SITUATION

When Peter Mathis learned that a former employee had filed a complaint alleging that Ready Delivery, his Aibuctuerquebased freight hauling business. had fired her because of her race. it seemed like the right time to rethink his companys human resource management methods.

The complaint was eventually dismissed, but that didn't stop Mathis from worrying about the possibility that other employee problems might arise in the future. And with 12 workers already on the payroll, he was finding that the paperwork associated with payroll preparation, government regulation, tax reporting, and other human resource management matters was beginning to consume too much of his time at the office.

A professional employer organization (PEO) aPProached him about taking over much of Ready Delivery human resource management work. It could cost the company 3 percent of payroll, but the IE0 could also offer additional benefits and services at additional cost.

Of course, that might help the ompany in other ways, too.

For example, joining the PEO would give Mathiss employees access to beter health and dental care plans that would actually less expensive than those the company currently mitered. It could also provide affordable group life asurance benefits. making the switch even more ittractive. Mathis realized that partnenng with the PEO could reduce his flexibility in selecting benefit options. but he was nonetheless giving serious consideration to accepting the offer.

1. How can Mathis be sure that the PEO is reputable and that his company and employees will receive real value for the money?

2. How might contracting with the PEO affect employee relationships at Ready Delivery? Is there any chance that his employees loyalty might be transferred to their new employers?

3. %That steps should Mathis take before entering into an agreement with the PEO?