Read Start Your Own Business Online
Authors: Inc The Staff of Entrepreneur Media
Start Your Own Business (59 page)
TIPMotivating independent contractors can be tough. How do you make them feel like they are part of your business? Communication is key. Send regular memos or hold in-person meetings with independent contractors to let them know what’s going on in the company. Also include them in company social events, such as holiday parties and company picnics.
Today, there are more than two to three million leased employees in the United States, and the employee leasing industry is projected to continue growing at a rate of more than 20 percent each year, according to the National Association of Professional Employer Organizations (NAPEO).
But today, employee leasing firms do a lot more than just offer better health-care rates. They manage everything from compliance with state and federal regulations to payroll, unemployment insurance, W-2 forms and claims processing—saving clients time and money. Some firms have even branched out to offer “extras” such as pension and employee assistance programs.
While many business owners confuse employee leasing companies with temporary help businesses, the two organizations are quite different. Generally speaking, temporary help companies recruit employees and assign them to client businesses to help with short-term work overload or special projects on an as-needed basis, according to a spokesperson with the American Staffing Association. With leasing companies, on the other hand, a client business generally turns over all its personnel functions to an outside company, which will administer these operations and lease the employees back to the client.
According to the NAPEO, leasing services are contractual arrangements in which the leasing company is the employer of record for all or part of the client’s work force. Employment responsibilities are typically shared between the PEO and the client, allowing the client to retain essential management control over the work performed by the employees.
LOOK BEFORE YOU LEASEH
ow do you decide if an employee leasing company is for you? The National Association of Professional Employer Organizations (NAPEO) suggests you look for the following:• Services that fit your human resources needs. Is the company flexible enough to work with you?• Banking and credit references. Look for evidence that the company’s payroll taxes and insurance premiums are up-to-date. Request to see a certificate of insurance.• Investigate the company’s administrative competence. What experience does it have?• Understand how employees’ benefits are funded. Do they fit your workers’ needs? Find out who the third-party administrator or carrier is and whether it is licensed if your state requires this.• Make sure the leasing company is licensed or registered if required by your state.• Ask for client and professional references, and call them.• Review the agreement carefully and try to get a provision that permits you to cancel at short notice—say, 30 days.For a list of NAPEO member organizations in your area, contact the NAPEO at (703) 836-0466 or write to 707 N. Saint Asaph St., Alexandria, VA 22314, or search their directory online at
napeo.org/find/members.cfm
.
Meanwhile, the PEO assumes responsibility for a wide range of employer obligations and risks, among them paying and reporting wages and employment taxes out of its own accounts as well as retaining some rights to the direction and control of the leased employees. The client, on the other hand, has one primary responsibility: writing one check to the PEO to cover the payroll, taxes, benefits and admin istrative fees. The PEO does the rest.
WARNINGBe sure you understand the precise legal relationship between your business and a leasing company. Some people consider the leasing company the sole employer, effectively insulating the client from legal responsibility. Others consider the client and the leasing company joint employers, sharing legal responsibility. Have an attorney review your agreement to clarify any risks.
Who uses PEOs? According to the NAPEO, small businesses make up the primary market for leasing companies since—due to economies of scale—they typically pay higher premiums for employee benefits. If an employee hurts his or her back and files a workers’ compensation claim, it could literally threaten the small business’s existence. With another entity as the employer of record, however, these claims are no longer the small-business owner’s problem. PEOs have also been known to help business owners avoid wrongful termination suits and negligent acts in the workplace, according to an NAPEO spokesperson.
Having to comply with a multitude of employment-related statutes, which is often beyond the means of smaller businesses, is another reason PEOs are so popular with entrepreneurs. According to the NAPEO, with a leasing company, you basically get the same type of human resources department you would get if you were a Fortune 500 firm.
Before hiring a professional employer organization, be sure to shop around since not all offer the same pricing structures and services. Fees may be based on a modest percentage of payroll (2 to 8 percent) or on a per-employee basis. When comparing fees, consider what you would pay a full-time employee to handle the administrative chores the PEO will take off your hands. (For more information on what to look for, see “Look Before You Lease” on page 375).
Temporary EmployeesIf your business’s staffing needs are seasonal—for example, you need extra workers during the holidays or during busy production periods—then temporary employees could be the answer to your problem. If the thought of a temp brings to mind a secretary, think again. The services and skills temporary help companies offer small businesses have expanded.
Today, some companies specialize in medical services; others find their niche in professional or technical fields, supplying everything from temporary engineers, editors and accountants to computer programmers, bankers, lab support staff and even attorneys.
“Don’t look at successful
people as aberrations.
Excellence is out
there for anyone.”—LEONARD RICCIO,
CHAIRMAN AND CEO
BARNES & NOBLE INC.
With many temporary help companies now offering specialized employees, many business owners have learned that they don’t have to settle for low skill levels or imperfect matches. Because most temporary help companies screen—and often train—their employees, entrepreneurs who choose this option stand a better chance of obtaining the quality employees they need for their business.
In addition to prescreened, pretrained individuals, temporary help companies offer entrepreneurs a slew of other benefits. For one, they help keep your overhead low. For another, they save you time and money on recruiting efforts. You don’t have to find, interview or relocate workers. Also, the cost of health and unemployment benefits, workers’ compensation insurance, profit-sharing, vacation time and other benefits doesn’t come out of your budget since many temporary help companies provide these resources to their employees.
How do you find the temporary help company that best suits your needs—from light secretarial to specialized technical support? First, look in the Yellow Pages under “Employment Contractors—Temporary Help.” Call a few and ask some questions, including:
• Do you have insurance? Look for adequate liability and workers’ compensation coverage to protect your company from a temporary worker’s claim.
• Do you check on the progress of your temporaries?
• How do you recruit your temporaries?
• How much training do you give temporaries? (According to the American Staffing Association, nearly 90 percent of the temporary work force receives free skills training of some kind.)TEMPORARY TREATMENTH
ow do you make the most of your temporary workers once they’ve come on board? For one, don’t treat them any differently from your other employees. Introduce them to your full-time workers as people who are there to help you complete a project, to relieve some overtime stress, or to bring in some skills you might not have in-house.And don’t expect temporary workers to be so well-trained that they know how to do all the little (but important) things, such as operating the copier or answering the phone. Spend some time giving them a brief overview of these things, just as you would any new employee.One strategy for building a better relationship with your temporary workers is to plan ahead as much as possible so you can use the same temporaries for an extended period of time—say, six months. Or try to get the same temporaries back when you need help again. This way, they’ll be more productive, and you won’t have to spend time retraining them.
• What benefits do you offer your temporaries?
• Should a temporary fail to work out, does the firm offer any guarantees? Look for a firm that can provide a qualified temp right away.
• How quickly can you provide temporaries? (When you need one, you’ll usually need one right away.)
Also ask the company to provide references. Contact references and ask their opinions of the temporary help company’s quality level, reliability, reputation, service and training.
Before securing the services of a temporary help company, also consider your staffing needs. Do you need a part- or full-time temporary employee? What are your expectations? Clearly defining your needs helps the company understand and provide what you are looking for.
Defining the expected duration of your needs is also very important. While many entrepreneurs bring on a temporary worker for just that—temporary work—some may eventually find they would like to hire the worker full time. Be aware that, at this point, some temporary help firms require a negotiated fee for “stealing” the employee away from them. Defining your needs upfront can help you avoid such penalties.
e-FYINeed to find an employee for your specific industry? Try a trade association’s website, many of which have classified sections or job boards. These sites allow you to post job listings at a low cost and receive responses from a very targeted pool of candidates.
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