Leadership corner
Interviewed by Curtis Lum
Advertiser Staff Writer
Q. As I understand, your company takes care of all the paperwork associated with an employee, and the client company only needs to worry about getting the employee to perform his or her job. Is that right?
A. A professional employer organization (takes care of) the payroll, providing all of the medical benefits, doing the taxes, paying the taxes. And this is all done under the PEO's tax ID number, so it is basically a co-employment status. ... The liability for the PEO is the workers' compensation. ... It's very important that the PEO establishes a good risk-management department, (including) job site inspections, and really works with the client company to provide a safe workplace for the employee. The PEO is also an advocate for the employees in terms of their rights and their benefits, and helps the client company be in compliance with those rights. And in Hawai'i, there are a lot of them. It's a very employee-friendly state.
Q. Does that make you very selective in choosing your clients?
A. Yes. We underwrite every potential client that comes to us and ... evaluate whether they would be a good fit for us and be willing to work with us in keeping the work site safe and giving the employees the correct benefits that they deserve.
Q. Because the PEO concept was so unknown when you began your business in 1997, how did you get your first clients and build from there?
A. I was doing mobile accounting and I would go to my clients and do all their month-end type of work or year-end. I used to travel all over the island doing that for different clients. One of those clients that I did month-end, general excise tax and stuff like that was a construction client, and he had had an excellent year the year before, which caused him to have to come up with a $40,000 work-comp deposit based on his prior year payroll, and he couldn't do it. So he had asked me what he should do, and I said I had heard about employee leasing and I think there's a company in Maui that does that. (I said), "Why don't you go and talk to them?" Well, he did and he came back to me and he said, "Carole, I don't know this company and I would rather you do it." He said, "It's just payroll. I'll help you get started, whatever you need to do; can you do this for me?" I said, "OK, if it's just payroll, let's start the process." So he was my first client. After that, my other clients that had payroll, they wanted to get on board too. So it just started from word of mouth.
The first year I was in business, I had 10 clients and about 40 employees overall. It grew from there, always by word of mouth. Right now we have approximately 150 clients, and that represents about 700 employees.
Q. Is there a range of business sizes? Are they all small businesses?
A. We have a range. Generally we have small businesses; upwards to 10 employees would be the average. We do have several large businesses, upwards to a hundred employees. And they vary. My background is mainly construction, and so most of our clients are in the construction industry.
Q. You talked about challenges, educating not just the public, but everyone involved. You mentioned insurance companies. Is that still the biggest challenge as far as education?
A. Well, it is and since the liability is ours because it is under our tax ID number. One of the challenges would be with workers' compensation, is working with the insurance company, working with their claims department, handling the claims, getting claims closed on time, etc., and the understanding that these employees are not directly under our control. So we have to set guidelines and we work hand-in-hand with our workers' compensation carrier to ensure speedy return to work for the injured employees, and this helps keep our rates low so that we can be competitive. ...
Q. You recently expanded off of Maui to O'ahu?
A. Yes, we have. We opened a division on O'ahu. We have clients on all the islands, but this is another area for growth for us. We're very well-known on Maui.
Q. Why would you need to physically expand, to have an office on a different island? Can't you just do it from your base in Maui?
A. We do all of our processing from our base on Maui. In our office on O'ahu, we have the vice president. There is a (human resources) specialist, and we have our operations manager there, who is very well known in that area, and she's the head of our sales department there. It's good to have a presence there for clients so that they know that they're having local representation.
Reach Curtis Lum at culum@honoluluadvertiser.com.