Santa’s List: Naughty or Nice?

Santa’s List: Naughty or Nice?

It is unbelievable that another year has passed by so quickly and the PEO market continues an excellent trek into the coming year.

I just got off a conference call with Santa who gave me a list of questions that would help a PEO determine how “Naughty or Nice” their business practices would be categorized.  Of course, the goal is to have as many qualities, practices, and results in place to position your Company to accelerate and optimize your performance and profitability in the coming year.

Note:  This is such an important area of our client work, that we will be launching a new Practice Area (Profitability) in 2019 focused on your bottom line performance!!

Santa’s Checklist & Report Card





1 Has your PEO grown more that 10% in 2018?
2 Does your PEO’s annual gross profit per WSE in 2018 greater than $1,200 (the NAPEO Financial Ratio median is over $1,400)?
3 Will both your WC Experience Mod and primary SUI rates decrease in 2019?
4 Do you annually perform a client stratification, profitability and data analytics to drive the business such as:

·       By NAICS Code (first 3 digits)

·       By Geography (State)

·       By Salesperson

·       By Year (that clients acquired in each year have higher profitability than the prior year)

·       By Gross Profit Composition

5 Is your PEO’s churnfor each of the following less than 10%?

·       Internal sales force

·       Internal staff

·       Clients

6 Does your PEO perform a client re-pricing process annually?
7 Does your PEO continue to underwrite existing clients annually (or are they only underwritten at the time of sale)?
8 Are a majority of your PEO’s new clients new to the PEO industry (not someone else’s client)?
9 Has your PEO and its management team completed an in depth formal strategic plan and forecast for the coming year?
10 Has your PEO added any meaningful new products or services in the past year?
11 Has your PEO invested in new technology in the recent past that enhance the client experience?
12 Has your PEO completed a competitiveness analysis through environmental scanning to understand the competitive landscape?
13 Has your PEO used the NAPEO White Papers to re-calibrate the focus of its sales strategy?
14 Does your PEO have a service, product, attribute or value proposition that is unique and distinct from its competitors?
15 Has your PEO obtained a CPEOdesignation from the IRS?
16 Is your PEO ESAC Accredited or considering it in the coming year?
17 Does your PEO have a management training and succession plan?
18 Does your PEO have a formal exit strategy?
19 Has your PEO had a recent business valuation to have a formal indication of its value in the recent past?
20 Is your PEO a NAPEO member, representatives regularly attend industry meetings and read the PEO Insider?
  Total Answered
  Compute your % of Yes & No


It is very easy to get caught up in the day to day challenges of running the business.  Sometimes we can get caught in the euphoria of a strong economy, strong consumer confidence, and the benefit of wage inflation buoying our financial performance.

Perhaps the memory of the great recession a little more than a decade ago has faded from our memory.

A Merry Christmas and Happy Holiday Season

As we prepare to celebrate the holiday season with our families and the fruit of our labor, we are thankful for the success of our businesses and the blessings of family and friends.

However, as we get back to business in the new year, perhaps you can take the self-assessment above and score yourself, and consider incorporating any of the items not currently in place at your business.

One of my favorite business authors is Jim Collins who is best known for the book “Good to Great.”  He also penned a sequel that is relevant to this article and that appropriately entitled “Built to Last”.

We wish that you all have a wonderful holiday and look forward to helping you get to “great” in 2019!

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