Welcome to The PEO Podcast where we interview industry leaders to discuss all things, PEO’s. From compliance, to technology, to client relations, and everything in between. I'm your host Andreas Deptolla.  

“When you're working with a small business client that we're working with three or four other salespeople. And so you realize you're not really as part of the.

[00:00:26] Dynamic strategic discussions potentially that the business is having internally. And for me, I just knew that I wanted to you do more. Hello and welcome to another episode of The PEO Podcast. Today, I'm joined by Bryan Bridgford, founder of PEO Concepts. We'll dive into his business model, criteria to select the right PEO, and how the growth of HR software is changing the industry.

Morning, Bryan, welcome to the show. Thank you. Appreciate it. Nice to be [00:01:00] here. Start off with you. Have an interesting journey, uh, into the, the PEO industry. Right? Tell us a little bit about your background and how you entered the PEO industry. Yeah. I mean, so the PEO industry was certainly not on my radar, 15 to 20 years ago.

[00:01:18] I originally am from the DC area DC metropolitan area. And I've lived in Colorado after college for a number of years, obviously for the skiing and the, just really the outdoor lifestyle. I moved back to the DC area and really, I had spent several years in my early professional days in a financial services industry, working in money management, and I got burned out.

[00:01:41] And did some extensive international traveling. And when I got back, oddly enough, I just used some of my just general life passions and ended up in the ski industry at a, at a high-end a ski shop in the Washington DC area, a very well-known, uh, [00:02:00] shop called a ski center and working there for a couple of winners, uh, learn some really.

[00:02:05] Uh, interesting skills around boot fitting, you know, ski, boot repair, and did a lot of us, you know, ski equipment testing over the years, you know, as part of a process that really kind of got me into sales and sales really is where I sort of gravitated into, you know, working for myself and the insurance business that that's sort of like how I, I gained that initial foothold.

[00:02:30] Realizing that that sales was a career that, that could take me different places and, you know, sort of a roundabout way because of insurance. I ended up in the PEO space. Tell us more about that. Jump from a ski shop and you discovering your passionate about sales. Too, like you're landing your first sales job at the PEO industry, which, which company was that?

[00:02:51] What was the process like? And, and, and, um, yeah. What, what was, what was exciting for you for, for, for that, um, you know, [00:03:00] transition. Yeah. So, you know, when I, uh, started in insurance sales is probably about a year after I started and maybe a little bit less. Uh, I was introduced to a small national PEO in the Maryland market, just outside of DC.

[00:03:16] And they needed, uh, an, a manager to handle the ancillary insurance program for their PEO, but I didn't know anything about PEO at the time. So that was my first foray into the industry. And I parlayed that relationship into a logistical move back to Colorado because they had us office out here and within a year.

[00:03:38] That experience and working with insurance and with a PEO and how they were interacting with their clients, led me into PTO sales because I understood the industry in a appropriate capacity. I had the insurance background and benefits background. And so my first professional job in the PEO space with.

[00:03:57] Was with Oasis outsourcing, which was one of the largest [00:04:00] privately held PEOs. At the time currently, they were acquired more recently by Paychex. So they're sort of the national public traded space now, but that's how I really got into the, to the industry. And w what most of your role at, uh, at Oasis, tell us more about that?

[00:04:17] The title was employer consultant. After four years, I consider myself as a senior. Employer consultant, but basically business development, you know, sales development, you're, you're the front end of the interactions between your prospective client or the PEs prospective client and creating a relationship before that business, uh, in the piece.

[00:04:38] Now you, you, you own your own company, right? So that's another transition essentially in your career. What, uh, what led to that decision and to that move when you were assigned. One good thing about the, the role at, at Oasis is that they had a channeling program, a channel partnership type program. They were certainly early in, in the space to do that.

[00:04:59] And [00:05:00] what I realized in my role in sales, one of the frustrating aspects of it, it sets a bit commoditized. You know, when you're working with a small business client, they're working with three or four other salespeople. And so you realize you're not really as part of the. Dynamic strategic discussions potentially that the business is having internally.

[00:05:20] And for me, I just knew that I wanted to do more, you know, for the client be more. And I knew that there was a gap relative to their own expertise relative to the industry, what their knowledge base was with the industry. The lack of time that they had internally to manage just going through proposal development, uh, taking time to sit down for a meeting to, to receive that information was, uh, was a big challenge.

[00:05:48] And I knew that there was this gap it's sort of like started forming in my mind. The Demmer on the lamp was just going brighter and brighter. And I knew that there was. I can parlay all my knowledge and experience because I learned a [00:06:00] ton from my colleagues. And during those four years into something that was a little bit more unique because there was a need that there was value that I knew that I could create for the small business.

[00:06:11] It just didn't have enough time. Didn't have enough expertise and was, was in need of that. That's kind of what led to it. So, so you started PEO concept about 10 years ago. Tell us about like the current business model of PEO Concepts. Yeah, absolutely. So, you know, PEO Concepts we don't, or I don't operate as a PEO.

[00:06:35] So I provide, uh, an agnostic PEO selection and that, and service really operating as a, as a middleman, if you will, to help facilitate the process that a company goes through to evaluate what is really a complex and really important partnership when they engage in it. So there's a lot of areas that someone who has [00:07:00] specific expertise like this.

[00:07:01] It's going to provide a lot of value. And so that's sort of the design of, of the business. You know, generally the way I sort of control the relationship with the client, it is a very specific consulting arrangement. So I have a design consulting agreement. I, you know, there's a scope of work that's decided upon with the client.

[00:07:23] There's a couple of strategic means that even the curve before you even kick off a project. So the initial thing is really just do they have the need for what I do and my service, and can I help them? So that that's a big part of sort of the starting point to determining a working relationship with it.

[00:07:40] With any perspective client. What summarize, you're essentially a consultant to employer groups, right. To find the right partner on the pure side. What is typically is scope of the engagement? You know, obviously there is the initial selection process, right? As an employer group, I'm thinking what to do, whether to talk with the PEO or [00:08:00] not.

[00:08:00] I wish PEO’s is the right partner for me. Do you then. Somebody selects a PEO also engage with the client then on an ongoing basis, or is the focus really on the initial assessment consulting and finding the right home for these employer groups? A lot of the companies I work with are a little bit more complex in nature.

[00:08:23] There's sometimes a little larger. So, again, that time constraint is usually a big driving factor, but they don't have the time, but they definitely have the need to do some type of evaluation. Whether they're looking to use a PEO or there are NLP relationships. So the benefits market is fairly complex.

[00:08:39] And so an health insurance is a big value proposition to the PEO space. So they need robust analysis in that. Area I've maintained my insurance licenses since I started my business because of that factor, knowing that I need to pull that data from market to do comparisons and help them with analysis, obviously in the [00:09:00] PEO relationship there's administrative fees, there are tax implications.

[00:09:05] There's workers' comp implications. There's underwriting specificity and documentation needs, that can be broad and complex. And so you're really spending time outlining the reality of the timing of that type of project and my work scope, right. It really is involved in managing like 80, 90% of all of that, or to get the client to the face-to-face meetings with their prospective vendors, so that they're had a set of knowledge.

[00:09:36] Um, helping facilitate those discussions, if, and when they do make a selection, I do provide ongoing support to the client. I mean, I've found that there's a lot of value, both for the PEO and the client to be a mediator in some capacity in certain instances. I certainly am not involved in any day-to-day servicing or those kinds of issues, but sometimes problems come [00:10:00] up and they need a little bit of an extra insight as to how to solve that problem.

[00:10:04] And so I can then provide some support to the client, into the PEO to help them come to a resolution. If a client has a problem and it's a big problem, or I see it's a big problem. Then it's very possible that that PEO may have other clients that have that same problem that they may not be quite aware of.

[00:10:22] So I usually look at it as a win-win for my clients and, and the, the strategic partners I have in . What's kind of like the ideal client profile for you in terms of industry size, complexity, maturity level, where does it make sense for a company to engage with you? Uh, generally what I've found, especially over the last four or five years, maybe four years or so, most of the client engagements are companies.

[00:10:47] I would say like 75%. They're already using a PEO and they're just not quite getting exactly what they need services. And quite there, their costs are maybe a little [00:11:00] bit out of line, but they just haven't gone down the road of determining. A market comparison or doing some type of market comparison. So they don't really know where they stand.

[00:11:10] Typically they're in the professional class tech companies, you know, or, or startups that are, you know, into their series, B C D they're growing pretty rapidly. They're in a multi-state environment. So their business is complex in terms of technology needs. Resource needs. There's this desire at the executive level, typically to have a better understanding of where they're positioned in the market.

