#HRTechChat: John Dnyprowsky & Ryan Shapiro on Why PEO Buyers Need a Translator

[00:00:00] Hi everyone, welcome to HRTechChat. I'm Nicole Roberts, Analyst and Advisor with 360 Insights. Today we're talking about a part of the HR systems ecosystem that will, I will readily admit, I didn't quite know much about it until I started doing this research, which is also why I love the work that I do with 360. And we're going to be talking about PEO brokers. So most HR leaders understand the role of a benefits broker. We certainly understand why organizations

[00:00:29] turn to trusted advisors to help navigate benefits, insurance and other complex workforce decisions. But there's an entire ecosystem of advisors helping organizations to understand and evaluate PEO solutions. And as I learned through our recent research, there's still a significant amount of education needed in the market about what PEOs are, how organizations should evaluate them, and where a PEO broker fits into that process.

[00:00:59] Joining me today to unpack all of that are John Dnyprowski with Venture Employer Solutions and Ryan Shapiro, President and Founder of PEOMG. John and Ryan, welcome to HRTechChat. Thank you. Yeah, thanks for having us. Before we get into the conversation, let's give everyone a little bit of context about each of you. So John, we'll start with you. Tell us a little bit about yourself, your role at Venture, and the work that you're doing with

[00:01:29] Venture's partner community. Sure thing. Thanks, Nicole. So again, John Dnyprowski, SVP of National Partnerships here at Venture. I've been with the organization for about seven years now. In the industry, however, for 25. Started my career many years ago in the HCM space up in the New York market, where I'm originally from. I live in Atlanta now. But a lot of the business that I had conducted over the years was predominantly through partners.

[00:01:59] I've been here at Venture for the last seven years. About a year and a half, almost two years ago, I was asked to step into a role specific to growing our channel and partnership lane. So in my role, I work with folks like Ryan and others, peers of his, folks in other partner types as well or different cohorts like accountants, bankers, associations, consultants, life and health brokers, P&C brokers.

[00:02:27] And my sole responsibility is to ensure that we're holding ourselves accountable to not just the client, but to the partners as well, and driving as much opportunity as possible through that channel. Love that. Thank you. Ryan, same question for you. Tell us about PEOMG, the work that you do with organizations evaluating PEO solutions, and also the PEO brokers collective, because I definitely want to come back to that later in our conversation.

[00:02:56] Yeah. So PEOMG is a PEO and HR outsourcing consulting firm. Probably the crudest way to say it is it's a PEO brokerage. And we started coming up on our third anniversary. During that time, we've had the opportunity to work with many, many, many companies and many PEOs.

[00:03:16] And that's where, you know, John and I naturally connected and started that with my business partner, Rachel, really with the vision of taking our customers through the most curated and impactful evaluation of PEO marketplace to identify and ultimately select that most tailored solution for them and their employees and their needs. And so we've been really busy in doing that here for the last three years.

[00:03:42] And along the way, part in combination because of some of our growth, part because of our brand and positioning and also our own podcast, PEO Speedwagon. And we love the puns, so it's somewhat obvious. Love it. We started connecting with lots of new brokers as new brokers were making their way into the market and either leaving PEOs or just finding PEOs a really great place to put their energy and talents. And so we started connecting with lots of these folks.

[00:04:11] And it was very obvious there was a big hole, which was a community in this PEO brokerage space. And so the idea of the PEO Brokers Collective was founded, which is a 501c6 nonprofit trade association designed at elevating the entire industry of PEO by empowering its brokers through collaboration, education and community.

[00:04:35] And so I'm the president and founder of that, along with Rachel McDougall and Fred Cramnall, who are executive directors of the organization. Awesome. So, Ryan, something that you said during our planning conversation really caught my attention.

[00:04:52] So you described kind of five different avatars of a PEO broker or, excuse me, of a PEO buyer, ranging from someone who is completely unaware of PEOs to someone who is actively evaluating them. And you also said that roughly 60% of your customers are in one of two categories, the PEO unaware and the PEO aware.

[00:05:19] So why do you think there is still so much confusion or at least so much opportunity for education around PEOs? There's a lot of opportunity because, one, I mean, it is small businesses. So the refresh rate of new businesses entering the market every year is significantly high.

[00:05:39] And now, you know, rather than prior decades, the adoption to outsource is more immediate than it used to be for new employers. Two, I think the barrier has come down somewhat drastically for, you know, legacy small to medium sized businesses that have never accessed a PEO to actually leverage it.

[00:06:03] One, not only for cost control, but two, because of our the post-COVID environment we're in, we're now employers, small business employers can access talent anywhere across the country, but still need to create a curated HR experience, cultural support, good benefits to attract and retain talent.

[00:06:21] And a PEO has been now seems much more attractive than it perhaps did in the past to some of those organizations who felt like they could handle it inside the confines of their office and 20 employees that are all there. So walk us through those five buyer avatars, because I think that that framework really helps to illustrate just how different the starting point can be from one organization to another. Yeah, absolutely.

