What's the most difficult part of owning a business? According to 40% of business owners, it's bookkeeping and payroll. It makes sense. Not only is payroll a time-consuming and repetitive process, but 78% of workers live paycheck to paycheck. This leads to 49% of workers to look for a new job after just two simple payroll errors.
The construction industry is already dealing with labor shortages. According to McKinsey, construction productivity has fallen by over half of its 1970s height — and a leading contributor to shrinking productivity is a global shortage of construction labor. There are around half a million open construction positions with no one to fill them. In other words, payroll errors can have a significant impact on your ability to hire and retain talent. And in a hyper-competitive ecosystem like construction, those retention difficulties can put you at a serious competitive disadvantage.
Of course, payroll errors don't only impact your hiring practices — they create chaos throughout your entire business. 40% of SMBs incur IRS penalties related to payroll, and 54% of employers openly admit that there's room for improvement in their payroll practices. Luckily, construction business owners don't have to pour their valuable growth time into payroll headaches. PEOs can completely take over your payroll burden, giving you an error-free payroll framework that keeps your employees right where they belong — at the construction site.
2. Affordable Healthcare
Let's be forward: health insurance is expensive. Benefits represent 30% of your total employee expenses. And healthcare is the biggest shark in the benefits ocean. Even scarier, SHRM predicts that health costs will rise by another 6% in 2020. For smaller construction companies, healthcare is one of those necessary costs that impede your ability to remain competitive in the talent marketplace. You don't have the bargaining chips to secure best-in-class healthcare rates like major enterprises. So, you end up paying more for benefits than some of your global competitors, which is reflected in your ability to offer competitive wages.
PEOs turn this problem upside down. Since PEOs partner with many different construction companies, they can pool the workers from all of their clients together to secure better rates at the benefits negotiating table. It's economies of scale. PEOs help you secure lower healthcare rates, which gives you more liquidity to improve operations, increase wages, or secure additional, value-added benefits.
3. Premium Benefits at Lower Costs
Obviously, health insurance isn't the only benefit you have to deal with. You probably have dental and vision as well. But you may also have some of the premium benefits like life insurance, skills development, and pension plans. The more, the merrier. Companies rated highly on benefits see 54% lower attrition, so being able to find a nice balancing act between wage and benefits is crucial for construction companies already dealing with a fickle labor market.
Like health insurance, PEOs can help you secure best-of-breed premium benefits at lower rates than your competitors. Of course, this gives you a competitive advantage in hiring, but it also keeps your existing employees happy. And happiness is magical. In fact, happiness alone boosts productivity by 12% — which helps you reduce costs, satisfy clients, and create a more holistic, communication-based work culture.
4. Benefits Administration
Yes. PEOs leverage economies of scale to secure better benefits at better rates. But that's not the only way that PEOs can help you manage your benefits ecosystem. They also provide administrative assistance. Securing benefits is just the first step. Employees still need to fully understand those benefits. Around half of employees don't fully understand their benefits.
PEOs can set up self-service portals for employees, which allow them to review benefits, change tax information, and view pay stubs. In addition, PEOs will handle the benefits selection process — which is ripe with confusing terms, hidden costs, and tricky language.
It's probably easiest to think of PEOs as benefit knights. They completely handle your benefits so that you can focus on more important matters— like nailing that next contract.
5. Regulatory Compliance
It's time to talk OSHA. We know! There are other compliance needs that construction companies need to meet, but, without a doubt, OSHA is the top concern. The current crop of OSHA fines runs as high as $34,937 per repeat violation. Plus, each violation will land you in OSHA's regularly update public enforcement section of their website.
So how can a PEO help you avoid OSHA violations? In multiple ways, including:
- Helping you create OSHA training courses
- Providing you with assistance during OSHA walkthroughs and creating mock walkthroughs
- Helping you follow on-site OSHA guidelines, including safety postings
- Helping your business understand your rights when OSHA inspections happen
- and more!
Having a PEO in your corner is a surefire way to improve your overall OSHA safety posture, which can reduce fines, alleviate compliance concerns, and improve your overall safety culture.
6. Unemployment Claims Management
87% of fraudulent employment claims happen due to reporting errors. When your past employees file for unemployment, you need to submit clear, concise, and correct claim information to safeguard your practice against fines and penalties. Even before the current pandemic, unemployment rates in the construction sector were on the rise.
Chances are, you'll have at least one past employee who files for unemployment. When that happens, you need to be prepared. A PEO can help. By taking over your claims framework, PEOs can ensure error-free unemployment claims management. Remember, your business is an expert at managing construction. PEOs bring administrative talent to that table that deeply understands the complexities of claims. Pair them both together, and you have a winning relationship.
7. Workers' Compensation Management
Workers' comp is another area that can be confusing for construction companies. Should you opt into programs with the lowest possible rates? Or should you focus on your experience modifier to secure government contracts? How do you handle claims when they arise? And what workers' comp legal requirements do you need to follow on a local, state, and federal level?
PEOs answer all of these questions. In addition, PEOs can help up secure workers' comp insurance plans, freeing up critical cash-flow and liquidity for operating expenses. Instead of dealing with confusing terms and expensive deposits, PEOs will set you up with a plan using economies of scale that you can pay for monthly, giving you the freedom to evaluate your needs at every turn.
PEOs Mean Success in Construction
In a nutshell, PEOs handle your HR administrative burden. From payroll to compliance, benefits, and insurance, PEOs will help your construction company compete with your larger peers. Why shouldn't you be able to offer premium benefits like retirement plans? Why should you have to pay 2x more than your larger counterparts for healthcare? And why should you have to focus on boring administrative tasks instead of growing your client list?
Want an example of how complicated some of your benefits are? Learn more about hidden costs of retirement plans by downloading "Do You Know How Much Your 401(K) is Really Costing You?"
