Cannae Beats a PEO Any Day
Prospective customers of Cannae are often comparing our outsourced Human Resource model against a Professional Employer Organization (PEO) approach. I founded Cannae as a better alternative to the PEO so to me, it is a no brainer in favor of Cannae but for those unfamiliar with the two models, this summary is our perspective.
Like a PEO, Cannae can assume all your core HR processes. We create value by integrating best-in-class technology, implementing best practices specific to your business and taking advantage of economies of scale in consulting services. In contrast to a PEO approach, Cannae’s outsourced Human Resource solution favors flexibility, customization, and cost-transparency.
Our clients can choose the model that makes most sense for their business – whether it be complete outsourcing, outsourcing some HR functions to support an in-house HR leader or simply a strategic HR leader. No matter the approach, our clients are assigned an experienced HR professional whose role is get to know your people and business and then drive improvement initiatives. We allow customization and an easy transition by starting off by assuming your existing work processes and vendors. Over time, they can be improved in accordance with business priorities. For example, HR advice, work policies, offer letters and performance management approaches are designed to support the particulars of your business not simply taken from a library of templates. We provide complete cost transparency in that your costs are equal to the pass-through costs of your benefit programs and vendors plus the cost of Cannae’s services.
When you engage a PEO, you are required to use their payroll and benefit providers and follow the PEO’s standardized practices when hiring, managing and terminating employees (because the PEO is the employer of record). A key selling point of a PEO to emerging companies is that by aggregating lots of employees across companies it can provide more benefit choices at a lower cost than an employer could obtain by going it alone. But, think again if you think that aggregation can bail you out of a poor medical claim situation. PEOs, like any large insurance company, are limited in their ability to subsidize a company’s relatively poor medical experience. It is a zero-sum game and they will quickly loose customers with relatively healthy employees if they charge them to subsidize unhealthy groups.
Finally, like a luxury timeshare, PEOs are easy to buy but hard to sell. All PEO costs are aggregated and there is no transparency into benefit claims. This makes self-insuring or buying insurance post-PEO a risky and usually more expensive proposition. Further, the PEOs are all-or-nothing. You cannot, for example, simply find a new benefit plan but keep the PEO payroll.
If you are a growing business looking for true customized, scalable HR support paired with the strategic advice of an experienced executive around business improvement, consider Cannae HR solutions.