[00:11:34] And that's where most of my value is going to come into play. It's going to really give them better tools and a better understanding of where they, where they sit. So, Brian, you obviously have many, many clients that are trying to evaluate. Who's the right PEO partner. I'm sure pricing is always an issue.

[00:11:53] Right. But outside of pricing, right? What are typically the criteria that you look at [00:12:00] together with your clients to evaluate is this the right PEO partner for an organization? So I think some of the primary criteria outside of the price benefits. And it's not just the price of benefits, price of health insurance.

[00:12:14] It's the robustness of the benefit offering. Does it satisfy a client that realizes they're in a tight labor market? They have talent acquisition issues. They need to distinguish themselves from competition. So benefits beyond just premium. But the complexity of those benefits, those offerings is really important on top of that service obviously is, is connected to the type of client and how they communicate.

[00:12:43] Do they communicate more through the use of utilization? Do they, you know, one face-to-face consultation, you know, response times. And the localization of those resources. I think there are some of the larger national [00:13:00] PEOs have moved more towards service and their models that they still have regional sometimes local law localized office of service delivery, but sometimes a company let's just say they they're 35 employees and they're all in one state.

[00:13:16] Well, the reality is that they don't well known from a marketing perspective. PEO they're likely to be in a better partnership with a localized firm, understands the market, understands their type of client. You know, culture certainly has a component to it. Young, fast paced startup VCPE backed firms in the tech space.

[00:13:39] They don't need to be with a type of PEO that's accustomed to handle it in your clients. There's a ton of face-to-face service delivery. They need good technology. They need some better automation, data analytics, things of that nature. Uh, and again, the benefits is important. So that, that all comes down to, you know, suitability from my perspective, which is [00:14:00] a, that's a term that's used quite a bit in the, in the insurance space, but that's certainly very appropriate within the PEO space as well.

[00:14:07] Totally makes sense. I want to go back to the first point that you, you mentioned in your answer, it was about benefits, right? In order to attract and retain the best talent, you know, outside of the health insurance. Right. What trends do you see on the market right now for benefits? What is kind of like the new insects benefits that, uh, employer groups are looking for?

[00:14:28] I think in this in either sales personnel and a PEO space, we'll sometimes mention that they have pet insurance where I see a lot of like corporate benefits going is more wellness. You know, related initiatives. I mean, it just, you know, in the last year, the level of stress and it's created, companies are needing and they're more specifically focused on those types of resources.

[00:14:51] Um, you know, in addition, it's, it's really just having a complex array of, uh, corporate benefits and then. Things [00:15:00] th that the other thing that's kinda come to mind is, you know, tuition, reimbursement, student loan assistance. There's some programs around that. So PEOs that have stayed at the forefront of the development of different benefits.

[00:15:14] They're on top of that, and they're there they're leveraging partnerships with different companies to provide something that's a little bit more unique than just health, dental, vision short, and long-term disability. Uh, having more resources. Uh, for, for the employees of their clients is certainly something that is desired.

[00:15:33] And, and they're looking to fulfill, you also mentioned in your ancestor service, right? It's a service that the PEO is providing and, you know, regardless of your industry, you always heard his service, right. As it's a major factor, you know, many provide us promise, Hey, we rip the best service in the world.

[00:15:50] Right. But like, how do you measure that? How do you quantify the service levels? In the meetings that, um, I've participated in, in the last 10 years, there's [00:16:00] a, there's a consistency of the theme of client retention and more recently high net promoter scores. But my perspective is that PEOs service cars up and down.

[00:16:12] It's not a static thing. It's different at different times of the year, based on their internal client workload plan, acquisition workload what's happening in the market is the PTO growing through acquisition. Are they growing organically? Those things all have a bearing on it. So it is somewhat difficult to keep very clean tabs on that.

[00:16:35] But. Because I'm interacting with my clients that I've placed with PEOs on a somewhat regular basis. I get a sense of what's happening consistently and I'm trying to determine, and all of those conversations, are they systemic issues or just one-offs. And that is I think where my, some of my unique perspective.

[00:16:55] Helps clients better understand what they can expect from service [00:17:00] delivery. A lot about an employer group that might want to, um, have a partnership with Swiss appeal, right. And, and how that can be evaluated. Right. And health plans can come to a conclusion who swiped partner without naming him names.

[00:17:16] Yeah. I'm sure you also had clients where the, where was the PEO and. You know, the, the service just wasn't there or from a cultural perspective, it wasn't a good fit. Tell us more about that. Like, how has that typically discovered how these things corrected? Yeah. If you have something in mind, right. A case or whatnot that you're walked on, that would be super interesting for us to, to hear normally when that type of issue comes up.

