Could your business benefit from the addition of a PEO?

Simply put, professional employer organizations are independent firms that provide human resource solutions to the companies that hire them.  Duties commonly handled by PEOs include payroll administration, training and education programs for new employees, overseeing compliance with applicable laws and the management of employee benefits.  When a PEO is affiliated with a small business, the owner is able to focus on their bottom line instead of being tripped up by red tape, and employees can rest assured that their needs—specifically job security and satisfaction—are taken care of.

There’s a lot of misinformation floating around about the nature of PEOs, which may make some business owners hesitate to bring one aboard.  But before you decide that you’re not interested in this kind of arrangement, here are some things to consider:

1. PEOs are commonly used by small businesses.
Don’t make the mistake of assuming that PEOs are only for huge corporations.  In fact, PEOs are often more valuable to small businesses than they are to large ones, simply because small businesses tend to lack the resources and/or manpower that having an in-house HR department requires.  According to the National Association of PEOs, (a collective that oversees, certifies and advocates for the PEO industry) companies that utilize NAPEO-affiliated organizations consist of—on average—only 19 employees.  So, don’t worry that a PEO won’t “understand” the nuances of small business culture.  Your company will NOT be their first rodeo, so-to-speak! 

2. PEOs can allow you to offer your staff better, more extensive benefit packages.
Offering benefits is one way to attract new employees to your company and encourage current employees to stay with you.  Furthermore, based on the number of people employed by your business, you might be legally required to provide health insurance benefits for the folks who want them. While trying to navigate the health insurance market on your own is definitely possible, and an option taken by many small business owners, this can easily be one of the responsibilities taken on by a PEO.  Your PEO may also be able to provide your employees with a wider choice of plans, more diverse benefits, (life insurance, retirement plans, long-term and short-term disability insurance, etc.) or lower premiums than you would be able to secure as an independent business owner.

3. PEOs can make sure that you’re complying with laws and regulations aimed at business owners.
The legal aspects of running a company can be tricky, especially in our current political climate.  Most business owners want to follow the rules and do everything on the up-and-up, but it’s very possible to not realize that you’re in violation of some obscure regulation until you’re being slapped with a hefty fine…or worse.  Instead of having to devote your valuable time to becoming an expert on these matters, you can hire a PEO.  In most cases, part of their job (i.e., what you’d be paying them for!) will be staying on top of legal rules and requirements for small businesses.  In short, having an HR expert on your team can help you keep your company on the right side of the law…or stop you from inadvertently sabotaging yourself.     
 
4. PEOs can take some responsibility off of your shoulders.
A PEO might not be right for you if you’re the kind of business owner who needs to have a major role in every single aspect of your company.  Hiring a PEO will require you to put your trust and at least a tiny bit of control in someone else’s hands, so don’t do it if not micromanaging one arm of your company will cause you to lose sleep!  However, for many small business owners, the option to relinquish some of their duties will actually come as major relief.  When you have a PEO to handle your company’s HR Department and the time-consuming administrative work that comes with it, you’re free to focus on growing your business and overseeing your employees.    
 
5. Not all PEOs are created equal, so it’s critical to do your research.
If you decide to use a PEO, you shouldn’t necessarily pick the first one that shows up on a web search for “PEOs in [general vicinity of your company],” or even the same one that another business owner recommends to you.  Every PEO is going to be slightly different in how much they charge their clients, which services they offer and how they conduct their business.  It would be wise, then, to shop around and get quotes from different firms before deciding which one to bring aboard.  This will ensure that you pick the one that will suit your specific needs.

So, will a PEO be a valuable addition to your company?  That’s a question that only you can answer.  Some folks weigh the pros and cons and find that the cost of hiring an independent firm for their HR needs just isn’t worth it.  Others, however, view PEOs as the solution to issues that have been plaguing them (and, by extension, their employees) since they first stepped foot into the business world.  If you’ve never considered hiring a Professional Employer Organization to help improve the efficiency, employee satisfaction and growth of your company, it is definitely something to consider!