Andreas Deptolla: [00:00:00] Welcome to The PEO Podcast, where we interview industry leaders to discuss all things PEOs from compliance to technology, to client relations, and everything between. I'm your host Andreas Deptolla.
Bill Lyons: And so the, the PEO industry, as well as other industries prove in certain fields that remote work is something that can be done.
[00:00:25] Uh, you know, allowing employees to work from home is something that can be accomplished without sacrificing productivity. And in some cases actually enhancing productivity.
AD: Hello, and welcome to another episode of the PEO podcast. Today, we're talking with bill Lyons, chairman and CEO of LyonsHR. Bill has been in the industry for nearly 30 years and has recently published a book called We Are HR. We'll talk with him about his book, his company, and the industry advancements he has seen over the years.
AD: [00:01:06] [00:01:00] Riding motorbikes. And you played in a, in a rock cover band. So plenty of things here to, to jump into more. First of all, what kind of bike are you riding right now? And, um, if the audience wants to listen to your music, what, where can they find it?
BL: Uh, well, I, I, I ride a Harley Davidson, uh, ultra limited edition.
[00:01:25] And so it's a nice bike, but I've been riding for probably 15 years. Interesting. Uh, we had a sales meeting, uh, with our company. Uh, that's 15 years ago on one of our salespeople arrived on a motorcycle. And, um, as a kid, I always wanted to buy it, but my parents never would let me have one. He was anxious to show me the bike.
[00:01:43] So he went out into the parking lot and he showed me the bike and I jumped on it and started it up. And he said, well, take it around the block. So I took it around the block and I was gone for about an hour. And, uh, next week I had bought my first motorcycle. I've been [00:02:00] sort of enjoying bikes since then.
[00:02:02] My. My wife rides with me and I'm not in a couple of clubs, but, uh, uh, don't get to do it as often as I would like to, as far as the music is concerned, I have never made a penny of playing music and that's probably probably a good thing, but yeah, I've been playing a little guitar since I was a kid and, and, uh, one day a group of friends of mine and I were in church talking about playing some music and we got together and started playing.
AD: Maybe a, to one of the next industry events we can, uh, we can organize a little session here. Um, so, so you're the founder and CEO of LyonsHR. Um, what inspired you 26 years ago to found the company.
BL: Well, we started off as a commercial stamping operation and I was a controller and CFO for another company. And we had used a temporary staffing in our business as a supplement.
[00:02:52] And I became fascinated with the business. And also, um, my sister was working with one [00:03:00] and so she and I started talking about starting one of our own. And so. I approached the company that she was working with to acquire them. Uh, I'd had some experience in doing merger and acquisition work. And so we were able to work a deal to start as a commercial staffing business through the acquisition of her temporary staffing business.
[00:03:19] And the business was very successful. In the first few years, we opened up several branches. And then a few years later, uh, branched off into PEO. And of course, PEO we came our focus. We, we ended up divesting our staffing division in 2018. And since that time have been focusing a hundred percent of our attention on the growth of our, of our PEO the PEO business, you know, we've been in innocence 2008, you know, over the last 13 years or so have, have, uh, been able to grow the business quite substantially.
[00:03:49] And we were real pleased with the progress we've made.
AD: That sounds like the quintessential story of the entrepreneur right. Where you started with something in this case as a [00:04:00] staffing agency, and then you pivot and morph the company into, into something else that's then growing quite substantially. I've always been interested in, in the PEO business.
[00:04:10] I've been listening to. People from the industry and reading about the industry actually joined a NAPEO before we started our PEO and did our homework in advance of starting our business. And, uh, once we got our first PEO client, we were actually processing our first video. Client using staffing software, which is not exactly ideal.
[00:04:30] So, uh, one in, in the early days of our business, we have some companies that place a lot of confidence in us. Uh, and then we took the di we, you know, we said this, this is the business we want to be in. And we've, we made the investments and hire the right people and, and put the plans in place to start our PTO.