[00:06:49] So we organize them as PEO unaware and PEO aware. And the difference between the two is somewhat obvious, but it's it's it's that they the awares have some awareness. It may not be fully accurate. It may be a misconception about what PEO is, but they at least know that the concept exists where unawares literally don't know that this model is out there. Then there's PEO curious, which is basically a PEO aware that is actively moving towards becoming a PEO customer.

[00:07:17] And then there's PEO active, which is currently in a PEO. So and then there's PEO know. And that captures a community that is either people who are just not a fit for different reasons. And that might be deemed by the PEO industry itself. It's a they're not a fit because that customer psychographic around outsourcing their need, the needs of their organization, maybe their high contractor model, you know, and don't see a need to pull that into an outsourced environment.

[00:07:46] Or they've been burned by PEOs in the past. And they said, we're never going to do this again. Those represent the nose. We we look at how do we change, you know, their belief system there in the right. But those would be the five. Nice. Nice. And then, John, you enter the conversation from kind of a different point in that journey. So Ryan's on the front line with the customer, understanding their needs and wants and priorities before a provider like Venture gets involved.

[00:08:16] So by the time they get to you, what do they typically understand about what they need? And where are you still finding that you're educating them? Yeah. So, you know, at a high level, of course, Ryan's going to and his team are going to and other brokers, by the way, are going to educate them on the philosophy around why a PEO, right? Benefits are around why leveraging a PEO.

[00:08:39] When it comes to the intricacies of our offering is when we really start to go through more of a discovery specific to venture, right? Luckily enough, we do educate our partners very well on our offerings, right? So they know where we are going to be a fit and potentially not up front, right? Which helps us even with the vetting process because the truth is not every PEO is a fit for every prospective client or SMB, right? There are certain PEOs that may specialize in certain verticals only.

[00:09:07] There are certain PEOs that have certain limitations, right? Can't carve benefits out or can't, you know, do something unique to the relationship. So, you know, education up front to our partners is key and having them have a good understanding.

[00:09:23] I've watched the evolution over the years where, you know, being in this business for 20 some odd years and, you know, predominantly 25 years in PEO specifically, not just HCM, working with brokers almost the whole time where it was just a cosplay, you know, before where it's just like less expensive medical and that's all they cared about. Now it's about the true value of what we have to offer, whether it's that they need things like time and labor management, applicant tracking, right?

[00:09:51] So when we enter into that conversation, right, luckily, again, our partners are educated enough to understand that we're a good fit and we can then, I don't want to say unleash, but really get under the hood with the client or prospect to give them a better understanding as to where else we can help, right? Ryan talked about things like staffing, right?

[00:10:13] We have a nearshore staffing solutions with staff augmentation that we can help fill up to 750 different roles for up to 65% less than what they would pay in a U.S. base wage. Not all of our competitors can do that. We have competitors that we don't. We have very specialty lanes sometimes when it's needed, like cannabis and staffing, right, or sports and entertainment. So, again, I think the right partner, right, and the right partnership between the PEO and the broker is vital.

[00:10:41] And education and a good understanding up front, just like Ryan and his team is going to profile a prospect, they need to profile the PEOs as well to have a good understanding as to where we can actually sit. Absolutely. And I want to kind of stop here and address something that I suspect some of our listeners might be thinking because it certainly was my reaction. And I know I mentioned it when we were on our call. I've been in HR, what, 22 plus years.

[00:11:08] And until I met the two of you, I didn't even know a PEO broker was a thing. So, no shame for any of my fellow HR people listening who are thinking the same thing right now. But, Ryan, what exactly does a PEO broker do and why would an organization work with a broker rather than just going directly to a PEO? Yeah. You know, a PEO broker can simplify this process.

[00:11:37] So, like, in our organization, we have this philosophy. It's Einstein's definition of genius. It's taking something simple and making or taking something complex and making it simple. And for an HR leader, they're navigating a lot of different things. One, they're having to learn PEO and if that PEO is the right thing. And is that approach of education that is being given to them, is that more sales tactics or is that more tactics of alignment?

[00:12:05] And that's hard for, you know, an HR leader or, you know, a business owner to determine. Two, I mean, we've been seeing this trend now for quite some time. Organizations are actively seeking third-party validation of their choices. And it's becoming more and more prevalent, especially as AI and other data sources are becoming available. They're actually looking for experts who can then distill that information and provide validation for the choices they make.

[00:12:35] And so, a PEO broker is kind of the intersection of both. One, do they understand this very complex environment and have the ability to make it simpler to understand? Two, it can help them provide that validation. And then third, they're able to bring options and insights. So, in order to determine if a PEO is the right fit for you, it takes some work. Like, you've got to go through the process.

[00:12:59] You have to go through the underwriting, the tech demos, the benefit alignment calls, the financial reviews, you know, understanding what the implementation process. And that's if you do it with one. And so, now you may need to, in order to serve the decision you're going to make correctly, you may have to do that three, four times over. Not forgetting, you have an entire business to run or an HR department to oversee and people to take care of. So, like, how do you manage all that time and energy that's necessary in order to do that correctly and then make the right choice?

