National PEO Week: The Evolution of an Industry From a Pioneer’s Perspective

By Craig Babigian

With the first National PEO Week here, it’s a powerful reminder of how far the Professional Employer Organizations (PEO) industry has come—and where it’s heading. 

The Power of Marketing and Innovation

The famed Czechoslovakian author Milan Kundera who wrote The Unbearable Lightness of Being once said, “Business has only two functions: marketing and innovation.” 

Well the PEO industry, thanks in part to the National Association of Professional Employer Organizations, has certainly heard that message loud and clear.

The innovation part can be seen in the efforts PrismHR puts out every day to create the PEO platform of the future. 

On the marketing side, we can look at NAPEO and what its president and CEO, Pat Cleary, has been able to accomplish during his tenure. NAPEO’s investment in marketing has played a crucial role in raising awareness and driving the industry forward. Its marketing budget has grown from about $50,000 to roughly $1.4 million over the past 12 years, and this substantial increase has resulted in more businesses recognizing the value of PEOs and actively seeking their services. Cleary and others at NAPEO worked hard to build on the legacy of advocacy and lobbying initiatives to ensure the industry’s recognition and acceptance at both the federal and state levels.

Read Tim Pratte’s thoughts on the first National PEO Week.

Building Recognition and Trust

One of the challenges faced by the industry in its early days was the lack of awareness and understanding of what a PEO was. Conversations back then often began with explaining the legality of PEOs. “Is this legal” were words we often heard, but of course it was. Many people just weren’t aware of how PEOs operated at the time.  

With NAPEO’s persistent efforts, the PEO industry gained recognition in federal legislation and heightened awareness throughout the country. This breakthrough led to increased investments in the PEO sector, with small and medium-sized businesses (SMBs) realizing the significant value PEOs offered. The introduction of the Certified Professional Employer Organization (CPEO) designation in 2014 further bolstered the industry’s credibility and created a turning point in its growth.

Currently, NAPEO is advocating for SMBs to get the credits from the Employee Retention Tax Credit (ERTC) program. There have been significant delays, which have impacted SMBs, and this will be a big focus when NAPEO visits Capitol Hill this week.

The Next Chapter and Pat Cleary’s Legacy

Pat Cleary
NAPEO President and CEO

With the imminent transition in leadership as Pat plans to retire at the end of the year, there’s no doubt what Pat has meant to the PEO industry. His immense contributions and the positive impact he has had on the industry are well-documented. Cleary’s experience in Washington, D.C., his association background and his inclusive leadership style have been instrumental in shaping NAPEO’s success. Pat’s legacy will make it easier for the next CEO to step into the role and build upon the foundation he has laid. Although finding a suitable successor may pose challenges, the understanding of the industry’s needs and the ability to navigate the complex world of Washington politics will certainly be a key criteria.

The Future of NAPEO and the PEO Industry

NAPEO’s continued commitment to measuring the impact of its efforts and engaging in surveys with member companies reflects a dedication to progress and improvement. The evolving landscape of legislative and economic changes, such as the Affordable Care Act and COVID-19-related tax credits, presented challenges but also immense opportunities for PEOs to demonstrate their agility and value to their clients. These are complex pieces of legislation that require the savviness of a PEO and the technological foundation from PrismHR software to navigate the many compliance-related pitfalls that most if not all SMBs would never be able to manage on their own.

The next big thing, of course, is the SECURE 2.0 Act, which is focused on retirement and 401(k)s. This is an extremely complex piece of legislation, which hasn’t gotten the attention it undoubtedly deserves, but it presents quite an opportunity for PEOs to help SMBs comply with this robust piece of legislation. 

The Future Is Bright

The inaugural National PEO Week is a testament to the remarkable journey the PEO industry has undertaken over the past few decades. Through the collective efforts of industry leaders, organizations like NAPEO and tech innovators like PrismHR, the industry has overcome challenges, gained recognition and transformed the way SMBs manage their HR needs. As the PEO industry continues to evolve, the future is brighter than ever. The PEO industry is based on helping SMBs compete for talent and business with much larger organizations, and that will never change. PEOs have and will continue to make a lasting impact on businesses across the nation.

PrismHR will always be there to support our customers along that exciting journey. After all, helping PEOs help SMBs succeed is what we’re here for.

Craig Babigan

Joining PrismHR in 1994, Craig Babigian was one of the pioneer software executives who helped shape technology solutions for the PEO industry. He has been instrumental in cultivating the PrismHR software family. Craig is uniquely qualified to help PrismHR maintain and extend its forerunner status.

Prior to PrismHR, Craig was the Controller for a multi-state service company. He served as a consultant for a Canadian company that had purchased a Boston-based health care laundry. Craig is a past board member of the ESAC, a PEO accreditation organization, and past board member of NAPEO, the leading organization providing strategic direction to the PEO industry. Craig holds a BS in Accounting from Bentley College.