The secret to creating an agile startup is unbridled momentum. One of the things that hold startups back from fully achieving this is the sheer weight of the administrative burden that comes with building a business and managing growing numbers of people. This is where organizations like Vensure come in. Professional employer organizations or PEOs like this help startup owners focus on the levers of business growth by handling all the HR administration, systems, and processes. Join in as Regional Sales Manager Alex Wardlaw explains in full detail.
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Alex Wardlaw – Creating An Agile Startup
Welcome everyone to the show. We’re a show that guides leaders on how to elevate the workforce. We believe that people are at the heart of successful organizations. A team member’s well-being, rewards, and career development are all essential to a happy and healthy workforce in a productive environment overall. This show discusses the practical and effective leadership strategies for top executives, senior professionals, and talent managers.
First, I would like to introduce our panel. We have with us Howard Nizewitz. He’s a seasoned compensation advisor and strategic HR consultant with over 30 years of experience. Also, we have Sumit Singla. He’s an experienced HR consultant dedicated to helping small and medium-sized enterprises scale up globally with cutting-edge practices and solutions. Sumit is also known as a culture guy. He gives a lot of advice online overall.
On the show, we explore the dynamics of creating an agile startup. We have the privilege of hosting Alex Wardlaw, a distinguished leader, mentor, trainer, and advisor from VensureHR. With more than two decades of experience and strategic outsourcing, Alex has earned recognition as an eleven-time President Club winner and has profoundly impacted the profitability of hundreds of small to medium-sized companies by streamlining their operations.
His approach to reducing labor costs, ensuring compliance, and providing competitive benefits has allowed countless companies to punch above their weight class and ensure that they can compete with larger employers overall. Join us as we dive into the essentials of building an agile startup here with Alex Wardlaw. Welcome, Alex.
Thank you, Sam. I appreciate it.
What we’d like to do here to kick things off is understand a little bit more about how you got into the business of helping companies and developed so that they can focus mostly on what they do best and the other regulatory pieces, payroll, and administration can be handled by your organization. Can you tell us a little bit about how you got to where you are today?
I went to grad school at the University of Florida and one of my colleagues was being put through the program with a company called Staff Leasing at the time, which is now TriNet. To make a long story short, he recruited about five of us right out of school. I started working for them in Atlanta in sales, then went to their corporate market, a place in Florida, then was a marketing manager, and moved out to Colorado to open up their Colorado Spring Branch. From there, I worked for several others, including ADP, TriNet, and CoAdvantage to name a few. That’s how I got into the industry.
What made you choose to move from some of those large players to where you’re at now?
It was more flexible from a service standpoint. We’ve got boots on the street throughout the United States. We have a single point of contact to help our clients. That’s what made me make a switch.
A lot of small businesses and founders of companies out there are not aware of the different avenues that they have for partners like you that help them grow. If we go back into a lot of small business space, I can talk about this because I’ve experienced this myself in growing my organization. As we start, we have our expertise. The solution that we’re providing our clients and our customers on what we do best is something that we were passionate about as any founder out there.
As you start growing and providing these services to your customers, you need more people. You need to hire some people from time to time, and then it comes into some of the regulatory burden. How do I pay these individuals? How do I comply with all the regulatory responsibilities in multiple places where I do business? How do I make sure I am effective in hiring people?
There’s an administration that needs to be brought on. Suddenly, that service provider is focusing a good portion of their time operating and running the business instead of focusing on their clients. This can be a big business strain in starting out. It comes into the solution providers that you have. Can you tell us a little bit about how you help organizations grow and get above this hurdle? What are the different options there?
The PEO Solution
From our end, we have several different options, but one solution that I know we mentioned is the PEO, which is the Professional Employer Organization. PEOs typically work with groups from startups to roughly 100 employees. We see that as they’re growing, the last person they hire is an HR manager. As they get to that 15 to 20 employee level, it’s the owner, the officer, this CFO, or control or handling all those HR functions. They don’t know anything about the compliance piece.
The next step for them is they have to decide, “Do I hire an HR manager for 60,000 to 100,000 all-in or do I outsource that solution to a third party?” That’s where we come in. We’re that outsourced solution where we can offer a one-stop shop. I tell people it’s like they’re hiring five people. They’re going to get a payroll specialist, an HR specialist, a benefits specialist, and a risk and safety manager. They’re going to get an account manager that holds their hand with the whole solution.
A PEO offers a one-stop shop where the startup owner gets the equivalent of hiring five people. Share on X
At the same time, they’re getting an HRIS system to streamline those operations for them. As a start-up, rather than going out and looking for a payroll company, they’ve got to get workers comp in place, they’ve got to get benefits in place, and they’ve got to get retirement in place. What’s nice with our program is it’s all there for them. You hire us and then we handle all of that administration from their side. From an HR compliance piece, we make sure they stay in compliance with whatever states they’re in. If they’re multi-states, every state has a different compliance feature that we can assist with.
I know that there are companies that try to go out there and do this on their own. What are some of the downsides? You mentioned some such as compliance and the know-how of doing this. Are there other downsides that they may experience from being a small organization and competing with or trying to do business in this larger context?
A couple of downsides. One, all the liability is on that employer and that owner. If they’re doing it themselves, they burden 100% of the liability piece. If they work with a PEO, you share liabilities. We’re on the hook for a lot of those liabilities, including payroll, payroll taxes, unemployment, workers comp, workers comp administration, benefits, and benefits administration. We are the go-between the IRS Department of Labor, the EEOC, and all those governing bodies.
We want to take that off of the owner’s plate so they don’t have to deal with any of those things. From a shared liability sense, it makes sense because they’ve got somebody helping them regulate all of those. If something comes up, they can rely on that PEO for assistance in those areas. The other thing from that end is with a PEO, we’re an employer of record for IRS purposes. Those are the liabilities that we shoulder, and then the onsite employer. That means they hire, fire, and make all the company decisions from that end. As I said, it’s a co-employment relationship and that’s where the liabilities come in.
What about benefits here in the United States? Benefits can be a very big challenge for smaller organizations. They don’t have a lot or they may not feel like they have a lot of options. How does a PEO help them with the benefits side of things?
In the United States, in most states, if you’re under 100 employee groups, you’re considered a small group marketplace. The small group marketplace is based on your census of what plans and rates you get. Whereas when you come with a PEO, you look at it like a coop. We group all of these small businesses together so we have a large pool that we shop with our carriers. You’re then able to get large group benefits. Typically, what that means is more choices, lower premiums, and richer plans for our clients.
Better choices overall for their people when they group with others.
The other nice thing is they don’t have to administer any of it. They can offer it. Employees come to us with questions. They completely let us run with it.
What about customization? Let’s say, for some reason, they want to provide something, in terms of benefits that’s not considered normal. They want to cover pets or something strange. Do you have that flexibility?
From that end, a lot of PEOs have additional perks for their clients. Pet insurance is one of the perks that they have. They have identity theft and employee assistance programs. They have discount programs for shopping. To answer your question, you can customize. Some clients want to keep certain benefits that they have. For instance, they love their dental plan. Some PEOs will allow that and some won’t. From our side, we’re completely flexible and we’ll be able to work with them on setting that up.
Agile Startup: A lot of PEOs have additional perks for their clients, and some offer customization.
Sometimes when you’re thinking about benefits, the first thing that pops up in a lot of CFOs’ minds is, “This is expensive.” They’re paying for the benefits and adding all these other ancillary programs there that their employees want and can add up. When we’re thinking about the costs overall, what are the tradeoffs? Can this be done in a different environment? What are the options for either going on their own or they can do a PEO? Are there any other options that a small employer can do to deliver good benefits to the people?
Typically, what we find from the CFO standpoint is if they have it on their own, it’s pretty expensive. Renewals go up 10% to 20% every year. They have to scale down on the benefits. When I say scale down, they have to take a deductible from $1,000 to $2,000 to $3,000. We’ve seen that over the last ten years. It used to be that HMO plans were zero deductible and covered everything. Over the last 10 to 15 years, now a standard plan for a small employer is a $1,000 to $2,000 deductible plan.