[00:13:28] And so, a PEO broker serves as the ability to, again, simplify that process, solve for its inefficiencies, and then bring those options and those insights all in one package. And then, John, what does the PEO broker add from your perspective then? Why has Venture chosen to lean into that relationship rather than simply viewing the broker as another layer between you and the customer?

[00:13:58] You know, versus it being just another channel for us to sell through, it's also an accountability layer as well, right? And, you know, we're not just held accountable now to the client, we're also held accountable to the partner. So, that almost forces the PEOs to step up their game by way of service delivery, right? So, if I have 25, 30, 40, 50 clients with a partner like Ryan and I mess up on one of them and then I mess up on a second and I mess up on a third, right? I put the whole pool at risk.

[00:14:28] So, it does force us a little bit to, again, step up our game by way of our service delivery and some of the practices that we have. You know, we didn't have a very high concentration around our partner strategy until about a year and a half, two years ago, which has drastically changed not only our business by way of the volume that we're doing with partners, but our relationships with the partner community, which I think is equally as important.

[00:14:55] You know, there are great partners out there and there are not so great partners out there. The ones who are the great ones are the educated ones, the ones who are credible, right? The ones who, at the end of the day, are being honest about the delivery and are doing it for the right reasons. It's not all about costs or compensation. One of the reasons I love working with Ryan, he doesn't work with any partner who pays more than another, right? It's just the way that it works. That's an interesting approach that is rare to see in our industry.

[00:15:24] So, you know, I think at the end of the day, it's important because, you know, where I'd say 13, 14 years ago, partners or brokers rather, really more in the life and health side, and even PEO brokers through a degree would look at us as competition, right? Because there are different ways that brokers go about, you know, acquiring their business, whether it's through an outbound outreach, you know, strategy they have, whether it's through inbound,

[00:15:52] whether it's through working with other brokers to, you know, act as almost like a GA. Now it's, you know, the relationship has drastically changed over the last 13 or 14 years because we're another solution, right? And we're partners, right? And that's a two-way street. And it's not what it used to be and what it was viewed as many years ago. So I want to go to another misconception, and that is cost, because I think that that is an important one.

[00:16:21] And there can certainly be an assumption that if, you know, I go through a broker instead directly to the PEO, then I must somehow be paying more because another party has been introduced into the transaction. How does that actually work? The honest answer is it does vary amongst some PEOs.

[00:16:44] As this channel has developed, PEOs who want to, like Venture, who want to access this really meaningful distribution channel of PEO brokers have found a way to not let that happen. You know, they have looked at, you know, and John can comment about that more specifically, but like they find other areas to access that, so that does not happen. So that the customer gets the access and the expertise of the broker,

[00:17:09] they get the access and the expertise of perhaps that sales representative that is a really talented individual within that respective PEO to assist on the inside of that process, and then not have it cost a dime more. There are those that, there are PEOs out there that are trying to figure out if PEO brokerage is right for them, and they haven't developed those programs and allocated those dollars differently so that it doesn't roll down to the customer.

[00:17:39] And, you know, so I think a lot of those are in the works. But for the most case, like the best in class and those that are very PEO broker-centric, they have restructured their comp to support that. Yeah, and if I may kind of just piggyback off of that, right, if you even look at the statistics over the last 13, 14 years, as I stated before, in 2012 when I, you know, worked at a previous PEO,

[00:18:08] I'll keep the name out for now, but when I worked at a previous PEO, we did not have a partner program or a broker program. I was actually one of the first to help launch it. And at that time, I would probably say that, I know for a fact it was about one and a half penetration of PEO into the S&B marketplace. Today, it's 15%, right? So think in 14 years, right, it's 15x almost what it was

[00:18:36] by way of PEOs in the market. We still have a long way to go. But if you also look at the trend of PEO brokers, right, and the percentage or the number that was out there previously, that number has grown by over 50x from what I've seen. And we see them, you know, I want to say popping up every day, right? We have some that come and some that go. Most sustain. And if you look at the profile of the folks who are involved in those PEO brokerages, they all came from the space.

[00:19:05] They worked at a company like Venture or others that got them their start. So at least they, you know, we know that we're dealing with subject matter experts, right? So I only see that, you know, number growing on both sides, right? Not just the penetration of PEO into the SMB space, but also the number of PEO brokers out there, right? So, you know, I can count on one hand back in 2012, how many meaningful PEO brokers were out there. Today, I need a spreadsheet, right?

[00:19:33] Because it's vast, right? And the numbers are growing. We just had, what, Ryan, 30 plus, almost 40? 38. 38 PEO brokers in our offices. Last week, we hosted the PBC conference, Convergence, at our offices. Wow. And, you know, if you told me that in 2012, we'd have 38 brokers, PEO brokers in a room in Duluth, Georgia, I'd think you were crazy. So. Let alone, like, nine PEOs in the same room. That's right.

[00:20:02] And everybody got along just fine, which is amazing. Yeah. Only one black eye. No. No black eyes. No. No black eyes. No black eyes. No arguing or fighting whatsoever. No, it was really great. I mean, it's cool to see this community come together. But even look at that, right, Ryan? We talked about that. And I think I said that as I kind of closed out before I rushed off to head out. Yeah. Before you closed out, I said, what's really cool to me is that I call myself an outsider.

[00:20:32] You know, it was in our offices, right? Ryan laughed at me about that. But, you know, looking around the room, if you, again, the same thing. If you ask me in 2012 if I can get 38 PEO brokers in the room together to collaborate, no shot, right? The collaboration and what's happened, right, and the expansion of that whole relationship. I mean, even with us, we had nine PEOs, right? Folks from nine PEOs in our offices. And it was incredible, right?

[00:21:01] There was collaboration there. There were things that we talked about that normally would be like, stay away, right? We don't want you in our space and they didn't want to come to our space. So the industry itself is evolving from that perspective, even having friendly competition, as we call it, coopetition, right? So, yeah. I love that. Coopetition. I love that. And Ryan, I know John spoke to it a little bit, but your approach to compensation at PEOMG

[00:21:29] is particularly interesting because you have deliberately structured the business to reduce the potential for financial incentives to influence which PEO you recommend. Can you talk to us a little bit about how that works and why that transparency was so important when you built the model? Yeah, it was incredibly important because we pressure tested if we believe the PEO brokerage. Yeah.

[00:21:59] And that concept of taking something complex and making it simple so they can access the resources that they need to grow and scale their business and take care of the people. Like, why would someone not do that? And we looked at that and, you know, like, what are the potential pitfalls within this industry? And one of them is with something that is unknown to the community and is complex at the same time, how do you create that trust? Right.

[00:22:24] So if I look at, like, health insurance, and there's tons and tons of complexity, but it's been around much longer. It's better understood by business owners, business leaders, HR leaders, and it's also on a spreadsheet. Like, there's a plan, there's a price, and there's, you know, you can kind of quantify it. Where PEO is much more complex in that nature because it brings in so many different facets, you know, things that are return on investment in people that isn't, you know, isn't always a real number, but it's a feeling about how your people give back to your organization, what's the byproduct of good culture.

[00:22:55] So there's enough complexity there that now we don't need to introduce this concept of does Ryan or Rachel at PEMG, like, do they like John and venture more? Or do they like someone at ADP more? And is that what's driving that motivation? Or is there a spiff at the end, like a trip somewhere? What is that? So it was actually Rachel's idea to come up and level set the comp. And then we hit a little bit of a brick wall with that because getting PEOs to get all on

[00:23:24] the same page, even though we did later get them all in the same room, it was hard to get that done. So we came up with a better way to do it as a byproduct of that intent, which is that we level set our comp and we govern that ourselves. But that anything that is paid to us up and above that is, in fact, donated away to charity in the name of the customer. And we use a CPA to audit that every 90 days and we make those payments out. And so we actually get to do something that's also supremely important to our values, which

[00:23:54] is giving back to our community and taking care of organizations and people. And so, you know, that was keen because we wanted to give that customer that comfort, allow them to lean into our services, our support, our methodology. Understanding it's only about fit for them because we've removed the financial factoring around it for us. Yeah. Which, by the way, is sometimes a very high motivator for some of our partners, right?

[00:24:23] Where, you know, and it's frustrating for us as a PEO, right? When we know just based upon conversations that we may have had with that specific prospect, potentially client, that, you know, we really have a lot of solutions that can help them. When a certain, you know, mindset is there around compensation only, it dilutes the value a little bit, right? And that's the balancing act that we have to play in the PEO space and have very, you

[00:24:52] know, direct conversations, which sometimes are difficult, right? For salespeople, right? Because what are salespeople, right? They're coin operated, right? So they want to make as much money as possible. And I remember, you know, even early in my days, I kind of just lay down and roll over for a partner or a broker who only cared about compensation, only cared about cheap medical rates, right? Where now I have some very direct conversations around like, hey, we have to be aligned on what

[00:25:20] the process needs to be, right? We need to be in front of the prospect, right? Together as a unified front. We don't want to be a quoting machine, right? Right. We'll lose opportunity, but we don't want to be a quoting machine and we don't want to just be sold on what we pay our partners or what the client's going to, you know, pay us and how cheap we could be. We're not Geico. We're not going to, you're not looking to save you 20% for spending 20 minutes with us, right? So. Right. It would be nice though. It would be nice.

[00:25:50] Yeah. No, it's, uh, yeah. And I think, I think what's great about the PEO, what John's saying in the PEO broker environment is like now there has been many years and John's worked incredibly hard to combat this, like where PEO brokers and PEOs, it was a combatant environment. Not only were PEO brokers competing with PEO brokers and PEOs with PEOs, but rather they were competing with each other and, you know, not competing, but frictioning with one another over these kinds of concepts.

[00:26:17] And so the programs that John has built, the relationships that have been built. And also now it's a more a hand in hand relationship where the PEO broker understands like the value that, that of having that inclusive sales process or evaluation process with the PEO sales leadership and team is much more valuable for their customer. Yeah. And vice versa. The PEO being such having that broker in that room brings a lot of value and insights to that customer.

[00:26:46] And so the byproduct of it is better client relationships through better alignment and longer term client relationships through better alignment. And Nicole, the way to, you know, often look at it, right? The PEO is very similar to the relationship between a life and health broker or a PNC broker and a carrier. We always have that same type of environment that we operate in now with the PEO brokers. We're like the carrier, right? Right.

