Evaluating 2020: What Worked?

Tuesday January 5th, 2021

The New Year has arrived and there are big expectations for 2021: from predictions that there will be a rising need for applicant tracking software, to forecasts that employee engagement will be a top HR trend.

While predictions and trend forecasts are certainly something to keep an eye on, the most impactful way to prepare for the year ahead is by reflecting on successes (and opportunities for improvement) from the previous year. For third-party service providers like payroll service bureaus, administrative service organizations (ASOs) and professional employer organizations (PEOs), there are certainly aspects of 2020 that should be evaluated, including:

A thriving client relationship.

The pandemic gave service providers in the human resources space a reason to become consultants again. For instance, the rapid changes in legislation and relief packages prompted PEO owners to work closely with their clients to provide the best support possible. And the data shows that this effort paid off. According to the National Association of Professional Employer Organizations (NAPEO), 98 percent of PEO clients’ Paycheck Protection Program (PPP) loan applications were successful.

This positive experience is something that should continue to be built upon in 2021. In fact, isolved’s Director of PEO Solutions Shane Underwood notes that it is quite possible that these positive relationships will lead to an increase in business for service bureaus across the board – including ASOs and PEOs.

“I think service bureaus will see a rise in business overall,” said Underwood. “Once the dust settles, I think people will be talking about how their business got through the pandemic, which will lead to a lot of referrals and new clients.”

A new appreciation for compliance.

Although compliance expertise and support has always been an important selling point for service providers like ASOs and PEOs, it became an even more valuable benefit for clients in 2020. 

“The compliance arm was underrated to some degree before the pandemic, but now it has really been brought to the forefront,” said Underwood. “Think about everything that changed so quickly, including legislation that needed to be unpacked and shared with clients. The ability for service bureaus to pivot and turn on a dime to disseminate information very quickly was a big success.”

With uncertainties remaining and the possibility of future legislation being rolled out, guidance around compliance will continue to be critical for employers in 2021. Meaning that ASOs and PEOs will need to continue to stay on top of changes in order to provide the best support to their clients throughout the year.

Opportunities for diversification and creativity.

Although many service bureaus were successful in the support they provided their clients in 2020, there are opportunities for improvements within their own businesses in the New year. One of these opportunities is to diversify their client base.

“Some service bureaus did not benefit from specialization in 2020,” said Underwood. “Niche PEOs may have had challenges depending on the vertical they focused on. For instance, hospitality has been hit hard. As a result, client diversification is definitely an opportunity in 2021.”

In addition to expanding their reach, ASOs and PEOs may want to add some diversification – and creativity – to their offerings, particularly for benefit plans. A wide variety of benefits is beneficial for clients and can provide a competitive advantage when employers are choosing which organization to partner with.

Continue the Momentum

2020 was a difficult year for businesses across the board, but those who were partnered with an ASO or PEO were better positioned to weather the storm. In fact, early data found that businesses leveraging a PEO were less than half as likely to be facing a permanent closure to their business. Although the full impact of the pandemic is yet to be seen, it is imperative that service providers continue to build on the momentum of 2020 so existing and future clients can have a successful 2021.

Prepare for the HR trends that are projected to make a splash in 2021 by downloading our eBook, Big Expectations: 2021 HR Trends.

Allie Howen

Senior Content Manager