Management 2000: the largest Indiana-owned PEO.

• Author: McKimmie, Kathy
• Position: Profile

Letting you to do what you do best--run your business and make a profit--is what professional employer organizations are all about. Working in a co-employment contractual arrangement, they perform the payroll, benefits and human-resources functions, for either a flat percent of payroll or a transaction-based arrangement per employee.

"Benefits are not a profit center," says Dave Day, president of Management 2000 in Indianapolis. "They're a hassle, a waste of the owner's time." In the old days--like two years ago--he says clients came because they had to have a benefit plan, but companies continue to sign on despite the high unemployment rates because small businesses want to hold onto their skilled workers.

Management 2000, the largest Indiana-owned PEO, has assumed the headaches of 310 CEOs who made a decision to stop worrying about payroll, health care, unemployment and workers' comp claims. Combined, their companies have 3,500 employees with $85 million in payroll this year and include locations in 29 states.

The National Association of Professional Employer Organizations, the trade association for PEOs, estimates there are 2,000 PEOs nationally, representing an estimated 2 million to 3 million employees. The popularity of the arrangement is shown in the 20 percent annual growth rate.

Growth at Management 2000 has been even faster, says Day. Sales doubled every year from its start-up in 1994 through 1999. Now it's settling into a 20 to 30 percent growth rate with an average 3 to 3 1/2 percent profit on gross payroll.

"As health and workers' compensation become more of an issue, the employer that wants to solidify its position jumps to a PEO," says Day. "Insurance has tightened up. There are no more discounts on workers' comp. In health insurance, there's no more first-year low rate and then jumping it the second." These are particularly critical issues for small employers, and the average size employer with Management 2000 is 16, with a range of four to 160 employees.

One early client, Cross Electric in Greenfield, joined the PEO when it had 10 or 11 electricians, says Day, and it now has more than 50. "Even at 10 employees, they still had the same benefits as Barth Electric," a larger Indianapolis competitor.

Carpenter GMAC Real Estate has brought its statewide offices under Management 2000. "Our benefits department is just like their benefits department," says Day, and the benefits package has helped them attract top quality employees.

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