[00:27:16] They're like the life and health or workers comp or PNC broker, but specific to PEOs. And that's where, you know, once that, that mindset, I think came into place a few years ago, it really changed the landscape. Even in the communication between, you know, PEOs and the brokers, not that it was contentious. It was just always, you know, a little difficult sometimes. Right. Sure. Yeah, initially, just because it was like, again, we were hammering out quotes.

[00:27:45] I mean, I remember and I've sold and I've worked with brokers before, both PEO brokers, life and health and PNC. It was like, who gets it out the fastest, right? Right. And I always had this saying, you know, I don't want things done fast. I want them done right. So, you know, sometimes, you know, we need to take our time to make sure that the underwriting is right, the pricing is right. Otherwise, we turn around, you know, two, three, four months down the line and there's an issue. So, again, I think it's all about the expectation setting up front.

[00:28:15] Well, and I think that that's a perfect kind of segue as well because choosing that PEO isn't just about putting, you know, all these providers next to each other on a spreadsheet, which is often the experience when you're the HR person and that's what your broker's bringing you, you know, from your healthcare perspective. And just looking for the lowest number and what does that look like?

[00:28:38] There is a significant diagnostic component to determining what's actually going to work for that organization. And Ryan, you gave us probably my favorite description of kind of the goal during our planning call. You said that you want the first meeting between the customer and the PEO representative to have that, like, stepbrothers moment. Like, did we just become best friends? I was going to wear a black T-shirt, by the way. With a tuxedo.

[00:29:09] Yeah. Yeah. I was going to wear my Catalina wine mixer shirt. There you go. I wasn't sure if it's appropriate or not. That's the first part of that out, Nicole. You know, the first part. Right. Right. So, Ryan, what are you actually evaluating when you're determining which PEO and which people that you want to put in front of a particular client? Yes. We have a real intentional process around that. It's a two-part process. So, the first step is the human evaluation.

[00:29:37] So, our team at PEMG sits down, looks at the conversation, looks at the notes of the conversation, the focus, the priorities, the data that we get in. And it's really, it's a human analysis where we map our customers to our PEO universe of 16 best-in-class PEOs, one through 16. And that draws in the things that, like, are they going to be best friends, right?

[00:30:02] Like, psychographics, the communication styles, you know, are they just going to like one another? And then we run the second step of our evaluation process, which is an AI. So, we've developed our proprietary recommendation engine that measures that customer and our PEO universe on 36 points of alignment and four tenants of data. And then it stack ranks one through 16, most aligned, at least aligned.

[00:30:28] And then we compare and contrast those two lists and see if any reshaping needs to occur based on insights gathered. I will say more, like, more often than not, the human evaluation wins out because, you know, there is that nuance to, you know, the stepbrothers moment or just other factors that AI will never help. But, you know, the AI does help us pick up some things that, you know, human error. So, something we miss.

[00:30:52] And then from there, we reshape and then we start to work with some of the PEOs with respect to that customer based on how aligned they are. And then, John, so Ryan introduces that customer to you, you know, you have this opportunity. And you kind of described Venture's role as kind of going further under the hood. What does that diagnostic process look like from there?

[00:31:19] And how do the broker and Venture then continue working together rather than the broker simply, like, handing off the customer and disappearing? We beg in some cases for the partner to continue and the broker to continue to stay involved, to even watch us in our process. Ryan's become close with quite a few of our reps who he's super comfortable with because of their process. And that diagnostic is, you know, dozens of questions.

[00:31:48] We don't ask them all, but knowing what we know about the prospect, about the reasons why they're even looking at PEO in the first place. We kind of go through this, to your point, diagnostic that we actually do call it a diagnostic. And we figure out, you know, sometimes we find out, by the way, they might not even be a fit for PEO and could be under a different lane, right? We've had plenty of times where we've had to pivot, even on a medical perspective, right?

[00:32:14] There could be other opportunities out there for them alternative to just a master medical plan that we have to offer. That process enables us to do that. That process also helps us, as long as the broker is still involved and the partner is still involved, to really get a deep understanding of our process and what does make us different. And then it does uncover, again, certain things that they may not have spoken about on the front end, right?

[00:32:37] A lot of the initial, I would say, and I think Ryan can agree, curiosity from the PEO unaware folks is mostly about cost. Let's just be real, right? It's mostly about how much money can you save me in fees and on my health insurance and my workers' comp. But at that point, when we come in and we do a diagnostic, that the additional value comes in, right?

[00:33:03] I'd like to think, and I know, especially working with Ryan and team, they sell on value up front. Not every broker does, right? And that's just the reality of it. But that's where our job comes in. Yeah. And that's the urge. I'm not a fan. If somebody just comes to me and says, hey, John, give me a quote for a 55-person group on your master medical plan, including ancillaries, and that's it. And then I never have a chance to speak to the client. That is not going to be a long-term client. And that client is going to be shopping again next year, for sure.