[00:04:47] And it's, it's worked out really well for the last 13 plus years. You mentioned NAPEO what role did the organization play in your career? How you involved in, what would you recommend [00:05:00] other leaders in the industry in terms of like really getting involved there and learning from the best. I think it's an outstanding industry association.
[00:05:08] I think it really proved itself during this past year, during the COVID crisis. So many times, uh, our clients were asking questions of us and we did not have immediate answers. But one thing that we had was NAPEO watching the, the regulations and giving us guidance as it was coming down. I remember last year during the height of that pandemic, they would put together a webinar.
[00:05:32] The day after new regs would be issued. And they would have information for us. And so we had them on the front lines monitoring what was happening. And then we had our legal teams tending the webinars from Naperville, and then they were disseminating that information out to our HR teams who were then interacting with our clients.
[00:05:50] And so I think they really distinguished themselves. As being an outstanding organization, they've, they've been tireless advocates, obviously by industry. We've always been members of [00:06:00] Navy. I couldn't recommend membership strongly enough. I think it's got great leadership. Uh, bacteria does an outstanding job with the industry organization.
[00:06:08] They have state and federal legislative affairs committees, I think do an outstanding job as well. And one thing I know that Naviaux has really made a priority of in recent years is trying to just generate awareness. When we started our PDO, when we start went out and started talking to companies about using our services, most of the people here didn't know what a PEO was.
[00:06:29] Not. No. Other States like Florida and New York, Texas, Arizona, and some of these other States around the country had a more mature market in that the consuming public understood the concept we had to start from scratch. And I remember early on really struggling with how do I simplify this business model?
[00:06:47] Because let's say, let's say it's not a simple business model. There are a lot of moving parts. And I think one thing that Napier has done a good job of in recent years is spreading the news. They've they've really put. An emphasis on, uh, [00:07:00] just creating awareness in the marketplace that, Hey, we're here. And of course, you know, the book that I wrote and we are HR and the whole purpose behind that was to try to create more awareness in our industry, that this is a tremendous value proposition for small to medium size business owners who are looking at trying to maybe look at an alternative way to.
[00:07:19] Manage their labor costs. This is an outstanding opportunity if they only know about it. So we're, we're trying our best to get the word out. There's so much here. So many topics to take it a little bit deeper into. I want to go back to one point, um, as it relates to lion Sage on your role there, uh, in the preparation for this interview, I learned one really interesting fact yourself like that.
[00:07:40] The most important thing for you as the CEO of the company is to set the culture. W, what does it mean to you? Like what is culture? How do you set it? How can you influence as tell us more about that? I think that culture is by far the most important responsibility of a CEO. Uh, I think the CEO is number one responsibility [00:08:00] obviously is to set the vision of the company.
[00:08:01] Here's why we exist. Here's what we're trying to accomplish. Here are our objectives. Here's, here's the direction that we're going as an organization. That's number one. Uh, number two is assembling the right people, uh, assembling a team of professionals that know their area of expertise and blending that group together in a cohesive way so that there's synergy created and the efforts of all of them, you know, move the boat forward.
[00:08:26] So, so it seems like for you, that is it's a CEO priority, it's even so important that you created a specific role for this, right. You know, for, for certain organizations, PEOS that might not be quite of your size and can't make that investment quite yet. What are certain tangible ways that you can recommend other PEO leaders to foster the right culture at their organization?
[00:08:50] Most business owners are taking the small companies are focused on the immediate. Issues right in front of them, controlling expenses, taking [00:09:00] care of the things that are right in front of their face. Uh, you have to have a competitive salary and benefits plan to attract good employees to begin with. You know, we always talk about attracting and retaining employees.
[00:09:12] Well, you can attract good employees with a, with a. A good salary and benefits plan, but you won't retain those employees unless you have the culture that goes with it. And so small companies that are, that are struggling with this, this issue and, and that are experiencing turnover. That's one of the biggest challenges we face is to get them to understand the exponential benefit to their business.
