What is a PEO?

Professional Employer Organizations (PEOs) provides comprehensive HR solutions for small businesses, making them safer, more efficient, and more profitable.

PEO – it’s an unfamiliar term, even for experienced business people. But a Professional Employer Organization is a partner every businessperson can depend on to handle their HR functions, keep them compliant with regulations, 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 the concern of your PEO.

You’ll receive additional assistance in creating improved policies, 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. This is called a co-employment arrangement. These boundaries are agreed according to your best interests and spelled out in a client services agreement.

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Featured Resource: Maximizing the Value of Professional Employer Organizations

Download our detailed guide to learn about the benefits of outsourcing HR tasks, and how it can enhance your business efficiency and employee satisfaction.

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 partnering with a PEO.

Shared Costs

When you have an in-house HR apparatus, there’s more to handle than paying employees. You need software, regular training, and other expensive add-ons to enable employees to do their jobs well. With a PEO partnership, your HR will be handled by a group of experts who use a tried-and-true system to benefit multiple companies.

Better Recruiting and Retention

A strong benefits package and positive work environment will give you a competitive advantage attracting and retaining quality employees. In fact, figures from the Bureau of Labor Statistics (BLS) show businesses who partner with a PEO have a 10-14% lower turnover rate than their industry’s average.

Increased Focus

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.

Increased Growth

What do better allocation of costs, increased retention rates, and a greater capacity for 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. The National Association of Professional Employer Organizations (NAPEO) reports that small companies that partner with PEO’s grow 7-9% faster than other firms in their industry.