[00:33:33] When we have that opportunity to run that diagnostic, to really get into what their pain points are, to really help them understand what the true value is of a PEO and the additional services we can help them with, above and beyond just payroll and medical benefits and workers' compensation, that really comes into play. Yeah. Yeah. And it's better for the customer, too. I mean, John's right. You know, a lot of them do come.

[00:34:01] Like, I think of, like, the medical is kind of like the milk. It's stuck at the back of the grocery store. So you've got to walk through the HR services to get to it. And it is generally their interest because it's a really big problem for companies. I mean, it is something they legitimately have no way to influence. Absolutely. So PEO offers a really nice option to address that. But it's usually not enough. And it's not enough for the PEO, you know, as John described, just to get a quote and go, OK, is this going to become a customer?

[00:34:30] Like that PEO sales rep who is trained really well by that organization helps develop the HR need. And then if you add the broker into it who has lots of other different insights and trust of said customer, now you're really accelerating the learning about what HR can unlock for that organization. But, yeah, if you're just buying on medical, you're also going to leave on medical. So you're not going to be a long-term customer.

[00:34:55] As soon as that, you know, that cost goes up, you're going to jump to the next one. And that's disruptive. It's disruptive to employees. It's disruptive to organization. So we really pressure test people like, why do it? Like, why would you do this? And so getting to partner with John's team and help them bring up and elevate that HR conversation is what they go, OK, great.

[00:35:20] I get to tackle all this stuff and I can, you know, get this at least a layer of control around the medical component. Like this is a that's a win-win. That's the whole package. Yeah. And I love. We're not blind, by the way, Nicole, to the fact that companies and businesses still want to save money and we're not saying we can't help them. It's just not always going to be on the medical or the workers' compensation. Like I said, we have things like staff augmentation.

[00:35:44] We have efficiencies that we can help streamline for them that, you know, they're not thinking of the soft costs that goes into it because there is soft costs. You know it. You're in HR, right? Oh, yeah. And the predominance of your job probably was beyond just HR, right? Yes. A lot of companies we work with in the SMB space, the HR person's also working in finance, also handling payroll. They're also offering office supplies sometimes.

[00:36:10] Our ability to help, again, and the true value of a PEO and the co-employment relationship and mitigating that risk and streamlining those efficiencies are some of the things that we don't speak enough about on the front end, right? Again, good brokers, the good partners do that up front.

[00:36:28] So that value, and to Ryan's point, taking that prospect from PEO unaware to curious to PEO aware is vital because they're an extension of our industry up front, not just a company, right? Not just venture or whoever else they're working with. They're an extension of the industry. So when you dilute the value, you're diluting your offering and your value as well. Yeah.

[00:36:55] Well, and one of the things that really stood out to me, I love that you talked about service and relationships because through the conversations that I had, consistently they were coming back to relationships. I mean, we could talk all day long about tech and capabilities, but what I kept hearing was service and trust and responsiveness and execution. Why do those things matter so much in the PEO relationship?

[00:37:26] I could speak from my end first, Ryan, and then, you know, you could talk from the, for us, look, it's, again, accountability. Yeah. Right? I say this all the time. Payroll is payroll. Benefits are benefits. HR is HR, albeit subjective at times, right? Depending on who you're speaking to. But service is what the great differentiator has to be. The delivery of that service, the responsiveness.

[00:37:52] Now, I'm not going to lie and say that everything's perfect, right? And we're never going to mess up. In fact, I say the opposite. I tell people we are going to mess up. It's our, it's, it's what our reaction is to that, that mistake. Absolutely. Consciousness and proactiveness to getting it handled before the partner or broker even gets called because that's who they're calling first. If they don't have a resolution directly with the PEO. That brings it back to that double layer of accountability that we have. Right?

[00:38:22] So service delivery, vital. Right? The relationship just as equally as vital. Right? I mean, look, you can't replace anything with a relationship. If Ryan and Rachel and team know me and trust me and they know that, hey, if I call John, he's going to pick up. If and when I call John, he's going to handle the problem. That's a big part of the battle in my opinion, right?

[00:38:48] That's winning most of that battle because, you know, you can have good service, great pricing on medical, you know, very competitive pricing on admin. And really, really aggressive compensation to the partner. But if there's no relationship there, if there's no access, if there's no responsiveness, it's worth nothing. Yeah. I feel it's really essential because it is a solution for people. And the service is what touches the people.

[00:39:18] And maybe to simplify it, it's if you come at it from the angle of, you know, I want to access medical, but I have to take this service. It doesn't really feel great. But if you go, if you're sitting from, I get to access this service and plus I get this really good medical with it, it feels very different.

[00:39:39] So the service has to be the most important part because if it's not developed, it's an anchor in the structure that really doesn't, you know, the customer really doesn't value. So it's a tradeoff to get one to have to take the other where if you start with the service, everything, again, is a win. They get to get both things and they get to take care of their people and they get to be an employer of choice and have effective technology and support and time. Like they get when the service works, they get time.

[00:40:09] Yes. And, you know, no amount of money ever bought a second of time. And so, therefore, that's the most valuable part. Absolutely. Well, and to your point. The last thing to the day, by the way, was employer of choice. Love that. I love that phrase because that's the perfect, by the way, prospective client for a PEO and prospective client for a PEO brokerage is that they want to be an employer of choice. Yeah.