[00:09:35] That prioritizing culture would have shopping for cheaper insurance or shopping for lower workers' comp, or those are things that are important, but those are not things that are going to have a longterm impact on profitability, creating effective safety programs within your company will creating, um, saying employee assistance program where you're helping an employee, not only professionally, but in their personal life, you know, [00:10:00] EAP programs since the, the pandemic started him have really increased in popularity because let's face it.
[00:10:06] You know, people have struggled in their personal lives. People's personal financial situation has, has been impacted. Uh, some people have had legal issues that have resulted. Uh, there have been marital issues. There've been addiction issues that have come up and effective employee assistance programs is the company's way of saying, let me tend to the entire person, not just the worker, not just the person who's here from saying, you know, eight to five, but the person in total, I want to take care of that person.
[00:10:35] Completely. These programs can having a tremendous impact. You talk about the culture. Uh, and, and most of the AP programs are very inexpensive and they're, they're out there, you know, helping somebody who's going through a difficult financial stretch in their life might be something that you could do.
[00:10:50] Unfortunately, during the pandemic, there's been an increase in addiction issues. And helping people manage those things and come out of that, uh, is, is [00:11:00] a, is another very important part of the AP program. Yeah. And I think that, yeah, it's interesting that you mentioned the epidemic in that context, you know, a lot of CEOs nowadays are not talking just about client Shaun anymore.
[00:11:12] Right. So clients and even their companies, but employee terminations and what, what that do to their company during those difficult times. So thanks for your perspective there and like tangible. Advice for other leaders, how to mitigate some of this. So you started in the industry in 1995. What have been some of the big trends that you have seen that are really changing the industry and making a profound impact?
[00:11:38] I think it's been more of a gradual thing. Obviously the industry, the most to me the most impactful year was the year 2014. That was the year that the ACA went into effect. Of course, the ACA was passed in 2010, but it was not implemented until 2014 because of, uh, you know, multiple attempts to repeal it.
[00:11:56] And there was a lot of political bickering back and forth. That's was at the beginning of [00:12:00] 2014, the implementation of ACA. That the industry has never seen an influx of new business like it did in 2014. I think it was about a 24% year, a growth year for the industry, uh, after having averaged about 8% prior to that time.
[00:12:15] So it was, it was a big surge of new business. And then at the end of 2014, we had the passage of the SPEA, which also ushered in the certification program for PBS that choose to participate in that. And it was the first time we had legal certainty at a federal level for the industry that we had for years, tried to obtain it, brought about, you know, the non, uh, starting wage basis for new business.
[00:12:41] Basically the SPEA creating the 12 month. Selling cycle. Whereas prior to that, we had this whole emphasis on trying to get all the business in on the fourth quarter, because everybody wanted to start January one to avoid wagering starts well, the SBA EA did away with that because for those PEOs who were certified, they were [00:13:00] able to backload those wages as the successor employer, and we avoided having to restart those wages.
[00:13:05] So it essentially made the selling cycle. A full 12 months of the year, as opposed to, you know, let's do it all, you know, in the fourth quarter, because it became a real, you know, private SBDM, it was a real stressful time for all of, you know, most of your new business was jammed into the fourth quarter for one, one star.
[00:13:21] And so, uh, I think it was real helpful, uh, for the, for the industry in that regard. And then, and then there was a question about, well, who retains the tax credit. That question was put to bed by the SPEA, you know, before the passage would be SBA. One of the issues that we dealt with was, you know, a company that you're talking to about coming on board with a PEO.
[00:13:42] Well, what about these tax credits that I did? If all of a sudden all of my payroll is being reported and under your settle ID number, as opposed to my federal ID number, Who creates confusion about who's entitled to that credit? Well, the SBA did away with it and it validated that the client is entitled [00:14:00] to that credit.
[00:14:00] And so, you know, as PDs, we may, we manage that on behalf of our clients. So it was a huge boost to the industry. Uh, it, again, if you think about all the legislation has been passed over the last 30, 40 years, that that affects employment, all of that legislation was passed. With the idea you have one employer and you have one employee.
