Barrett Business Services, Inc. (BBSI) is a provider of business management solutions for small and mid-sized companies.
The company has developed a management platform that integrates a knowledge-based approach from the management consulting industry with tools from the human resource outsourcing industry. This platform, through the effective leveraging of human capital, helps the company’s business owner clients run their businesses more effectively.
Business Strategy
The company’s strategy...
Barrett Business Services, Inc. (BBSI) is a provider of business management solutions for small and mid-sized companies.
The company has developed a management platform that integrates a knowledge-based approach from the management consulting industry with tools from the human resource outsourcing industry. This platform, through the effective leveraging of human capital, helps the company’s business owner clients run their businesses more effectively.
Business Strategy
The company’s strategy is to align local operations teams with the intention of small and mid-sized business owners, driving value to their business. To do so, BBSI partners with business owners to leverage their investment in human capital through a high-touch, results-oriented approach; brings predictability to each client organization through a three-tiered management platform; and enables business owners to focus on their core business by reducing organizational complexity and maximizing productivity.
The company operates a decentralized delivery model using operationally-focused business teams, typically located within 50 miles of the company’s client companies.
Services Overview
BBSI’s core purpose is to advocate for business owners, particularly in the small and mid-sized business segment. The company’s evolution from an entrepreneurially run company to a professionally managed organization has helped to form the company’s view that all businesses experience inflection points at key stages of growth. The insights gained through the company’s own growth, along with the trends the company see in working with more than 8,100 companies each day, define the company’s approach to guiding business owners through the challenges associated with being an employer. BBSI’s business teams align with each business owner client through a structured three-tiered progression. In doing so, business teams focus on the objectives of each business owner and deliver planning, guidance and resources in the support of those objectives.
Tier 1: Tactical Alignment
The first stage focuses on the mutual setting of expectations and is essential to a successful client relationship. It begins with a process of assessment and discovery in which the business owner’s business objectives, attitudes, and culture are aligned with BBSI’s processes, controls and culture. This stage includes an implementation process, which addresses the administrative components of employment.
Tier 2: Dynamic Relationship
The second stage of the relationship emphasizes organizational development as a means of achieving each client’s business objectives. There is a focus on process improvement, development of best practices, supervisor training and leadership development.
Tier 3: Strategic Counsel
With an emphasis on advocacy on behalf of the business owner, the third stage of the relationship is more strategic and forward-looking with a goal of cultivating an environment in which all efforts are directed by the mission and long-term objectives of the business owner.
In addition to serving as a resource and guide, BBSI can provide workers’ compensation coverage as a means of meeting statutory requirements and protecting the company’s clients from employment-related injury claims. Through the company’s third-party administrators, the company provides claims management services for the company’s clients. The company works to manage and reduce job injury claims, identify fraudulent claims and structure optimal work programs, including modified duty.
In 2023, BBSI began offering additional employee benefit programs to the company’s clients. The new benefit programs available to clients include medical, dental and vision plans, flexible spending accounts and health savings accounts, life insurance and voluntary accident coverage, critical illness and disability coverage, among others. These additional employee benefit programs are offered through fully insured arrangements with third-party carriers and are designed to provide strategic value to the company’s clients through access to best-in-class plans and service.
Categories of Services
The company reports financial results in two categories of services: Professional Employer Services (‘PEO’) and Staffing.
PEO
The company enters into a client services agreement to establish a co-employment relationship with each client company, assuming responsibility for payroll, payroll taxes, workers’ compensation (if elected) and benefits coverage (if elected) and certain other administrative functions for the client’s existing workforce. The company provides its PEO clients access to human resource advisors, retirement plans, a learning management system and the company’s web-based technology platform, myBBSI.
The company refers to employees of the company’s PEO clients as worksite employees (‘WSEs’). The client maintains physical care, custody and control of the WSEs, including the authority to hire and terminate employees. During 2024, the company supported in excess of 8,100 PEO clients with total average WSEs of 129,577.
Staffing and Recruiting
The company’s staffing services include on-demand or short-term staffing assignments, contract staffing, direct placement (including for PEO and non-PEO clients), and long-term or indefinite-term on-site management. On-site management employees are BBSI management employees who are based on the client-site and whose jobs are to assist BBSI staffing employees. The company’s recruiting experts maintain a deep network of professionals from which the company sources candidates. Through an assessment process, the company gains an understanding of the short and long-term needs of the company’s clients, allowing the company to identify and source the right talent for each position. The company then conducts a rigorous screening process to help ensure a successful hire.
Clients and Client Contracts
The company’s PEO business is typically characterized by long-term relationships that result in recurring revenue. The terms and conditions applicable to the company’s client relationships are set forth in a client services agreement, which typically provides for an initial term of one year with renewal for additional one-year periods, but generally permits cancellation by either party upon 30 days’ written notice. In addition, in most cases the company may terminate the agreement at any time for certain breaches of contract, including nonpayment or failure to follow the company’s workplace safety recommendations.
The PEO client services agreement also provides for indemnification by the client against losses arising out of any default by the client under the agreement, including failure to comply with any employment-related, health and safety, or immigration laws or regulations. The company’s client service agreement requires that clients enter a co-employment arrangement and maintain comprehensive liability coverage in the amount of $1.0 million for acts of their employees. It is nevertheless possible that claims not satisfied or covered through indemnification or insurance may be asserted against the company, which could adversely affect the company’s results of operations.
The company has PEO client services agreements with customers in a diverse array of industries, including among others, construction, manufacturing, transportation and warehousing, waste management and remediation services, retail, leisure and hospitality and wholesale trade.
The company’s integrated management platform has enabled the company to capitalize on these needs within the small to mid-size business sector.
Technology Platform
The company’s client-facing technology platform, myBBSI, includes both internally developed and licensed software which gives the company’s clients a wide range of tools, including the ability to process payroll, collect and process time and attendance information, manage human resource information, including employee onboarding and termination, as well as compensation, benefits, and payroll tax reporting.
Growth Strategy
The company’s business growth has three primary sources: referrals from existing clients, direct business-to-business sales efforts by the company’s area managers and business development managers, and an extensive referral network. Partners in the company’s referral network include insurance brokers, financial advisors, attorneys, CPAs, and other business professionals who can facilitate an introduction to prospective clients. These referral partners facilitate introductions to business owners on the company’s behalf, typically in exchange for a fee equal to a small percentage of payroll.
The company sees two key drivers to its growth: increase market share in existing markets and penetrate new markets.
Competition
The company competes with Automatic Data Processing, Inc., ManpowerGroup, Inc., Kelly Services, Inc., Insperity, Inc., TriNet Group, Inc., Robert Half International Inc. and Paychex, Inc.
History
Barrett Business Services, Inc. was founded in 1965. The company was incorporated in the state of Maryland in 1965.