[00:40:34] Well, yeah, because their employees don't care at the end of the day that you worked so hard to get this great medical plan for them. If there's issues in the service of the delivery of anything else that they paid for, because now, like you said, Ryan, like you're taking time away from them and they're doing 15, 20, 25 other things. Like they hired you so that you'd be taking care of those things. Yeah. Yeah.

[00:41:00] And I mean, and it's known for anybody who has sold PEO services. They've been in the conversation where they talk about it and then the customer goes like, well, can I just have the medical? And the answer is always no. It's always no. The answer should be always no. Yeah. It'd be nice, but you can't. You have to have service. And so that's probably as clean of a way to say how important it is. Yeah.

[00:41:27] And Ryan, I want to come back to the PEO Brokers Collective because you and John both talked about how quickly that that brokerage community is growing. I mean, holy cow, 38 PEO brokers and nine PEOs in one room. Like that's crazy. And I agree with you. I definitely wouldn't have thought that was going to be a thing. So you shared a really great example during our conversation, which was shortly after your event.

[00:41:56] So you said another broker contacted you and asked if you wanted to join a training call with them to learn about some other PEOs offerings. So two brokers from different companies were essentially saying like, let's learn this together because it makes all of us better. Tell us about the PEO Brokers Collective and what you're trying to build within the industry.

[00:42:24] We're trying to build a community that will help this community serve small business more effectively and collaborate really, really well with the PEOs. Which, you know, in co-employment, there's this symbol. It's three circles. There's an employee. There's the PEO. And there's the employer. And I kind of think very similarly about this industry from our vantage point.

[00:42:54] There is the employer, the client. There is the PEO. And there's the PEO broker. And they all intersect and they have to work together. And when they do, it's a better outcome for the customer. And so we're trying to help more PEO brokers, not only one, access that, but also understand it and how to maximize the opportunity for the businesses. Because what's also really cool is every PEO brokerage is a small business. We really like to live and breathe what PEO does.

[00:43:22] Like they deserve to be served and supported just as much as any other business, tech, marketing, manufacturing, logistics, what have you. And so it's just really symbiotic in nature.

[00:43:33] And so knowing that this wave was coming and that more and more were coming, they were, because I truly do believe with the challenges for customers to figure this out, the access to information and insights that are now required, the environment has really been terraformed for the PEO brokers to emerge as a really powerful industry and help both the PEOs and the small business customers.

[00:44:00] And so they needed a community because everybody was sitting on the outskirts of the industry. Everybody was disconnected. Everybody was doing it on their own. Everybody was deploying more time and energy to not get as far. So we thought as if we could bring them all together, even just virtually initially, which is what we did for the first eight months. They would learn more. They would feel connection with people. They would be able to ask questions. And they could then help grow their businesses more effectively, which in turn would help more small businesses.

[00:44:29] And that's what that's what really started happening. And so now we launched on January 6th. By the time we, you know, landed in Atlanta, you know, we had 111 members. You know, now we've had a jump close to, you know, closer to 140 and, you know, just more and more people are accessing it.

[00:44:50] And the really cool thing about convergence, the idea was bringing this community together, making it a tangible event, like a validation of what we're doing. But it also was a replacement for what PEO sales reps get to have, which is, you know, ventures VSKO or another PEO's fall campaign kickoff or another PEO's champ kickoff. Like when you leave when you leave the PEO space and start and hang your own shingle, do your own thing like you lose some of that.

[00:45:20] And so a lot of convergence was like that kickoff again where people could connect, collaborate, but also forge relationships. And so that training call is a byproduct of that. Like, oh, yeah, I got to know you. I got to see you. I liked you. Like, I'd like to get your insight and input. And so my interaction with our PEO broker community has skyrocketed since that event.

[00:45:45] And that really kind of answers the question of what has people wanted, which is connection. Yeah, absolutely. And you talked a little bit as well about things like in the future, establishing a certification to have greater consistency as well around what it means to be a PEO broker. Like, I just I'm really excited for the things for the future that you all have planned.

[00:46:12] Mm hmm. Yeah. Yeah. We're looking forward to that. We got to announce that there's going to be an accreditation process that be, you know, accessed and credentialed by the PEO brokers collective for those PEO brokers who want to go through that more intentional education process and focus on ethical brokering and standards and best practices. And so we're going to kick that off in February at our next gathering of the PEO brokers collective.

[00:46:40] And, yeah, we've got lots of other like fun things in store to help this community grow and thrive. Love that. So, John Ventures invested pretty significantly in building out the venture partner network, creating infrastructure specifically around working with partners. Mm hmm. Why do you believe that the advisor driven model represents such an important part of where the PEO industry is going?

[00:47:09] Again, look at the numbers, right? The numbers tell us everything, right? Experience tells us everything. You know, direct sales isn't dead, right? There's there's opportunity for all out there. Yeah. You know, with the surge in, you know, brokerages, right, popping up everywhere now.