[00:14:21] Okay. The idea of an alternative employer or an alternative employer arrangement was never part of the original legislation until the SPEA. The PEO industry was always trying to make certain that our interests were protected after certain legislation was passed. But the SPEA was the first piece of legislation that was specifically written.
[00:14:43] For PEOS. And so it gives legal certainty to the industry. And I think it's can certainly give clients of certified PEOs, uh, greater assurance that their PEOs are operating. If you look now into the future, right, and say like, Hey, this will be the [00:15:00] things for next five, seven years topics that. CEO's PEOS leaders should just think about right now, right.
[00:15:08] To be successful in the future. What comes to mind? Place? Flexibility is something that we're seeing. Um, we're seeing this in the P and PEO operations themselves, but also in our clients, the pandemic forced people to work from home. Uh, and you've always had people that have been remote work. You've always had, uh, video conferencing capabilities, like what we're doing right now.
[00:15:28] But never had before the pandemic, did you see this massive surge in utilization of those technology tools? And so the, the PEO industry, as well as other industries crude in certain fields, that remote work is something that can be done. Uh, you know, allowing employees to work from home is something that can be accomplished.
[00:15:49] Without sacrificing productivity and in some cases actually enhancing productivity. So I think you're going to see an increase in some type of a hybrid business model, where you've [00:16:00] got employees that have the capability of working either from home or from the office, you know, depending upon their schedule.
[00:16:06] And that's a huge benefit to certain employees who have personal circumstances that would be made easier by the fact that they're able to work from home. You're you're seeing that increase. I think our industry is also going to continue to grow. Uh, I've never been more bullish on the PEO industry because as I saw during the pandemic, the impact that PEOs have had with their clients, I've heard some great stories of how.
[00:16:33] PEOs went above and beyond helping their clients, particularly with obtaining these PPP loans and thinking about how much they help their clients during this period of time. I think it's going to have a huge impact on the growth of the industry. So, uh, I was reading in one of the most recent white papers that the impact that PEO has had on their class ability to get the PPP loans, particularly during the first round of funding that, [00:17:00] that initial 349 million a billion, right.
[00:17:03] That was approved, you know, mostly most of the large companies, you know, big companies. We're gobbling up that money early on, but come smaller businesses who got an average PPP loan of say $115,000, they were advantaged over other companies that didn't work with a PEO because the PEO had the information needed to get the loan application completed more quickly.
[00:17:28] So 119%. Uh, the employee of the, of the clients that applied for PPP loans were able to get a more so than those were not in a P uh, EO relationship. So the, the impact that they've had in helping their clients get those loans. In that first round, I think had a lot to do with the survival of a lot of their clients back to the point that you made about remote work.
[00:17:53] Right. I think it's on the top of the minds of all of us in the industry. It seems to be that there are essentially three different [00:18:00] schools, right? Hey, everybody's from mode. We'll, we'll see if the cost for the office, the, and like, Recruit the best talent regardless of location, then you have the other extreme, we all need to be back at the office tomorrow.
[00:18:11] Right. And then maybe something in between, you mentioned the hybrid model, right? And obviously each of these probably have their own challenges. Where, where do you fall with this line? Ah, what are your plans right for your own company to, to roll this thousand, to, to make this a success. Well during the pandemic, uh, we were 100% remote.
[00:18:31] We were nervous about it because we had never done it a hundred percent before. We've always had people that have been able to work remotely, but never had. We sent everyone home. Uh, we put plans in place to have that capability. I think. At the current time we are in evaluation mode, if you will, because I think there are some things that remain to be worked out in that regard right now, most of our employees are back at work, our headquarters in the state of Alabama.
[00:18:58] So we're nearing the [00:19:00] end of the mash mandate and things were starting to loosen up in our state. We do have locations in other States we have to be concerned about. I think that we're, we're evaluating that at the moment and we will probably end up with some. Some combination that now I'm being careful about what I'm saying.
[00:19:16] Cause I know that there are those within our organization have feelings on both sides of that issue. And so I think we're probably still evaluating the, the best way to maximize productivity. That the key here is not whether or not. Employees are, are, you know, on site versus at home. To me, the key is, uh, number one is their safety making certain that they're safe, whether they're at home or at the office, but just as important is making certain that there's no disruption to our clients.