[00:17:42] It's. Something glaring to me because I've been in the industry for so long, but for a casual observer, they wouldn't think anything of it. The example would be, uh, it was actually a recent case in the last six to eight months, a company that was in the property management industry. So [00:18:00] when you think of that, you don't, you think of a, sort of a mix of a little bit of blue collar, a little bit of white collar, maybe call it gray collar.

[00:18:08] And they are, they were with a PEO that they actually inherited because they were with a smaller PEO that was a good fit for them at the time that smaller PEO was in acquired by a larger PEO, that really just has a different overall industry focus. And so that cultural sort of disconnect became glaring.

[00:18:29] At least to me, not as much to the business because they, I think they procrastinated a little bit over time and doing an appropriate evaluation. Were they in a good fit, but essentially you have a company that's in a gray collar industry. That's with a PEO that's really focused on tech professional class.

[00:18:47] So it didn't quite sort of work from a cultural perspective and just from a delivery or a service delivery perspective. So. It was glaring to me or at least, you know, I recognized it early [00:19:00] on. And within the proposal development process, the principal at the firm, interestingly enough, wanted to talk to three companies that were sales.

[00:19:10] People had been in contact with them and each of those PEO’s for various reasons, but were not from my perspective, we're not a good logistical cultural and service. Based fit. And so we talked through that. Why each, you know, and I th I believe one of them was included in the process due to commitments. He had provided to, uh, some sales personnel there, and we included them in the process, but it became glaring as, as that project went on that of more.

[00:19:38] You know, so of a localized approach, uh, com you know, companies that have a little bit more risk expertise, a little bit more of a broader client base within the property management industry was a much better fit for me, there's business. And ultimately, as they've gone through the selection process, and they've been planning for six months, it's just a better working relationship, a better partnership for.

[00:19:59] For that [00:20:00] company, you're obviously in touch with a lot of what I would call, like best-in-class PEO’s maybe tell us a little bit what you're seeing, what the leadership teams of these PEO’s are doing differently, right. In order to keep being, you know, On top, right? And that, that top, uh, tier of the PEO market, the best in class PDO is that, that I've seen there from a consistent perspective, relative to service their pricing, their benefits are managed in a, in an effective way.

[00:20:30] They really understand that. In this market, especially with, with the type of competition that exists in the HR software space, HR technology space companies that are in the payroll space that their value proposition must be executed consistently instead of consistent performance is really, I think what sets the top class or the top tier players in the market.

[00:20:53] More so than again, you know, companies that it might have some bumps in the road, and there's a little bit of up and down. They're heavily focused [00:21:00] on really good technology improving on that technology consistently, because again, there's so many companies that have come into the space that are not just PEO’s, but they are uniquely using an, an HCM system and technology that is.

[00:21:15] About time for platforms together. And historically that's what a PEO was able to do for his client, payroll benefits, worker's comp their retirement plan, all sort of tie together within a single dashboard. Now there are a multitude of companies that started off as software companies that are in that space.

[00:21:33] So that's probably the number one thing. And then the secondary thing would really be the benefits that they're really on top of. Providing a broad array of really good health and again, ancillary and corporate benefits that uniquely positioned their clients for talent, acquisition and talent retention.

[00:21:52] And that's talked about commonly, I think, in the insurance space, but PEOs, they execute on it better than really any other [00:22:00] industry. From my perspective. You mentioned technology as, as one of the, uh, differentiate or focus areas. How is the industry right now effected by technology change, but what, what, what kind of trends do you see?

[00:22:14] Well, you know, from a technology perspective, they, the reality is it's such a broad industry. You know, there are just a ton of countries, you know, companies in the HR. No software space and the technology space. Again, going back to sort of how PEO has always utilized technology to his advantage. There are multiple you'd have companies and industries that are really just a nipping at their heels, integrating payroll and benefits administration tying in together, applicant tracking performance management and LMS.

[00:22:45] The, the reality that when you see survey after survey of each small and mid tier companies, They're managing multiple systems. They're managing, you know, upwards of five to seven systems. And the PEO industry has sort of was [00:23:00] on the forefront of that. But because you have companies like rippling, namely Zenefits, Gusto, these companies really saw see that a unique simplified the dashboard in HCM that ties together a bunch of these different core areas of John functionality is, is real.

