A professional employer organization (PEO) provides human resources, payroll, benefits, finance, regulatory, and administrative assistance to small- and medium-sized businesses. When you work with a PEO partner, you can engage all of their services or just choose a few.
With a PEO, you don’t have to have an in-house HR person if you don’t have one or don’t want to hire one. You can outsource all your HR functions to your PEO partner if you desire.
However, if you already have a full- or part-time human resources specialist on staff, you should still consider partnering with a PEO. And a qualified HR staffer will likely applaud the addition as it will expand your capacity to grow your business while complimenting the services that person provides.
Working with a PEO or Hiring Human Resources Staff
If you’re at the precipice of deciding whether to hire one or more HR staff members or work with a PEO partner instead, it helps to consider the benefits of both and see what is the best fit for your needs.
Hiring one or more full-time employees costs more than just the salaries you will pay. You also need to consider benefits, payroll taxes, workers’ compensation and other insurance, recruiting, training, and more.
Working with a PEO is typically either a fixed rate or percentage of your payroll. The costs are laid out ahead of time in your client services agreement (CSA) and rarely vary unless you hire more employees or utilize additional services.
If you’re deciding whether to hire an HR specialist or work with a PEO, you already know that taking payroll management, HR, and finance tasks off your plate as a business owner will save you time. Lots of time. Up to 20 hours per month or more. Hiring an employee (or several) also takes time to recruit, train, onboard, and manage.
A recent survey found that businesses working with a PEO experienced less employee turnover, faster growth and were up to 50% more likely to stay in business. Those are pretty big benefits in addition to saving time.
Extent of Services
A human resources specialist may have several key areas of expertise that your business needs. However, one person cannot do it all. Someone with a focus on tax accounting and finance administration may not be able to provide a similar level of service with HR tasks and vice versa. You will likely have to outsource some functions, which puts you back where you were in the first place.
When you work with a PEO, you tap into a vast array of expertise. Just some of the areas a PEO can help with include:
Local, state, and federal labor laws and regulations grow increasingly complicated every year. Not to mention industry-specific laws, tax reporting, and a vast array of laws and structures you need to remain compliant with. Just one slip-up can mean huge fines and losing your business reputation. Your PEO partner can stay on top of it all and keep your business in compliance across the board.
Whether you need help from start to finish or just need a user-friendly internal payroll software system and a little extra assistance, your PEO partner can provide stability, predictability, and any level of payroll management support you may need.
One of the most common reasons businesses work with PEOs is to take advantage of the “co-employment relationship.” Pooling the employees of many businesses together creates a competitive edge in pricing out premium benefits packages. Most small- to mid-size businesses wouldn’t have access to similar benefits on their own, nor could they afford them. A PEO changes the equation.
Working with a PEO to Augment Current HR Staff
Some companies do have an in-house HR person, or multiple staff members, when they work with a PEO partner.
If this is the case for your company, be sure to get key members of your HR team on board and make them part of the PEO interview process, so you can truly get the most out of your relationship with both.
NetPEO will also help determine your current in-house capabilities and help you find the right PEO partner that can:
- Fill in any skills gaps your team may have
- Provide access to a more attractive benefits package
- Open the door to state-of-the-art technology to make your HR staff’s jobs easier
- Carefully cover any and all needed legal compliance
- Protect the company from liability through the co-employment relationship
In-house human resources specialists can view a PEO partner as giving them the opportunity to focus more on big picture strategy, while they can pass along the day-to-day tasks to the PEO. A PEO can also serve as invaluable support when compliance, financial, and legal complexities enter into the picture.
Call Today to Schedule Your Free Business Assessment
Call NetPEO at (678) 376-1212 or fill out the form. We’ll work with you to do a free business assessment and let you know where a PEO might enhance your human resources, administrative, finance, and benefits services. Whether you have an in-house HR person or need a full suite of HR services, NetPEO can match you with a PEO that perfectly meets your unique business needs.