[00:19:46] If our clients can reach our people and they're at the office or they can reach their P R people and they're working remotely. That to me is the most important thing, their safety person. Then secondly, making sure that we don't have any disruption in [00:20:00] service. And so I know that the oversight of operations is made more difficult by a remote workforce.
[00:20:05] And, and so because of that, there are some things that have to be worked through. Those are the particulars that we're still in the process of evaluating. Yeah, it's certainly an interesting time. Right. And also an instant opportunity. Like how can we now really foster a new working environment that, that essentially takes the best out of those two worlds.
[00:20:25] And how can you still have the innovation, right. Is that done remotely? Do we have to come to a hop to, to do that together? How can we, uh, measure success? Right. We have the right. Tracking systems in place and whatnot. So yeah, I'm sure the next three, six, 12 months will be very telling and interesting as different companies find their models here.
[00:20:47] I think so. I think so when we're we're opening the one, uh, the, the remote work arrangements, not something we'd ever done before, but part of a business continuity plan is to make certain that no matter what happens, we're able to serve our clients. [00:21:00] And, uh, whatever that looks like in this future is, is still an unresolved issue.
[00:21:05] We talked a little bit about industry accreditations, right? For, for employees, for companies that obviously have different thoughts on that in the industry would love to hear your 2 cents and to get some feedback here. Well, we talked a little bit about the, uh, IRS certification program that was brought about by the passenger of the SPEA.
[00:21:25] I think there are about 64 PEOs that have gone through the process of becoming certified. And when, when that program was first launched, I thought there would be a huge rush of PEOs to obtain that certification. I think we were in the one of the first 10. CEOs in the country that became certified by the IRS, but, but there has been a surprisingly large number of PEOs that have taken sort of a wait and see attitude to see, is this really going to advance the cause?
[00:21:53] Or is this going to move the dial on any significant way? You know, keep in mind that the protections that are made available. Through the [00:22:00] SPEA or only available to those CEOs who choose. And again, it's a voluntary program to become certified, to provide that annual audit, to pay that nominal fee, to go through those quarterly reporting requirements.
[00:22:13] So they're 64 of law at last count that had gone through the process. Now, of course, the one thing that the SPEA does. Is it provides assurance to clients for a PEOs performance with regard to federal tax responsibilities. That is, you know, FICA, Medicare, federal employment insurance, but ESA C on the other hand provides assurance appliance for the full range.
[00:22:37] Of employer liabilities, which goes well beyond, you know, federal income tax. It provides assurance for the PEOs performance, with regard to state unemployment state, uh, withholdings, also all the benefit plans that a PEO, uh, might administer you think about all the withholdings that come out of, out of an employee's check.
[00:22:57] It's more than just FICA and Medicare. You [00:23:00] have 401k with owning. Do you have health insurance and a full array of benefit plans that are withheld out of an employee's paycheck? ESC provides assurance to the client that the PEOs who have achieved accreditation are acting properly with regard to all. Of those liabilities.
[00:23:16] And to me, it's, it's obviously a much more comprehensive assurance and it's also backed by $15 million worth of bonds that are held in trust. And so those two things together, I think can provide a client with a level of comfort that, Hey, if I'm doing business with a PTO, that's certified by the Arias.
[00:23:34] And if I'm doing business with a PEO that is accredited by ESA, um, I have about as much assurance that this PEO is going to perform responsibly with these fines as is available in the industry. I think there are 23 PEOs that possess both certification from the Arias and accreditation from ESA. That number has been pretty flat, uh, I think since the launch of the certification program.
[00:23:59] So I think [00:24:00] th th the SPEA and the certification program that it created provided a huge boost in the industry because it gave insurance at a federal level. But also when you say something is IRS certified, that carries a lot of weight. The IRS is probably the scariest entity on the planet. It sounds it can, you know, I can come after you.
