Did you know that companies who work with a PEO see higher growth? A recent study suggested teaming up with a PEO could net growth up to 9 percent higher than the competition.
The growth figure is enticing, but many business leaders aren’t familiar with PEOs. What is a PEO anyway? What is it that they do that can help your business grow?
This guide will shed some light on the subject.
What is a PEO’s Role?
This is often the first question business owners ask. What is a PEO and what do they do?
PEO stands for a professional employer organization. The role of any PEO is to help businesses deliver better HR services for employees.
You can think of the PEO as a co-employer or partner in delivering HR to your employees. Unlike a temporary staffing agency, the PEO is not the sole employer for your employees.
This situation gives you more say over HR functions. You make the hiring decisions for your firm, as well as decisions about compensation and other HR policies.
This is different from the temporary employment agency. They may pay the people working for you under their own policies or expect your workers to abide by their rules.
What a PEO Handles
It’s one thing to say a PEO offers assistance with HR tasks for small and mid-sized businesses. What exactly do they do?
PEOs offer a wide variety of services for employers. One of the most important is compliance management. Employment law is almost always shifting, and it can be difficult to keep up.
This is especially true for small business, who may not have the resources to track legal changes. A PEO is already watching changes for their other clients. They can then offer their expert advice on how to plan or revise policies to stay in step with the law.
Many PEOs also offer payroll services. This can lift a large burden off your HR team’s shoulders. If you have just a few HR team members or do payroll yourself, teaming up with the PEO is often a smart move.
Other services PEOs offer may include:
- Benefits administration
- Workers compensation insurance
- Access to banking infrastructure
- Help with employee training and development
Different PEOs offer different services. Be sure to research which ones meet your needs.
One thing every PEO offers you access to an expert team of experienced HR professionals. Great advice is always at your fingertips when you partner with a PEO.
The Advantages of Working with PEOs
Many business owners handle tasks like payroll and workers’ compensation themselves. Others may feel they can’t afford to hire expert help for their HR administration.
Working with a PEO often seems to be an up-front cost, but the benefits usually outweigh the fees. Provided you’re working with the right PEO, you’ll likely save money.
First, PEOs save you and your HR team time. The PEO can take over ongoing tasks like payroll, which are often tedious. Given their expertise, PEOs can usually execute payroll quickly and correctly.
Their accuracy is another advantage. Not only will you spend less time fixing mistakes, you’ll also be less likely to incur penalties. The IRS estimates the average business spends about $850 per year on tax penalties.
A PEO could save you those fees, and then some. The same is true of compliance. If you aren’t aware of a change in legislation, you may not update your policies. You could then face hefty penalties.
PEOs can also provide you with access to infrastructure you need to run your business. If you need insurance, the PEO may be able to provide access to a group policy with a better rate than you’d get on your own.
Benefits by the Numbers
Companies working with a PEO can expect to see higher growth than those who choose not to work with a PEO.
There are other advantages as well. Business owners who work with a PEO often see a much lower rate of employee turnover. Their risk of going out of business is halved.
Employees Like PEOs Too
It’s easy to see how a professional employer organization can benefit a small business. What about your employees? How will they be affected by a PEO partnership?
The fact companies that partner with a PEO have lower turnover is a clue. Employees like PEOs too.
Working with a PEO allows you to deliver better, faster HR service. Through the PEO, you may be able to offer your employees benefits like a 401(k) or better health insurance plans.
PEOs may also work to deliver better employee training and development opportunities. Many employees today want these opportunities to continue developing their skills. This allows them to further their careers.
With better benefits and opportunities for self-growth, your employees are more likely to be satisfied with their jobs. In turn, they’re also more likely to stick around, leading to lower turnover. This also saves you time and money in hiring and training new employees.
You may also notice a jump in employee productivity. With the right people on board, you can focus on customer satisfaction and growth.
Is a PEO the Right Fit?
Every business has unique needs, and that’s true in the HR department too. Now that you know what a PEO is, you’re probably asking if the PEO model is the right choice for your business.
Take a look at your business needs. If you need help with workers’ compensation or compliance management, a PEO might be right for you.
Find the Right HR Partner
Now you know the answer to the question, “what is a PEO?” Knowing your partnership options for better HR in your company can help you make the right choice.
If you think partnering with a PEO might be the solution you’re seeking, get in touch. The right HR partner could be just a click away.