Small-Business Benefits outside Companies Help out on Human Resource Paperwork

By Skidmore, Sarah | The Florida Times Union, August 16, 2001 | Go to article overview

Small-Business Benefits outside Companies Help out on Human Resource Paperwork


Skidmore, Sarah, The Florida Times Union


Byline: Sarah Skidmore, Times-Union business writer

The small-business owner is generally accepted as the one-man band of the business world. She can hum a marketing pitch, strum the investors' checkbooks and stamp out a new product all at once. But many struggle to handle all of these things and manage their benefits, too.

Medical, life and other benefits are a complicated issue for small businesses in Florida. There is a limited number of plans for businesses with fewer than 50 employees, and the costs of those that are available often are too much for the small-business budget. Add in the daunting time and knowledge required to find, offer and manage a benefits plan, and many employers are stuck choosing the lesser of two evils.

And if they don't offer a good benefits package, then they lose their allure to qualified employees.

Many small business are seeking a new option -- professional employer organizations, or PEOs. These outside organizations handle human resources for companies, including using their larger size to get benefits at a lower cost than employers may find on their own.

Because of the abundance of small businesses in Florida and the growing challenges of securing an insurance plan for a small business, the PEO business is booming.

"The PEO concept is really just evolving and coming into its own," said Bob Scruggs, director of sales for ADP Total Source, a Jacksonville company that offers PEO services.

Nationally, the growth rate for PEOs is about 25 percent annually, according to the Florida Association of Professional Employer Organizations. But several local PEOs reported growth in the 30 percent to 35 percent range.

"We're doing phenomenal," said Tom Newman, vice president of Oasis Outsourcing, a Jacksonville company that offers PEO services. Newman said the company's PEO work is growing about 30 percent a year.

There are more than 150 PEO companies licensed in Florida and about 2,000 PEO companies nationwide, according to the association.

Most PEOs target small businesses like UniMortgage, a Jacksonville mortgage banker that employees 35 people.

"A company our size has no leverage with an insurer," said Paul Doidge, president and chief executive officer for UniMortgage.

The company analyzed the cost of its options, which included hiring an entire human resources staff and finding its own insurance or contracting with a PEO, and it found considerable savings with the latter.

The Florida Association of Professional Employer Organization estimates that small businesses pay as much as 40 percent more for employee benefits than larger companies.

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Small-Business Benefits outside Companies Help out on Human Resource Paperwork
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