[00:24:19] Okay. But if you say the RPO is certified by the IRS, Uh, that immediately resonates with clients, the comprehensive major of ESC accreditation. On the other hand takes more explanation with the client. There are certain States where ESC accreditation is well-known and certain clients won't do business with a PDO unless they have that accreditation.
[00:24:40] There are other places where you have to start from scratch and tell them what employer services insurance corporation is. And so, uh, you know, we operate in all of those different markets. And so we run into both of those scenarios. I think that the ESC, uh, is without a doubt, the most comprehensive level of assurance, because PEOs who submit to [00:25:00] that comply with over 40 financial and operating standards that are put together by regulators of PR.
[00:25:08] So if you think about the board of directors of ESA, DC, It's made up of industry operators. I used to be on the board is also made up of former, uh, industry regulators and independent directors, and then also industry advisors. So CPAs, you know, attorneys and serving industry. So they serve on the board, former regulators on the board.
[00:25:27] And then you have operators who were in the trenches every day, trying to run their big ego. Are represented on the board. That is a very comprehensive representation of the industry. If you are a PEO and you're adhering to the more than 40 standards of operating financial standards within that framework, then I think that is very comforting to a client that is trying to select a PEO if there's only 5% of the PEOs in the country that, uh, our ESC accredited, this is I think it's worth point now.
[00:25:57] I think right now there was 40, um, [00:26:00] one ESC accredited Des. Well, about the time new PEOs become accredited, you have PEOs that have been around for a while they get acquired. And so the number of new PEOs coming into the program versus the number of PEOs that get acquired by larger CEOs who are also accredited, tend to offset one another.
[00:26:19] And so you've had a sort of, a level of effect of the number of PDs that have chosen to be accredited. Over the last 25, 26 years since ESA was, was established. And so, you know, people ask me that question, you know, why are not more PEOs accredited value as they say. And so, uh, I think there are a number of reasons.
[00:26:39] Number one, it is the standards are very high, that it does require an owner to leave certain capital in the business. Certain financial ratios have to be maintained in order to continue the accreditation. There are fees involved. Uh, and there's also quarterly agreed upon procedures that have to be adhere to and reporting on [00:27:00] independently by a CPA to validate the accreditation status.
[00:27:05] And so not every PDO operator is willing to do that. And so there are a number that did choose not to do it, and we tend to think there's a lot of value in it. We like to sell. Uh, on the basis of our accreditation, because we still like, it gives our clients a level of peace of mind knowing that, uh, they're, they're dealing with a reputable PEO.
[00:27:23] So it seems like for you then as well, it's about positioning differentiation and to certainly be a sales enabler as well. Yes, we started our video. Uh, I mentioned we were originally a staffing organization in 28. We started to be here to vision and we, I immediately started pursuing accreditation, uh, upon establishing our PBL.
[00:27:43] We were able to achieve accreditation the first year of our operation, but we sort of used the PEO operating standards and financial metrics as sort of a roadmap on how to, um, start our PEO. That was our choice. It's felt like the operating standards were such that [00:28:00] we could pattern and build a strong operating blueprint from those standards.
[00:28:05] And so that was the basis. And we, we hope that, you know, by the, by the end of this process, we will have met all of the standards and therefore will be awarded accreditation. Of course we were. I want to switch topics here. I saw that your book, we, I got published on Amazon here recently. So congrats on that.
[00:28:22] Tell us more about your motivation. I'm sure what goes into writing and publishing, but what was your motivation for this project? I was approached by, uh, representatives of Forbes books about the project had never really thought about writing a book. I mentioned, you know, at the beginning of our conversation here, how, how underserved and that I thought the industry was with regard to just awareness.
[00:28:46] And I thought this might be a great opportunity to write a book that sort of tells the story of the PEO. Not from a technical perspective. Cause I think, um, you know, back in the late eighties, there was a gentleman by the name of T Joe Willie that wrote a book on, [00:29:00] uh, employee leasing, which is what it was called back in those days.