[00:23:20] There's just a lot of value there. And I think that that's pushing all of the industry in the upwards direction, which is really healthy for, for small employers and companies that. No want to look to get that type of a platform. I'm hearing it's consolidation integration. The automation of services is becoming even more relevant, right?

[00:23:40] With spas, a certain breadth of services. You mentioned a couple of interesting names, right? Yeah. Was, was rippling, namely, and specifically rippling being a more newer player in the PEO markets. What do you see there? Like. What are these new entrance to the market? How are they innovating and disrupting the market?

[00:23:59] And what can [00:24:00] maybe, um, some other more traditional PEO’s drawn from that? In my role, I consider them a startup. So I'm a little more, but that's just a dynamic that I focus on, right? Like in the PEO space, there are well-established players. There's also new entrance. And that's a fact that you just can't avoid what's unique or what I've found Nique and my involvement with them and interactions with them so far is that they really have just a there again, they're kind of a technology company.

[00:24:30] That's going the HR route that just creates a completely different dynamic for different types of businesses. That, you know, maybe wouldn't necessarily think of a PEO I believe from what I see or what I've seen relative to their technology and how it's really sort of a widget based technology bringing best in class resources within the LMS applicant, tracking forms, management space, and sort of tying that together is really unique.

[00:24:56] And that's pressure on legacy PEO’s. [00:25:00] Pricing transparency is something that, you know, a company like just works. I mean, they put their pricing on their website. I mean, it's very clear the, the, these newer entrance into the space are forcing conversation to be more open and transparent relative to pricing technology and its capabilities and finding the right need the clients that that's what they need or that's what it's going to fit best for them.

[00:25:24] It just becomes more apparent when you have uniqueness. In the PEO space and those companies provide that. Absolutely. You talked a lot about like these, these new entrance into the market, right? You're rippling being one of them. You said like maybe a little more of a technology startup company. What, what can the traditional legacy PEO’s do proactively in order to compete here?

[00:25:49] Right. Well, that is an innovative pricing strategy, whether this is. Owning a niche market. What, what have you seen PEO’s doing successfully here in order to [00:26:00] stay, um, on top of the market? So, so w what I've seen, especially from the, the comments that I made about sort of the competition HR technology space, is that PEOs are aware of it.

[00:26:13] They, they, it, it certainly puts pressure on their profit margins pricing strategy. You know, it's, it's certainly not the same exact resource when you're talking about, uh, namely a sort of a standard rippling Gusto and tenements. Those are more self service sort of HCM systems, but the robustness and the slickness and the visual component, the mobile.

[00:26:37] Aspect of that has really made PEOs realize that they have to be proactive in technology development. They have to really spend more time making sure that their systems are competing and competing with mid tier capabilities. You know, companies like pay or Paylocity. These companies have the vest, you know, they've invested [00:27:00] millions.

[00:27:00] Into improving their technology platforms so that they can be fully integrated with and handle benefits and payroll and comp. And again, the applicant tracking to LMS the performance manager. So PEO’s they just have to be on top of it. And I, I know that from the conversations that I've had with my partners, that.

[00:27:23] There are some videos that have, they have proprietary technology that they invest in. They have software developers on staff. They have people dedicated to their technology backbone, and there are PEOs that are smaller in nature that white label products like prison, prison is a provider, a big provider of HR technology and the companies.

[00:27:44] It was very forward-thinking relative to that. And so PEO, so when they're selecting software partners like a prism, you know, like, and I saw the, probably the two main players in the PEO space, that's a, that's a key factor. And that's really going to help [00:28:00] PEOs continue to push on their value proposition because when their technology.

[00:28:04] Is working in an optimum way. It allows all the other services that they provide helps distinction relative to their value proposition, how they stand out in a world of HR software that are, that they're really a full service HR provider. But there's more to them than just our technology, right? So much for all the valuable insights there about the PEO industry and what criteria to look for when selecting the right PEO and also providing us with some insights here about like strategy and the new entrance to the market.

[00:28:37] Super valuable. Thanks again for being on the show today. My pleasure. Thank you. This podcast is sponsored by ThrivePass, a trusted PEO partner for employee benefits from pre-tax accounts, to COBRA administration, ThrivePass empowers employees to strive through exceptional service and innovative technology. More at thrivepass.com.  

[00:29:00] Thanks for listening to today's episode, don't forget to subscribe and visit us at peo-podcast.com to learn more. I'm Andreas Deptolla. We'll see you next time.