Sam, going back to your point. T, there are some choices. From our side and I’m just speaking for Colorado, most carriers require you to contribute at least 50% of the lowest-cost health plan. What’s nice about moving to a PEO is we have over 25 different plans that employers can choose from anywhere from zero deductible plans to $7,500 deductible plans. What’s nice is they can choose a few plans. If they have to go that higher deductible route, they only have to pay 50% of that plan versus a $1,000 plan from that end.
That helps with affordability.
It gives them choices and they can restructure their benefit package. Other than health, a lot of the other services can be employee-paid. The only requirement we have is 50% of the lowest cost health plan for the employee.
The VentureHR Experience
Perhaps, we can dig in more to give our audience more of an understanding of what the experience is like. Let me go back to that story I was talking about at the beginning of our discussion. The company that’s out there is providing services. They want to grow and expand. They bring on employees. Now they have the burden of payroll regulation and so forth.
They find an organization like VensureHR that can help them to provide some of these services. The next thing that sounds like a daunting task is as a small employer, I have zero policies in place. I have zero know-how in how to go through this, even starting with benefits and so forth. How does a company or a PEO or a company like VensureHR help guide on board a client that has never done this before? What are the steps there?
How we help is when we’re bringing them on, first of all, we have an implementation team that we hold their hand through that process to get them going for the first couple of payroll runs. During that time, they get to meet their full-service team, which includes that HR specialist and a benefits specialist. During that time, from an HR standpoint, we help with handbooks, job descriptions, salary surveys, training programs, and performance reviews.
Everything that large companies have an HR department for, that’s where we come in and help that small employer from that front. During the benefit enrollment, what’s nice is they can rethink what their benefit strategy is going to be. Maybe they’ve been doing the same thing for the last ten years and they don’t know why. This allows them to restructure that and do what’s best for them moving forward.
You help them put together these plans by priority. Also, put in the policy so that they can do this effectively. As an organization, you can ensure that they’re compliant with all the regulations and so forth.
If they have already a handbook in place, we’ll review that handbook. We can make updates to it if need be. What happens is once they’re in and run the first couple of payrolls, our HR person’s going to sit down with them and come up with an action plan. Do they want to offer training to their employees? Some states require it. For instance, California. You have to do sexual harassment training.
Whatever states require it, we’ll make sure that we implement that and get it done. For the other states, they can decide, “I would like to have training for my employees.” A lot of small employers don’t have time to put that in place. Once they come on with us, they’re already there. We’re talking sexual harassment, diversity awareness, management training courses, time management, stress management, legal assistance, hiring practices, interviews, and questions you can ask. You name it. A full gamut becomes available to that small employer.
Part of the solutions that you provide as an organization with VensureHR is you have some technology that can help them manage their people. Is that part of the traditional offering?
Correct. We have our technology platform called PrismHR. We own Prism. With that being said, 70% of PEOs utilize the Prism platform. What’s nice for a small employer is the other challenges as they’re putting these pieces in place, they’re putting their payroll in place, workers comp in place, and benefits in place, maybe their time and attendance system or applicant tracking system. We call them silos, but they don’t talk to one another if you’re on your own.
What happens is the owner has to hire people to manage those different areas of their practices, and that can become expensive. What’s nice is when they come on to us, they’re automatically put into our Prism system, and then we streamline that operation because they can onboard people paperless. As soon as they term somebody, all of those services come off the payroll, the workers’ comp, the health invoice, and the dental. Everything is pulled out in one click of a button rather than going back and having to take those out yourself.
Prism HR platform streamlines operations, making it easier for small employers. Share on X
The Prism system is a human resource management system. This is where you would keep all your employee information, records, and so forth.
That’s where the data is kept. It’s available to the employer and his team 24/7. What’s nice is they can go online and get whatever reports they want. There are over 150 standard reports that they can pull. The employees will have a self-service portal where they can go in and review their information. They can review their paychecks, check their PTO, review their benefit elections, and then they can house some employee documents there as well.