[00:29:03] And the industry was, you know, 10 years old at the time, it was very raw and fresh and he wrote a book. On the operations of an employee leasing business. And I saw that and I thought, well, you know, this is interesting, but this is, this is a book for those who might want to consider starting an employee leasing business.
[00:29:20] This is not a book that really persuades a small business owner to pick up the phone and call a PEO. And so I wanted to write a book that I, that I thought might educate the public. That, and again, it's not a very technical book. I wanted to make it an easy to read book. So we, we, you know, I keep it at a, at a high level.
[00:29:39] But I hope it sparks an interest in, so that business owner who's, you know, stressing out over his health insurance premiums going up or is worried about, you know, OSHA coming in and shutting him down because of safety procedures or he's had a number of claims or, you know, he has his workers' comp premiums are going up or he's having just terrible turnover.
[00:29:58] Th the kind of things that plague a [00:30:00] lot of small businesses. I hope that that small business might read the book and think this is a real viable alternative to what I'm now going through. I mean, the PEO value proposition has always been, you know, allow us to take these non-revenue producing.
[00:30:15] Administrative responsibilities off your place. And you've been focused on the things that make you money, serving your clients and growing your business, improving your products and services. Those are the things that business owners need to be focused on. Not on dealing with, with a state unemployment issue or not, not dealing with a health insurance, renewal, or worrying about a worker's comp audit.
[00:30:35] Those are the things that Rob a business owner of their time. But do not add a nickel to the bottom line. And so I wrote the book because I thought that if, if we can at least educate the public about what PEOs are, then they might pick up the phone and call the PEO near them. Oh, I was hoping that it would be something that might advance the industry.
[00:30:54] And then secondly, I thought about, you know, new commerce into this industry. If they had a [00:31:00] book like this and sort of told the story that went back to the very beginning of the origins of the industry, taught about how the business started, how it evolved some of the pitfalls and problems that we experienced along the way, how we finally got our act together and then explaining how this business really works.
[00:31:17] And then telling the story about how the future is likely to play out based on, you know, current economic conditions and, and, uh, other other factors that impact your business. If a newcomer to the industry had that as sort of an orientation for like a PEO prime, I think it would be really, really helpful.
[00:31:36] And so I'm hoping that the, that the book does two things. I hope that it will advance the industry and create more awareness among potential, uh, PEO business clients. But then secondly, I hope that it's going to be used sort of as an orientation guide to newcomers into the end. Um, I'm all about trying to promote the industry.
[00:31:54] Um, I think, you know, rising tides, lift all ships and so I want to help every PEO get more business and I [00:32:00] hope the book can be used for that purpose. It seems like a tumble. If few at your target audience, you mentioned, um, you know, small business owners, you mentioned from newcomers to the, to the industry.
[00:32:10] Somebody wants to start or run a PEO or being in a leadership position there, I assume also HR professionals, right? Um, that, that want to educate them. Are there any other segments where you say like, Hey, this is, um, this is where this book could add value and be relevant. I think a business advisors to small business, you know, you, you think about CPAs and bankers and, and, uh, and attorneys that, that advise their clients.
[00:32:35] You know, this has always been a hotbed of referral sources for people in the PEO industry. You always want to talk to CPAs and bankers and, and business lawyers and, and convince them and persuade them that, Hey, this is really a viable business model. This is something that truly adds value and it can be done at a cost it's much less than what you're.
[00:32:56] Your client can do these same services for, if you can persuade [00:33:00] them, then you really have, have done something because they are the opinion leaders that are going to think of their clients and make those recommendations on your behalf. So there's a third audience for the book. I would say those professional business advisors would be a strong third candidate.
[00:33:14] I think they could really benefit from, from looking at the book. You know, you mentioned HR managers and there is a concern out there among some HR professionals that PEOs are a threat to their. To their jobs and to their livelihoods themselves. It's, it's a lack of understanding of what PEOs do and what we are that generates that concern.
[00:33:33] Um, obviously the society of human resource management, which we belong to is a tremendous organization form of dedicated professionals and serve human resources needs in companies around the country. We certainly do not feel as though we pose a threat. We are an HR option or alternative to small business owners, and typically cannot afford a large HR infrastructure within their, within their companies or, you know, less than the cost of one HR [00:34:00] professional.
