Half of businesses are considering changing the professional employer organization (PEO) they are working with in the next 12 months, while 41 percent are considering swapping their administrative service organization (ASO). The top reason for those looking to make a switch? The need for a broader HR technology platform, according to data from isolved’s Transforming Employee Experience Report.
Although change is never easy, it is oftentimes what is necessary for continued success. Not only for businesses looking to change third-party service partners, but also for the partners who want to continuously evolve the way they support their clients. Improving HR technology is clearly an area of opportunity that service bureaus like PEOs and ASOs can use to differentiate themselves from the competition, attract prospects and retain current clients.
What is a “Broader” HR Technology Platform?
A broad, or comprehensive, human capital management (HCM) platform does more than just track attendance and administer payroll – it provides scalable technology that is intelligently connected and built to support the future of work. In fact, isolved’s VP of Program Management, Chris Mantua, says that technology is a key factor in how quickly a service bureau can react to market demands.
“Technology is the driver behind how much a service bureau can support its clients,” said Mantua. “By utilizing a cloud-based HCM platform, PEOs, ASOs and payroll companies can focus on their customers and employees. After all, service bureaus are most effective when they can spend more time providing strategic HR services and less time managing software and maintaining infrastructure.”
A robust HR technology platform will ensure that all important and commonly needed employee data is easily accessible from one place through a single login – regardless if the task being performed relates to talent acquisition, benefits enrollment, learning management, payroll or another essential HR function. What’s more, truly nimble cloud-based HCM platforms have an open application programming interface (API). This provides agility, enabling the platform to deliver updates and enhancements with minimal downtime so it can adapt to both short- and long-term trends. An open API also allows for customization, which means every client’s needs can be accounted for.
While offering better technology is certainly the top way for service bureaus to differentiate themselves from the competition, there is another opportunity that has helped third-party service providers attract new clients for years – compliance.
Compliance Remains Key
isolved’s data shows that the top reason businesses decide to partner with a PEO, ASO or payroll company is for access to the organization’s resources for managing compliance and essential HR functions. Although compliance support has always been a benefit of partnering with these types of service provides, the uncertainty surrounding the pandemic and possibility for new employee-related legislation makes it an even bigger selling point for organizations looking to retain or attract clients.
“Compliance continues to play an expanding role in the world of HCM,” said Mantua. “The challenges we faced in 2020 were a perfect example of how quickly regulatory changes can happen. One of the primary reasons a company considers using a service bureau is to mitigate risk, which is why compliance needs to be at the top of the list when business leaders are choosing a provider to partner with.”
With the pandemic still having a significant impact on businesses, there will likely be more regulatory updates that impact employers in 2021 (and beyond). Service providers like PEOs and ASOs will play an important role in helping businesses stay on top of these changes. This is another reason why it is important for service bureaus to leverage technology that can quickly adapt to comply with legislative updates that impact their clients.
Don’t Forget the Importance of Employee Experience
In the search for a comprehensive technology platform, service bureaus should keep the current working climate in mind – especially since many businesses have shifted the way they operate over the last year. In fact, 92 percent of business leaders identified employee experience as their top priority in 2021 due to remote working conditions and a need to improve retention rates.
An investment in a comprehensive HCM platform allows service bureaus to support clients with engagement tools that can help bolster employee experience. This, coupled with tools that support critical HR functions like payroll and benefits enrollment, means that businesses have access to a broad range of HR technologies through their service providers. For service providers, this means that switching to a robust HCM platform is a needed change to attract new business, improve retention rates and provide a competitive advantage for their business now and into the future.
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