This article is meant to educate prospective and current clients of Insperity on several points of differentiation between them and most of their PEO Insperity competitors. Many companies that are using a Professional Employer Organization (PEO) are simply unaware of the competitive landscape in which their vendor operates, this leads to a lack of competition, and companies paying way too much for a PEO!
Lack of immediate competition is ultimately detrimental to the PEO industry as most first-time PEO customers that get overcharged by their vendor will attribute PEOs with extremely high costs, spread the word to their friends, and never take a call from another PEO.
So how come so many PEO clients have only heard of the PEO that they’re currently working with? Let’s take a look at Insperity, a very large PEO that is publicly traded, from the perspective of Insperity competitors in this space.
Insperity Competitors Know It’s A Marketing Powerhouse
“Give respect where respect is due; Insperity could be the most successful firm at transitioning companies from internal HR operations to outsourcing HR to a Professional Employer Organization for their first time.”
Jim Nantz is a household name in America, and he recently replaced Arnold Palmer as a celebrity spokesperson for Insperity. You will find Jim vouching for Insperity on national TV and radio ads. He may even show up at the Insperity Championship, an official event of the PGA Champions Tour. However what you most likely won’t hear is Insperity competitors competing for airtime.
Insperity is the only true publicly-traded PEO, their advertising budget reaches millions of people that would have otherwise never heard of HR Outsourcing or Professional Employer Organizations. For this reason we crown Insperity the kings of evangelizing the HR Outsourcing industry to the American business community.
Like many leaders in an evolving industry, Insperity carries the heavy cost of evangelizing and educating companies through the steep learning curve of the HR Outsourcing value proposition. Meanwhile their competitors stay lean, ride Insperity’s coattails, and offer a similar product for significantly less money.
We provide our PEO Comparison service to hundreds of Insperity clients each year. The next three points highlight some of the largest contributing factors to companies migrating to other PEOs.
Non-Transparent Billing Practices
In most cases we’ve worked on, Insperity invoices their customers through a practice known in the PEO industry as “Bundled Billing”. Bundled billing is when a multitude of the separate cost factors involved with working with a Professional Employer Organization; taxes, workers comp insurance, employee benefits, and administrative fees are bundled into one lofty percentage of payroll.
Bundled billing makes comparative analysis and cost reporting extremely difficult; it’s also a great way to hide exorbitant costs.
Competitive Difference – Flat Administrative Fees
Many Insperity competitors will subscribe to bundled billing when convenient, but offer different billing methodologies when requested. Most PEOs today can offer transparent bills that break out all levels of cost, and format administrative fees as a flat dollar amount per employee, as opposed to a percentage of payroll. We are strong advocates for transparent billing and flat administrative fees as transparency and a fair-value exchange for goods are necessary for the PEO industry’s long-term success.
All You Can Eat Buffet
Have you ever paid for a buffet, left with an empty stomach, and realized that you didn’t get your money’s worth?
In our experience Insperity’s service is delivered consistently and to clients’ satisfaction. The issue voiced to us by Insperity customers is that there is such a wide breadth of services offered, and not all of them are being used.
PEO customers are found in almost every industry vertical and have a wide variety of specific needs they rely on a PEO for. PEO customers that can implement significant strategic HR services will receive good ROI in a buffet-style pricing and service delivery model. Clients that do not implement many strategic HR services, and rather focus on underlying cost of benefits, payroll processing, and have more transactional HR needs will not achieve the same ROI in a buffet-style pricing model.
Competitive Difference – A la Carte Pricing
Many PEOs offer a pricing model aligned with that of an A la carte menu. Under this model core PEO services such as payroll, benefit administration, and HR support are included in the base cost, but non-core services such as recruiting, technical training, and tuition programs are not included, and rather billed on a usage basis.
Educated PEO Customers develop a strong understanding of which processes are better performed in-house vs. outsourced when arranging their PEO relationship. For example some PEO customers want the PEO to handle all benefit and payroll related questions from their employees, but prefer to engage a industry-specific consultant to hold technical training for employees rather than a PEO. Proper expectations as to the efficacy of each service is critical to a satisfying PEO relationship.
It isn’t rocket science. Bottom-line cost is the most common search parameter requested in our PEO Comparison process. Every dollar not spent on PEO administrative fees can be spent on richer benefit plans for employees. Insperity does a great job of managing bottom-line HR costs relative to in-house HR operations. However when Insperity competes directly with other PEOs, their public status, large advertising budget, and expensive field operations all have an impact on the bottom-line cost. When we perform our PEO Comparison for Insperity clients, we find an average savings of $1500-$2500 per employee, per year.