Case application 1-A: Outsourcing Human Resources

Questions

1. Why do you believe organizations such as selective HR have grown so rapidly in the
past decade?
Ans: Organizations such as Selective HR have grown so rapidly in the past decade due to
Selective HR (formerly Modern Employers, Inc.) which provides an avenue for companies to
outsource all their human resources activities. Modern Employers, Inc, was founded in 1984
by two insurance agents ,Rick Ratner and Ed Bongart. It was acquired by selective Insurance
Group, Inc.,in 1999 and renamed Selective HR. Under the direction of Bob Clancy, president
and CEO, selective HR recognizes that human resource services especially employee
benefits and governments compliance programs are major problem for the small and mid-
size business owners. These owners often want to do what they enjoy most selling the
services of their business but they need employees, and with each employee comes a variety
of responsibilities.
For example, once an organization employees 15 individuals, they must follow a wide
variety of government regulations relating to hiring, firing and promoting employees.
Completing requisite payroll documentations as well as employee safety forms is generally
more involved than most entrepreneurs envision. Furthermore, smaller businesses often find
attracting skilled employees more difficult because that many of todays worker seek. So this
challenge created as opportunity for Selective HR to provide a valuable service to businesses.
Selective HR is one of the top twenty PEOs in the United States. With branch offices in
Marietta, Georgia; Charlotte, North Carolina; Branchville, New Jersey; and Baltimore,
Maryland; Selective HR support to more than 500 client organizations in 17 eastern,
Midwestern, and southern states, and currently leases more than 14,000 employees.






2. Do you believe persons working for an organization but employed by a PEO are
more or less likely to be committed and loyal to the organization? Defend your
response.

Ans: Yes I believe that the persons who are working for an organization but employed
by a PEO are more committed and loyal to the organization. A professionals employer
organization (PEO) is a firm that provides integrated human resource administration and
risk management services to other organizations. That is, a PEO recruits, trains, pays
employees, offers employee benefits, and handles all the necessary compliance and
government reporting requirements.

For example, they issue paychecks, deposit payroll taxes, handle unemployment and
workers compensation claims, provide employee benefits, screen applicants, and
develop employee handbooks. They also assist in handling layoffs and terminations, if
necessary. But freeing business owners from endless paperwork and government
regulations is only one piece of the puzzle. By hiring the employees and leasing them to
client organizations, PEOs can provide employee benefits at a much lower cost than if
small business owners had to buy them separately. Client organizations can thus offer the
benefits their employees desire at a fraction of the cost. This includes comprehensive
health insurance plans, retirement programs, credit union membership, and life insurance.
This aspect alone has helped reduce turnover in many of the PEOs client organizations.

PEO enable clients to cost-effectively outsource the management of Human Resources,
employee benefits, workers compensation and payroll through employee leasing. PEO
clients focus on their core competencies to maintain and grow their bottom line.
Businesses today need help managing increasingly complex employee benefits related
matters like Workers Compensation Claims, Payroll, Payroll Tax Compliance. They
contract with a PEO to assume these responsibilities and provide expertise in Human
Resources management. This allows the PEO client to concentrate on the operational and
revenue-producing side of its operations, while saving on the funds that would be
required to manage necessary human resources roles. PEO clients save money on human
resources related expenses while still being capable of offering more complicated human
resources products to their employees. Employee leasing through a PEO provides
integrated services to effectively manage critical Human Resource responsibilities and
employer risks for clients and maintains an employer relationship with the employees and
assuming certain employer rights.



3. How do you believe PEOs enhance/hinder the contingent workforce? Explain your
answer.

Ans: I believe PEOs enhance the contingent workforce by frequently targeting employers
with fewer than 500 employees. In many cases, these organizations need a fully
functioning human resource department but cant justify the costs. For a percentage of
their total payroll costs, PEOs handle all human resource activities for a client
organization. PEO Resources which is a nationally focused Human Resource
Outsourcing firm that provides professional services to companies that are motivated to
reduce costs in payroll processing, workers compensation costs/claims, various employee
benefits, human resource management, employee liability and other related HR
Outsourcing overheads. These days employers who do not have the right HR systems and
tools in place may be putting their overall business, and their net worth, at risk.

Managing multiple vendors and administrative functions can often exhaust internal
resources and take time away from revenue-generating activities. Increasing profits is the
number one goal for business owners. However, with greater unemployment tax rates and
volatile health insurance costs, it is hard for business owners to implement a predictable
cost model that contains costs for the long-term. By aggregating the buying power of
hundreds of firms, Staff One's PEO solution empowers clients to minimize expenses and
fuel long-term profits.