[00:47:31] And again, especially folks who came from our industry who know how to get in front of those prospective clients. That's going to become more and more prevalent, in my opinion. I don't see it slowing down anytime soon. I think there's going to be more opportunity again. 15 percent penetration today, 85 percent to go. Right. Yeah.

[00:47:54] I see. I see. I see. I see a shift in even some of the role within the PEO brokerage space and looking at some alternatives as well, because, you know, beyond PEO, there's other opportunities that many of the providers like ourselves do have to offer outside of just PEO. So there's many things outside of just master medical benefits now to offer through alternative benefit plans. So I think, again, you know, just like you are advised on your taxes, right?

[00:48:23] You are advised and consulted on for certain, you know, industries or verticals within a business. This is no different. And, you know, the truth is, you know, we're all buyers on this call or meeting we're on right now. Right. Yeah. Yeah. What's the first thing that we do when the roof leaks? Right. Or we're looking to renovate the house. We don't just say we're going for one quote. Right. Most of us get two or three quotes. This is no different.

[00:48:52] You know, so I always remind myself, you know, whether it's a sales call that's coming into me. I'm like, hey, I'm a sales guy. I should probably be a little nicer. Sure. Or like when I look at when I look at like, you know, when I get frustrated, like I can't believe they went for three quotes. I'm like, wait a minute. I do the same thing when I buy. Right. So, you know, it's just the reality.

[00:49:11] And again, with the more and more that we see of, you know, subject matter experts from this industry transitioning into the brokerage space more, there'll be more of a necessity for us to continue to pivot and deliver value to those partners. Right. And that's beyond compensation. It's beyond the incentive trips. It's beyond, you know, the spiffs we may run or incentives we run on a quarterly basis to put more money in our partners pockets. That's all fine and good.

[00:49:39] But things like access to data and reporting and education around how it's going with us proactively. Those are all things that are going to become very important. Those are things that we're working on right now with my team. We're in the midst of building out a PRM for all of our partners to go on and view their commission statements, get co-branded marketing materials, you know, get, you know, summary plan designs for the benefit plans that we have to offer without having to wait for a rep to get it to you.

[00:50:07] Right. You know, convenience and speed and, you know, more of building that relationship and getting together more and, you know, sponsoring things at our office like the PBC and other events will be more and more important as this industry. And that segment of the industry continues to grow. I love it. I want to close with something really practical for the HR leaders and the business leaders that are listening.

[00:50:34] So if someone is listening to this right now and they're thinking maybe a PEO makes sense for my organization, what is one thing that you would tell them to do before they start evaluating providers? And Ryan, I'll have you go first. I mean, it's definitely reach out to a broker.

[00:50:55] You know, I could think of a few, but it would be to reach out to a broker and, you know, connect with them on what you do and don't understand about PEO and like provide some, you know, perhaps transparency and vulnerability around that. And I'll have to, okay, we found this interesting. We think this could be something for us. We don't really know and hear and be real honest about what your priorities are.

[00:51:21] I say that because in the PEO direct space, it's hard. You know, and I was a rep and I ran large teams. Like when you know the person across the table from you is potentially going to try to transact you at the end, sell you, like you tend to hold priorities back because you think it might, you might lose leverage in negotiation. You might, you know, you just might be giving up too much and making it too obvious you want this and you might think that that's a bad idea.

[00:51:50] With a broker, you only empower them to do a better job for you. And the same is with a direct sales rep too. I want to be clear. But, you know, come in with that vulnerability about what you understand, that transparency about what you need. And then, you know, set real expectations with them on like how this needs to work because, you know, they want to go do the best job. And if they know what you want from it and what that's going to need to feel like, they can, PEO brokers can go get it done.

[00:52:20] I love it. John? Yeah. Call the broker and tell them you only want to look at venture. No, I think for me it's educate yourself on the why. You, PEO, right? Again, if it's the expectation that you're going to, you know, spend 20 minutes with a broker or a rep from the PEO directly and they're going to save you 20%, that's not the reason why, right?

[00:52:47] I think understanding the why behind wanting to look at it. If it's about disparate systems and wanting to streamline efficiencies, 100%. If it's shifting some of that liability through co-employment, great. If it is still, look, benefits driven and it's because you want to offer 55, you know, Fortune 50 or Fortune 500 style benefits to attract and retain top talent. Great. Be an employer of choice. Great.

[00:53:10] But if it's just all about, I want to save money and I'm not doing it unless I save money, I don't see that that organization as a long-term PEO client. I don't. Because the reality is that that's the only reason you're doing it. And I'm going to be, you know, real and address the elephant in the room. PEOs aren't easy to unwind, right? Get rid of disparate systems. You streamline them into one. And then to unbundle all that is not the easy thing to do.

[00:53:37] So I've seen it 20 some odd years in this business. I've seen people, you know, buy into PEO for the wrong reason. And PEO is not for everybody. It's not. Right? That's why there's alternative solutions out there as well. Absolutely. I love that. Thank you. That's a great place to leave it. So John, Ryan, thank you both for joining me. And to everyone listening, thanks for joining us. If you enjoyed today's conversation, please be sure to subscribe so you never miss an episode of HR Tech Chat.

[00:54:07] And we'll see you next time.