STD,
LTD & LTC
– Section 125 Cafeteria Plans
– 401(k) Retirement Plans
– HRAs, HSAs, FSAs, & Gap Plans
– Prepaid Legal, Purchase discounts, Wellness, EAP

25. What services does the PEO provide?
• Human Resource Management
– Compiles job descriptions & employee handbooks
– Provides recruitment assistance
– Conducts pre-hire background checks
– Advises clients on employee discipline or performance
problems
– Educates clients on regulatory compliance issues
– Handles unemployment claims & COBRA and HIPAA
administration
– Conducts exit interviews

26. What services does the PEO provide?
• Risk Management
– Workers Compensation Coverage
– Master Safety Plans
– Site Inspections
– Safety Training
– Accident Investigation
– Workers Comp Claims Administration
– Drug Testing & Modified Work

27. What responsibilities do you
retain?
• Management of business operations
• Use of facilities and equipment
• Safeguarding assets & people
• Employee compensation
• On-the-job supervision
• Quality control

28. How would your company benefit?
• Greater focus on your core business
• Broader range of affordable employee benefits
• Workers compensation insurance at competitive
rates, with no deposit or annual audit
• Fewer compliance issues & employee lawsuits
• More time and money

29. How would your employees
benefit?
• Better, more affordable benefits
• Higher “take home” pay
• Greater understanding of company policies and
procedures
• Improved safety awareness and fewer on-the-
job injuries
• Happier, more productive employees

30. So how much does it cost ?
• The cost of PEO services is generally less than or
equal to the cost to do everything in-house.
• Additional savings come by redeploying talent,
reducing turnover, reducing workplace injuries
and avoiding employee lawsuits.

31. Service fee is a percentage of
payroll & includes:
• FICA/Medicare
• SUTA
• FUTA
• Workers compensation insurance
• Employee benefits costs
• Miscellaneous charges
• PEO’s fee

32. PEO in Action –
Aluminum Frame Manufacturer

33. PEO in Action –
Freight Forwarder

34. For more information, visit
www.napeo.org
• “PEOs take load off companies by filling human
resource function”
• “Human resource outsourcing can boost bottom line”
• “PEOs can help small business grow”
• “PEO’s: help for small companies in good times and
bad”
• “PEOs: the wave of the future”
Source: NAPEO website

35. Guidelines for Selecting a PEO
• Lists available thru NAPEO or TDL
• Verify that PEO is licensed & in good standing
• Ask for banking & credit references
• Ask for client & professional references
• Visit their offices
• Review customer service agreement

36. Licensing Requirements
• Controlling person must be 18 years of age and of
good moral character
• Controlling person must have educational,
managerial, or business experience relevant to the
operation of a business entity offering staff leasing
services
• Must demonstrate net worth of $100,000

37. Q&A
• Who controls the workplace? Will the PEO be
telling me how to run my business?
• What if the PEO fails to remit payroll taxes?
What recourse does the IRS have?
• Does the PEO’s workers comp policy protect
my company against third party liability?

38. Who controls the workplace?
• The client controls who performs the work and how
and when they do it.
• The client recruits and sets the compensation for all
employees. The PEO screens new hires and has
right to reject.
• The client disciplines & terminates employees
subject to PEO’s review to ensure compliance with
appropriate statutes and regulations.
• The client implements safety programs. The PEO
helps them design, implement and train.

39. What if the PEO fails to remit
payroll taxes?

40. Any protection against third
party liability on WC claims?
• Texas labor code section 91.042(c) states that for workers
compensation insurance purposes, a PEO and its client are
“co-employers.” As such, both entities are covered by the
PEO’s policy. Alternate employer endorsement required.
• Law Again Supports This Position:
– Regalado v. H.E. Butt Grocery Co.
– Esquivel v. Mapelli Meat Packing Co.
– Aquilar v. Wenglar Construction Co., Inc
– Gibson v. Grocery Supply Co., Inc.
– Marshall v. Toys-R-Us Nytex, Inc.

41. For More Information:
John W. Allen
G&A Partners
4801 Woodway, Suite 210
Houston, Texas 77056
(800) 253-8562
www.gnapartners.com
jwallen@gnapartners.com