Research Results. PEOs: Good for Small Businesses and Their Employees 9/13/2017. Project Description. Project Description

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1 Research Results PEOs: Good for Small Businesses and Their Employees 2015, McBassi & Company Laurie Bassi McBassi & Company September 2017 Project Description In the spring of 2017, we conducted two surveys: 1. Of owners of small/mid size businesses (both PEO clients & non PEO clients) 2. Of the employees of these businesses The purpose of the project was to create a data base that could be used to test what, if any, differences exist between the businesses of PEO clients and comparable, non PEO clients. 2 Project Description All businesses included in the main comparison set had at least one similar business in the comparison group 60 firms (40 PEO clients, 20 non PEO clients) 1,588 employee respondents (1,143 from PEO clients, 445 from non PEO clients) 32 survey questions 3 1

2 Overview of findings Business owners who are PEO clients report: Better financial outcomes Fewer concerns about business challenges Employees of PEO client firms are more likely to report that: They are engaged/satisfied They intend to stay with their employer They have a good work environment They have opportunities to learn at work That their employer is focused on critical drivers of future business success 4 PEO clients would recommend a PEO to a colleague 5 PEO clients have higher revenue growth 6 2

3 PEO clients have better financials Based on business owners responses... Median revenue growth for PEO users was twice that of comparable non PEO firms ( ) Expected median revenue growth for PEO clients from 2016 to 2017 is 40% greater than that of comparable non PEO firms PEO client firms were 16% more likely to report a profitability increase from 2015 to PEO clients have fewer concerns about business challenges Based on business owners responses... PEO users are significantly less concerned than non PEO users about their ability to handle key business challenges: Hiring employees (45% of PEO clients reported this was a moderate or major concern versus 70% of non PEO firms) Increasing revenues (73% of PEO clients reported this was a moderate or major concern versus 90% of non PEO firms) Raising capital/funding (18% of PEO clients reported this was a moderate or major concern versus 45% of non PEO firms) 8 Employees of PEO clients are more optimistic about their firm s future 9 3

4 business success factors 10 quality of HR practices 11 employee engagement 12 4

5 intent to stay 13 Employee intent to stay: longer for companies that have been PEO clients longer 14 We used the McBassi People Index to examine employees day to day work experience Method for using employee surveys to assess not only employee engagement, but also key elements of a company s work, leadership, and learning environments 15 5

6 Differences in key areas Note: higher in those areas where you d expect direct impact from PEO, and little or no difference in other areas 16 Statistically significant differences between PEO and non PEO on 17 of 32 survey items 17 Employee survey: technical details All businesses included in main comparison set had at least one similar business in the comparison group 60 firms (40 PEO clients, 20 non PEO clients) 1,588 employee respondents (1,143 from PEO clients, 445 from non PEO clients) 32 survey questions 18 6

7 Wrapping up The overall pattern of results is quite consistent with what would be expected. Substantial positive differences were found on many of the specific issues that PEOs focus on, while no significant differences were found on other issues that are not directly targeted by PEOs. From an analytic perspective, the lack of differences in some areas serves to underscore the existence of real differences elsewhere. It s not just that PEO clients have higher scores on everything their higher scores are in the areas where their scores would be expected to be higher if PEOs are indeed having a positive impact. 19 Wrapping up PEOs improve their clients : HR policies and practices Employees work environment & engagement Ability to focus on factors that drive business success Business outcomes (revenue growth & profitability) 20 Research Results PEOs: Good for Small Businesses & Their Employees 2015, McBassi & Company Laurie Bassi McBassi & Company September