PEO. It’s an unfamiliar term, even for experienced businesspeople. But a Professional Employer Organization is a partner every businessperson can depend on to handle their HR functions, keep them complaint with government and have their back if difficulties arise.
What Does a PEO do?
When you outsource your HR to a PEO, they become the employer of record for your workforce. This usually covers all aspects of human resources—complete payroll processing, workers compensation, employee benefits packages, regulatory reporting, onboarding, separations, and more. All the paperwork and administration hassles become our concern. You’ll receive additional assistance in reducing exposure, creating improved policies and procedures and safety programs. Plus, the expertise PEO personnel bring to the table allows them to shop the market of benefit plans geared toward small and mid-sized businesses and find plans that are affordable for you and your employees.
In some cases, it makes sense for some functions to remain with you, the client, which is called a co-employment arrangement. These boundaries are agreed to according to your best interests and spelled out in a client services agreement.
What are the benefits?
The benefit of saving time spent on payroll administration and other tasks is obvious, but is there more to it than that? Here are just a few of the many benefits of having a PEO partner.
When you have your own in-house HR apparatus, there’s more to handle than paying the HR employees. They’ll need software, regular training and other expensive add-ons to do their job well. With a PEO partnership, a group of HR experts has created that infrastructure and is using it for the benefit of multiple companies.
Better Recruiting and Retention
When you can provide better benefits packages and create a better work environment, hiring becomes an easier process. You’ll be able to higher better employees, and generally do so more quickly. And best of all, those employees will stay with you: Figures from the Bureau of Labor Statistics (BLS) show businesses who partner with a PEO have 10-14% lower turnover rate than their industry’s average.
Instead of dealing with frequent HR issues and decisions, you and your management team will be able to devote more of your time and energy to leading your workforce and making your company a success.
What do better allocation of costs, better retention and focus on what you do best lead to? Increased growth. When you’re focused on what you do best instead of compliance and paperwork, you can make the decisions that lead to greater success. BLS figures bear this out as well, with companies that partner with PEO’s growing 7-9% faster than other firms in their industry.