We’re talking about small companies scaling up and becoming more agile so they can focus on what they do best. Part of that is hiring more people. You mentioned that if the company decides that they want to hire somebody in a different state across the United States, you’re going to help them on board and make sure that they’re compliant in that state and so forth. What about if we’re hiring a person in a different country?
When we’re talking about looking at different resources and talents across the globe, there’s a rich talent place out there. As an example, we have Sumit Singla here with us from India. He’s a top HR consultant in India. Companies nowadays can reach out across the globe and find the best talent wherever it may be. How does a PEO or VensureHR help with something like that?
We have a couple of ways to help recruit talent. One of them is called Solvo Global. It’s the name of the company, but we of course own them. What we do is near-shore recruiting. We have offices in South America where we recruit talent for our clients in the United States, typically at a 60% savings. What happens is they come to our office and work 45 days a week for that employer.
We then keep all the metrics through our employer record program, which means we pay their payroll and their benefits. We take care of all the compliance on that end. The benefit to the employer here is all they have to do is pay us a fee to provide that talent for them. When we go out and source that talent, they’re highly educated, bilingual, and willing to work 45 hours a week for typically about a 60% savings to what they can find here.
That’s nice. Companies can save money and also hire outstanding talent more than what they could potentially afford in the United States. As a small startup, they can reach out and make sure that they’re still providing top-tier service to their people with diverse people from around the world. What are the complications there? If a company tries to do that without having an employer of record or the services that you provide, what risks would they take on by doing that directly?
They would take on all the risks of having to pay that person out of the country. All the compliance pieces that are put in place, they would have to shoulder that to get that employee. If they wanted to bring them here, then that’s even more complicated from that end. From our side, we take that all off of their plate so they don’t even have to deal with that.
The other nice thing from that end is we send them videos of the candidates. They get to screen those candidates then they tell us, “I like this candidate or I don’t like this candidate. Here’s why.” They don’t have to pay for anything until we place a person with them. It’s pretty much free recruiting until we can find somebody that meets their needs.
PEO Success And Outlook
You can create a lot of opportunities and so forth. That seems very compelling. What are some of the stories that you would have to share with some of your clients around the world as far as your clients in the United States that use your services? I imagine you have a couple of success stories in mind that you could probably share with us.
The biggest one that we always hear is the two reasons why people come to a PEO is because of the compliance piece. A lot of times, they don’t know what to do in those areas. As you expand to multi-states, there are even more rules and regulations that you have to adhere to. The big success stories that I hear are, “I don’t have to deal with that anymore.” From our end, we’re already set up in every state. It’s quick to market from a payroll, HR, work comp, and benefits standpoint. They don’t have to register in each state they go to. They know as soon as they hire somebody, they’ll automatically be set up in those States.
The other nice thing that typically we hear is, going back to your point, “My benefits aren’t rich. I’m paying way too much. I’m not able to attract the talent that I need because of my benefit package. I can’t compete with that 100-man technology company down the street because they have all these robust benefits.” From our side, we’re able to bring that solution to them and they get to pick whatever plans they want to be able to attract those types of employees. They can structure it based on employer contribution, and how they want to position that with their new hires and with their existing employees.
Sumit, I’d like to hear your thoughts on this. Being in India and so forth, I imagine that there are a lot of opportunities for locals in your country to work with any country across the world. For instance, there are a lot of gig work platforms and so forth. Have you heard of the employee-of-record model of companies like this?
Not in the same format, Sam. A common model here is for companies to have almost like an outsourcing model where they provide you with the staff whose background checks are done and they’re on the payroll. Let’s say they give you ten employees, they’ll give you a certain fixed fee for it and that’s about it. The compliance, the payroll, and everything gets taken care of by them but in effect, those people would then report to you. From a reporting standpoint and a performance evaluation standpoint, they would be almost like employees. In India, we’d call them contractors, but not the US definition of a contractor. That’s how it would work. In certain ways, I can see that being similar to the PEO model, but not an exact replica.
