A Comprehensive Guide to PEOs and Why Your Business Would Benefit from Using One

Many small businesses are taking advantage of professional employer organizations or PEOs. These organizations are basically a way to outsource human resources for small businesses that do not have the staff or time to take care of HR functions. A PEO assumes most of or all of the aspects of human resources for a business. This includes hiring, payroll, health benefits, and more. Some PEOs will bundle their services while others offer them on a single basis – you buy only what you need in services.

For many small business owners, a PEO is a perfect solution for their human resource woes, giving the business owner more time to spend on other important aspects of the company. Below, we have explained some of the features PEOs offer.

Recruiting and Hiring
PEOs offer an essential service during the recruiting and hiring process. They are able to track applicants using a specially designed system referred to as ATS—the Applicant Tracking System—that allows the PEO to score applications submitted by potential employees. PEOs help with verification measures such as background checks and personality assessments and they also provide assistance writing employee performance reviews. This management style can help the company grow and take a load off the shoulders of the owner.

Working Relationship
Some people believe that once a PEO is used, that PEO will have all of the control over employees. In some instances, this can be true if the organization tries to ‘run the show.’ Good PEOs work with the client company, providing support and advice when it comes to employees.

Excellent PEOs create a solid partnership with the client company to help ensure that the client still has control over their business and employees. The client company can make their own choices regarding employees. If an employee is not up to snuff, the client company can decide to dismiss them. Their PEO may help mediate any disagreements, but ultimately the client has the right to keep or dismiss any employee based on their performance or the company’s standards.

Benefits Packages
Many small employers just can’t afford to offer health insurance to their employees. This is where a PEO can come in handy. An excellent PEO may offer benefit administration services and have several different insurance carriers to choose from with multiple tiers to their clients and employees. A small business can choose among these plans to help their employees enjoy the same health insurance and benefits as large companies with serious buying power.

Not every PEO will be able to offer your company all of the things you may need. Carefully review the PEOs in your list in order to find the one that fits your company the best. Don’t get forced into buying into a package that is too big or small for your company. Packages that are too ‘big’ for a small business can end up costing more and being a waste for people that only need a few areas of help. Your choice should balance on the previous performance of the company, how well they work with you, and the quality of employees they can offer or find for you.

Nothing in your business is as important as your people, but building and leading a team brings challenges. At StaffScapes, we can help you meet the challenges in HR by helping you provide excellent (and affordable) benefits, manage risk, and by handling workers comp and complete payroll processing.

That lets you increase profitability, maximize productivity, reduce time spent on transactional HR activities, reduce employment-related liability, and ultimately lower labor costs, while boosting morale at work, and improving employee satisfaction and retention.

If you’re interested in learning more, reach out to one of our PEO experts today.