Best Practices in Human Capital

PEO teamMoving your Human Resource functions to a Professional Employer Organization does not pass the accountability buck. The PEO will perform your tasks, but it does not relieve you of your core HR duties. Rather, it will take care of the day to day mundane responsibilities and steer you towards what needs your attention, such as monitoring and delivering best practices in human capital. 

Take the gender pay gap, for example.

Men and women are paid differently for the same work. The “same work” can be vague among the loftiest job titles, and calculating across industrial sectors allows a lot of wiggle-room. But, the difference presents an ongoing challenge for business.

The American Association of University Women (AAUW) reports on 2013 data:

  • Women are paid 78 percent of what men are paid.
  • Self-identified white males earn 54 percent more than Hispanic women and 64 percent more than Black women.
  • This 78 percent gap has barely changed in ten years.
  • Women face this gap in nearly every occupation across all 50 states.
  • The variance increases after women reach age 35, but this correlation may also reflect that the gap is narrowing for new hires.
  • While education may increase earnings, at every level of academic success, women’s median earnings lag behind.
  • Childless women are still paid less than their male counterparts.

As summarized by the Pew Research Center,

Even though women have increased their presence in higher-paying jobs traditionally dominated by men, such as professional and managerial positions, women as a whole continue to work in lower-paying occupations than men do. And some part of the pay gap may also be due to gender discrimination – women are about twice as likely as men to say they had been discriminated against at work because of their gender (18% vs. 10%).

So what will a PEO do?

It is not a PEO’s job to determine your compensation strategy or policy – other than to advise you that your pay rates may not be in compliance with FLSA and applicable City/State laws. It is not typically the PEO’s role to press you to become an “A+” employer.

However, because the PEO is immersed in your personnel data, it has information demanding your attention and action, information you cannot walk away from but may overlook if it is not at hand. For example, compensation analysis locates individual employees on parallel planes of compensation ranges, term of employment, gender and age, and job title coding.

The data reports facts, trends, and variants. But, it is your management responsibility to shape and take corrective action. The PEO relieves you of the tedium of calculation and charting; at the same time, it puts the handwriting on the wall. For instance:

  • When data shows your first year female Assemblers are making more than minimum wage but 25 percent less than first year male Assemblers, you may be breaking the law. If it shows there is a 3 percent gap, you may have a problem forming.
  • When you hire comparably qualified Sales Managers with different compensation packages, you may be breaking the law. If, on the other hand, the female Sales Manager is performing well but not as productively as the male at the end of the year, you may want to confirm the bona fide earnings differential.
  • When respective offers to male and female candidates for CFO are markedly different, you may be discriminating against the female. If there are demonstrable differences in performance history and potential, the data affords you the opportunity to justify the difference.

Partner with your PEO

Your PEO is open to productive partnership. Developing rapport and a personal relationship with your PEO liaison is mutually beneficial. It is in the PEO’s interest to keep your practices aligned and your employees pleased. It is in your interest to value the PEO input and feedback. It does not take much to understand, appreciate, and energize this synergy in the interest of your business success and doing what’s right.


Hill, C. (n.d.). The simple truth about the Gender Pay Gap (Spring 2015). Retrieved July 25, 2015, from

Patten, E. (2015, April 14). On Equal Pay Day, key facts about the gender pay gap. Retrieved July 26, 2015, from Pew Research Center: