A little less than a year ago, my employer, Tamale Software (since acquired by Advent Software, in what I would happily classify as the fourth successful acquisition of the five in which I’ve been involved), decided to outsource its human resources function to the Professional Employer Organization (PEO) Administaff (note: Tamale used Administaff, but Advent doesn’t, so I am no longer a current client of Administaff).
Administaff uses a “co-employment” model, wherein the employees of Administaff’s clients become employees of Administaff as well, and Administaff handles health insurance, payroll, recruiting, performance management, etc. Administaff clients don’t necessarily use all of Administaff’s services; it’s a menu from which they choose what they want. The biggest reason for a company to use Administaff is probably to reduce the cost of health insurance. Administaff can bargain with the insurance industry for lower rates than a small or medium-sized business can on its own, since they have a far larger employee pool.
Tamale has always had awesome benefits, including great health insurance with 100% of the premiums paid by the company. But the company and its employees got a little older and more mature (read “got married and/or started having babies;” I must confess that I’m a major contributor to this!), and at the same time the cost of health insurance skyrocketed across the board. It’s therefore not surprising that Tamale went looking for a way to reduce its costs, and perhaps switching to Administaff was a necessary evil.
Nonetheless, from the point of view of the employees, it was not a positive change. (more…)
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