If you’re considering partnering with a PEO, you may be curious how the relationship is going to affect your bottom line. After all, there’s no sense moving forward with the partnership if it’s not going to help your business grow.
When it comes to comparing similar businesses, companies that partner with a PEO tend to do better than similar companies that don’t work with a PEO. In terms of annual median revenue, PEO users have been reported to see a growth rate that is twice as high as similar businesses. In other key metrics, such as profitability and employee retention, PEO users also outperform their competition.
If you want to know more about how a PEO can help your business grow, call (678) 376-1212 or reach out using the contact form to connect with a PEO broker. NetPEO’s brokers can help you understand what services are available for your business and how they can help your company grow.
Annual Median Revenue Growth and Other Important Metrics
A 2017 white paper by economists Laurie Bassi and Dan McMurrer presents some of the clearest research on the impact of partnering with a PEO. Their research came in the form of a survey of 101 companies, with 71 businesses represented by PEOs and 30 who were not currently partnered with a PEO. Using information gathered from these businesses, Bassi and McMurrer found that PEO users:
- Had double the annual median revenue growth over comparable businesses without a PEO partner
- Projected a 40% annual median revenue growth over similar companies
- Saw 16% greater likelihood of increasing profitability
- Were more confident about handling business challenges
The key business challenges that Bassi and McMurrer looked at included:
- Hiring employees
- Increasing revenues
- Raising funding
In all these categories, PEOs users were more confident in their ability to meet these challenges than businesses who didn’t have a PEO partner. It is perhaps one reason why 98% of surveyed businesses would recommend a PEO to their business associates.
Reported Benefits for Employees
While the above information is good for your bottom line, you may also be concerned about what a potential PEO partner might mean for your employees. However, the Bassi and McMurrer’s research also suggests that employees are more satisfied when the company partners with a PEO. Compared to employees at similar firms, employees of PEO users were more likely to report higher levels of:
- Employee engagement
- Confidence the employer is moving the business in the right direction
- Intention to stay with the company
Employees also reported that their employers had:
- A stronger commitment to employees
- Better hiring practices
- Better HR policies
- Better training and development opportunities
In all these key metrics of employee satisfaction, PEO users outperformed similar firms without a PEO partner.
Why a PEO Can Help Your Business Grow
The study by Bassi and McMurrer shows that PEO users do better financially. It also shows that a PEO partnership improves the outlook of the firms’ employees.
This is likely from a combination of services offered by the PEO and the freedom it gives to you as a small business owner.
Services of a PEO
When you partner with a PEO, you are outsourcing some of your HR responsibilities to a team of HR professionals. Depending on the nature of your PEO relationship, you may be getting assistance with:
- Workers’ compensation claims
- Benefits administration
- Employee training and development
Particularly for business owners without a background in HR, turning to a PEO allows your company to benefit from the knowledge and experience of HR professionals. At a fraction of the cost of hiring an in-house HR team, you save money and get access to insights that can help your business grow.
Effects of a PEO
If you’ve been juggling HR functions along with running the daily operation of your business, you have likely felt that there are too few hours in a day. A PEO partnership means that you no longer have be as active in those responsibilities.
This freedom means that you can refocus your attention on working with your employees to grow your business. According to the research of Bassi and McMurrer, this can have a significant impact on your revenue growth and employee outlook.
Use NetPEO to Simplify Your PEO Search
As the growing PEO industry may make finding the right partner difficult, NetPEO is here to help simplify your search for a new PEO. Whether you’re a first-time PEO user or you’ve been less than satisfied with your current provider, our PEO brokers will be happy to assist you for free. For your free initial needs analysis, call (678) 376-1212 today!