Part of the advantages of the employer record model is unlike a good worker or even hiring a contracting firm. Can you customize the experience for some of those employees that you may be hiring through that employer record model?
From our standpoint, our contract is month to month. They pay month to month. They can get out at any time. However, we keep the KPIs on them. Even though they’re working and they are employees, we still see them as they’re working for that company and we want them to be included in that company. What’s nice in South America is the time zone. They work 45 hours a week in the same time zone as our clients in the United States.
Going back to customization, pretty much the employer decides. Let’s say, they don’t want them to work 45 hours a week. They can give them vacations or breaks or they can structure it to suit their needs. Even though those employees work a full year without any vacations, the employer can decide, “I don’t need you for this week or that week,” and give them some time off. It’s pretty flexible from that end.
As far as what the future holds in this particular industry, do you see any new trends that are on the horizon that service organizations like you can help agile startups to provide more benefits and solutions for their people? What’s on the horizon in your industry?
There’s a lot of consolidation. A lot of companies buy each other. The technology is extremely competitive. Everybody is trying to get the best-in-class technology every year. That’s great news for our clients and the employers because they’re going to get the best technology that’s out there. From a benefits standpoint, in the United States, that changes all the time.
The benefits change, depending on the rules and regulations, but the advantage to the employer is they don’t have to deal with that. They let us handle whatever changes come into place so they can just run their business and not have those things. You mentioned startups. Startups don’t have time to put all of this in place. All they want to do is grow, recruit, and run their companies. By offloading and outsourcing a lot of those features, it helps them get to where they need to be a lot faster.
One of the things that I’ve been thinking about is the world is changing so quickly. There are new trends that are coming up and new technologies such as artificial intelligence and things like this that are coming along. A lot of organizations are focused on upskilling their talent so that they’re prepared for the future. For an employee-of-record model where, for instance, the different partners of VensureHR are employing these people who are working for our companies, how do we ensure that they’re developed? Is the employer of record responsible for the development of those employees or is that upon your clients to do? What does that look like?
It’s a little bit of both because they’ll get training through us by being employees of ours. At the same time, if that employer has his own employees do training programs, he can include the employer of record higher and have them go through it as well. We can help set that up and make sure that gets taken care of. AI is huge. Every company is looking to see how they can implement that. We use that for job descriptions. We use that from our applicant tracking standpoint. It’s already being integrated with a lot of the software out there.
As we wrap up the discussion here, the main premise of our discussion is how we help small emerging companies be successful and do what they do best, focus on their clients, and have an organization like you to help them with the administration of regulations and so forth. What do you want to have our audience walk away from this discussion? What do you want them to think top of mind?
There are other avenues out there that can help. If it’s not us, there are other players out there that can help them get to where they need to be. They don’t need to do it all themselves. They don’t need to do all the hiring themselves and set up all these different silos from their standpoint. It takes time out of their day. It gives them headaches. There are other avenues where they can go and get that done for them so they can focus on that growth.
Alex, for anybody who is tuning in and may want to learn more about PEOs, how they work, and what are services included in there, what would you recommend for them?
Reach out. What’s nice is our company is not all in a box. It’s not all or nothing. There are different avenues to go. We can do payroll only. We can do human resources only. We can do an ASO model where we handle all of that under their ID number. There are plenty of different ways to go. It’s not a one-shop fits all. It’s a lot of different solutions.
Good to know. It’s been a pleasure talking to you, Alex. Thank you for being on the show.
I appreciate you having me. Thanks, guys. It’s great meeting everybody.
Take care, Alex.
Take care, everyone. We’ll see you next week on the People Strategy Forum. Thanks for tuning in.
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About Alex Wardlaw
As an eleven time President’s Club winning consultant, My team and I work with Business Owners, CEO’s, and CFO’s to utilize outsourcing strategies to refocus efforts on tasks that can help them grow their company and increase revenue, while protecting them from risk. Streamlining business operations and outsourcing can help you turn from a capital expenditure to an operating expenditure model. My goal for my clients is to help them save time dealing with non-revenue producing tasks, reduce liability, reduce labor costs, and ultimately increase profitability.