[00:34:00] As a small business owner can hire a PEO and get, you know, a safety expert can get, you know, financial expert can get a tax expert, can get a P you know, payroll that's done. Correctly and accurately, every time can get, you know, certain guidance in technical areas of HR that really require a diverse set of skillsets that are they usually one single HR professional is going to be beyond their scope, beyond their capabilities.
[00:34:27] And so. To me, that's where the real value of our services come in in serving that small to medium sized business. And again, when you look at the target market for the PEO it's employers that have between 10 and a hundred employees, why is that? That's because usually companies that have employees between 10 and 99 are too small to have a big HR infrastructure, but they're also too large to ignore HR.
[00:34:51] And so our PDO is a beautiful fit for them because they get the benefit of all of this expertise, uh, for less than the cost of one HR profession. And then the obvious question, like [00:35:00] how did you, what, what are kind of like the main topics that you are diving into? I was trying to accomplish several things with the book.
[00:35:07] Number one, you know, I'm promoting PEOs and I'm not bashful about that. And I make no apologies for trying to promote. The value proposition, but I wanted to educate, and this goes back to, I mentioned industry newcomers, people coming into the business. I'm sure right now there are people who've been working in this industry for years that don't know how the business started.
[00:35:27] I wanted to start there. I wanted to go back to the very beginning and say, here's how the industry started. It started off as a tax advantage pension play for, you know, wealthy physicians. And then it evolved into all of these other areas that businesses have. Grown dependent upon. And so I wanted to explain, you know, here's how it started.
[00:35:45] Here's how it evolved. Here are some of the pitfalls that the industry experienced along the way. Here's where we cleaned up our act. Okay. Then boom, 1995 Naviaux is, uh, you know, as established, you have NSAC that is created to. Provide [00:36:00] guarantees or assurances to PEO clients. And then you have really from 1994, you see a maturing of the industry and a diversification, you know, used to, you know, in the very early days it was, you know, with pension play than it was.
[00:36:15] You know, we can save you money on your, on your, uh, workers' comp insurance. And so workers' comp carriers were scary and trying to figure out, you know, what exactly we insuring out there. You know, you have a construction company over here. That's being reported as a, you know, as an insurance office and all kinds of miscoding and classifications going on.
[00:36:32] And so there were a lot of variations that happened in the industry, in the insurance industry that affected the industry early on. Well post 1995. That's when they, you know, all of those missteps in starting to where we got to 1995, that was all in the past. Or at least we like to think it was. And the business, the industry started policing it staff and it started getting its act together.
[00:36:55] It started becoming more concerned. About state and federal regulation, [00:37:00] uh, legitimacy and recognize within, within the various taxing authorities. And that's one of the things that ESA has done is as know, speak to the various state regulators in an effort to try to promote the industry. ESA promotes, uh, the industry to regulators at the state level, because that's where it's always been regulated.
[00:37:19] And Brian Dahlia, Stacy has many States, I think all around 20 States that accept the SAC accreditation in lieu of. All are part of their state licensing requirements. And so there was an effort to try to legitimize the industry. So it's not the wild wild West anymore, but this is a legitimate growing industry.
[00:37:38] And now there's what 907 PEOs in the country paying about three, I think three and a half million work site employees, about 175,000, um, PEO clients. Among those 907. So we're, we're not a blip on the radar. And he loved any longer that the industry is growing. The industry has with the passage of SPEA has got federal certainty, has got settled [00:38:00] rate condition within the hour is too.
[00:38:01] And I think all of the stars are aligned as they say for us to continue to distinguish ourselves as a tremendously valuable business partner, to the small business owner, particularly. In light of COVID and the things that we had to do in 2020. Thanks for listening to today's episode, don't forget to subscribe and visit firstname.lastname@example.org to learn more.
[00:38:24] I'm Andreas Deptolla, and this is The PEO Podcast. We'll see you next time.