Despite the American Recovery and Reinvestment Act's infusion of $27.5 billion for infrastructure spending on highways and bridges, the ripple effects of the September 2008 financial crisis on the construction industry and its distributors persist. Based on other market indicators, the road ahead will still be rocky:
- The Associated General Contractors of American projects that state Departments of Transportation's highway construction budgets for 2011 will drop between 30 and 50%.
- Home builders' confidence was recorded at an all-time low this summer following a decline in housing starts which began after the end of the first-time homebuyers' tax credit program.
- The National Association of Home Builders (NAHB) is forecasting an improvement by year's end and into the next decade. The NAHB's Vice President, Economic Analysis and Forecasting Bernard Markstein noted, "I predict a slow recovery back to normalcy, which is 1.5 million starts per year, over the next 10 years."
- Rising construction material costs have leveled off, but the effect on sales remains.
For construction distributors, these and other market conditions demand that they manage their businesses at the highest level. That means management needs to focus on core revenue-producing functions. Additionally, they must assure that overall operations are at peak efficiency and that there are no unnecessary costs or exposures incurred. These are primary reasons why many distributors turn to human resources (HR) outsourcing.
What's involved in HR outsourcing?
When done properly, HR outsourcing is a seamless, reliable service. Professional Employer Organizations (PEOs) are the optimum choice for an HR outsourcing partner. Most states require that PEOs be licensed or registered in each state in which they operate and the best among them also hold an important credential: certification by the Employer Services Assurance Corporation (ESAC). ESAC is an independent, non-profit organization established by the National Association of Professional Employer Organizations (NAPEO). It was developed to serve the PEO industry through its accreditation and financial assurance programs. ESAC certification is to the PEO industry what FDIC approval is to banks and SIPC is to security firms. To achieve ESAC certification, a PEO must meet stringent financial, professional and ethical standards. An accredited PEO is covered by a $1 million bond held in trust by a major national bank which backs the PEO's performance in accordance with its contractual obligations. Additionally, accredited PEOs are covered under the excess coverage held by ESAC in the amount of a $10 million surety bond.
An ESAC-accredited PEO provides its clients with a comprehensive solution to all HR-related matters. Included in the PEO's HR services are: payroll, tax and employee benefits administration, regulatory compliance, Workers' Compensation, unemployment claims, Employee Assistance Programs and value-added employee services ranging from discounts for transportation, shopping, travel, entertainment and fitness clubs to college tuition assistance, etc.). With a PEO onboard, construction distributors gain access to experienced, highly qualified HR professionals many of whom hold advanced credentials such as those provided by the HR Certification Institute (Alexandria, VA) including the Professional in Human Resources (PHR) designation and Senior Professional in Human Resources (SPHR) designation. They also benefit from the PEO's application of advanced HR Information Technology management solutions which afford secure online access to benefits information both to management in the form of reports and employees who can access their personal account and health insurance claims information directly on a 24/7 basis through their PEO's website.
Probably one of the most common reasons many companies elect to outsource their HR function is to access a better selection of employee benefits than they could as a single, smaller entity. Especially today, in our post-healthcare reform era with the passage of the Patient Protection and Affordable Care Act, more businesses are seeking the best and most cost-effective healthcare plans. Under a PEO, the options can include consumer-driven healthcare plans with higher deductibles and lower premiums. The PEO's offerings also may include health and wellness initiatives to encourage employees' healthier lifestyles, which, in turn, help contain insurance costs as well as absenteeism and its related effects on productivity.