For Phil Morabito, founder and president of Houston-based PR agency Pierpont Communications, workplace issues at the 18-person shop were mounting. Whether it was providing
proper employee training or concern over liability, he was spending too much time on administration and less time on serving his clients. He needed some relief. And earlier this
year, he found it.
He hired a Professional Employer Organization, or (PEO), a personnel management company that serves as a full-blown human resources department for small and mid-size businesses
nationwide.
Bringing in a PEO has provided handsome returns for Morabito, freeing him to focus on his clients' needs and reducing what he calls the "fiddle factor." To wit, "You don't have
employees coming up to you and asking all sorts of questions which to them are very important - and are - but really just chew up your day."
Morabito, who's been in business for nearly 17 years, said the transition to the PEO has gone smoothly, improved employee relations markedly, and helped to inoculate the firm
against employee lawsuits in what is a particularly litigious climate. "You work so hard, and I wouldn't want anything to sweep us away."
Now, new research shows that Morabito's concerns are hardly unique among small- to mid-size PR agencies. The study, conducted by Administaff, one of the country's top PEOs,
along with the Counselors Academy of the PRSA, found that many agency owners now fear their companies could be put out of business by employee suits.
For PR owners, HR is increasingly encroaching on the rest of the business, taking precious time away from billable hours and the ability to think strategically on behalf of
clients. (see sidebar).
Rising health care costs are also taking a toll, as 50% of those surveyed believe that managing health care benefits is their fastest growing management problem. The poll,
which was distributed to 484 PRSA Counselors Academy members and got 93 responses, or 19%, was conducted this summer.
"The survey drives the point home that PR firms are vulnerable and that the fear level [about liability] is at a high point," said Paul Sarvadi, co-founder, Chairman-CEO of
Houston-based Administaff, which in 2003 was on Fortune's list of America's Most Admired Companies. "When you become more sophisticated in the HR practice you accomplish two
things: You take care of liability and, in turn, are able to spend the time attracting and retaining the key people who are needed to think strategically with your partners."
A time when people are more educated than ever about workplace issues and workers' rights, PR owners in the small- to mid-size arenas find it increasingly hard to forego full-
service HR anymore.
For PR firms like Pierpont, CBR PR (Orlando), and LVM Group Inc. (New York), Administaff is providing a reasonably priced solution to any potential liability problems. It
charges around $1,500 a year, per employee, to take care of the kind of mundane HR tasks like employee administration, benefits management, and government compliance that, if not
carefully maintained, could be murder on a PR firm.
Publicly traded Administaff has more than 4,700 client companies and approximately 78,000 worksite employees. The company, which operates in the banking, legal, and medical
services industries, among others sectors, now has about 20 accounts in the PR field. "Many PR firms' core competency is moving along the creative process and directing activities
[for their clients], but [the heads of these companies] are not generally astute in administrative and compliance-related areas," Sarvadi said.
Lori Booker, founder and CEO of CBR PR, recalls being in a meeting with her insurance broker 10 years ago, which left her with a "splitting headache." Booker, who had done some
project work on behalf of Administaff, said she then called her contact at the company and "cried uncle."
In the ensuing decade Booker, whose clients include Colonial Bank and McDonald's, has enjoyed what she said is a very positive relationship with Administaff. "Immediately
after I hired the firm I had a 20% increase in profits," she said, adding that Administaff costs her around 4% of payroll but has reduced her administrative stress by 80%. The
first month of the relationship, she said, "is not fun because you have to give them all sorts of paperwork, but after that you're done."
Before Administaff, Booker would squeeze in client work between all of her administrative responsibilities. But with Administaff on board, it's been the exact reverse, where
she's readily available for client work and leaves all the heavy HR lifting to Administaff. Another benefit: Booker is now able to attract the kind of PR talent -- from
neighboring companies Walt Disney World and Universal Studios, for example - that increases her clout in the marketplace. "I would hesitate to confine it to HR," Booker said,
referring to Administaff's services. "There's so much more that they bring to the table." PR
Contacts: Lori Booker, 407.834.7777, [email protected]; Phil Morabito, 713.627.2223, [email protected]; Paul Sarvadi, 281.348.3270; [email protected]
PR Agencies are increasingly dealing with the risk of an employee lawsuit...
| Rate your level of agreement with these statements: | |
|---|---|
| Attribute | Percent Positive |
| The risk of an employee lawsuite is much greater today than it was ten years ago |
72.1%
|
| In order to make the right decisions about employee benefits, retirement plans, health care benefits, etc., our firm has to consult with several outside experts. |
68.6%
|
| Our firm can't justify the cost of hiring a full-time HR professional to manage our HR repsonsibilities |
80.2%
|
| Because managing the HR function is so time consuming, our firm finds it hard to devote time/resources to professional staff development and training |
51.2%
|
...And Rising Health Care Costs
| Rate your level of agreement with these statements: | |
|---|---|
| Attribute | Percent Positive |
| Managing the cost of health care benefits is our fastest-growing management problems |
50.0%
|
| Our management wastes valuable, billable time dealing with different vendors for various HR matters (e.g., benefits, management, payroll administration, training) |
23.8%
|
| The cost of defending our firm against an EEOG, sexual harrassment or other such lawsuit could concelvably put us out of business |
37.0%
|
| Our firm's employee handbook hasn't been revisited in a long time and its probably out of date |
35.8%
|
| Employee turnover at our firm is higher than it should be |
16.0%
|
Source: Administaff/Equation Research
[PR] Labor Pains
Please indicate how strongly you agree with the following statement: Aside from our core business of serving clients, Human Resources and staffing issues have emerged as our
biggest challenge in recent years
| Attribute | % Response |
|---|---|
| Strongly disagree |
8.6%
|
| Disagree |
33.3%
|
| Agree |
43.0%
|
| Strongly agree |
12.9%
|
| Don't know/not sure |
2.2%
|
| Source: Administaff/Equation Research. | |