Executive Report

Benefits of Using a PEO

Often small and medium sized business spread human resources responsibilities amongst the leadership and back-office workforce. At first glance, this practice may appear cost effective because expenses are masked by the regular responsibilities of the staff. But when you take a deeper look, you find that the costs are higher and often play out in slower business growth, reduced productivity, and low return on investment.

Smaller businesses often cannot hire specialists who are able to stay abreast of the ever-evolving regulatory landscape. This puts these businesses at a disadvantage.

A professional employer organization (PEO) offers small and medium sized business a team of human resources specialists that would otherwise be inaccessible to all but the largest businesses. You have access to specialists in compliance, benefits, employee relations, policies, recruitment, retention, and strategy.

The are many benefits to using a PEO. Here are a few highlights.

Reduced Costs

  • Outsourcing human resources is cost-effective. You pay for the services and expertise that you need. Your employees have access to state-of-the-art tools to self-service, manage payroll, track training, and manage leave. Businesses that outsource human resources save money. According to research by the National Association of Professional Employer Organizations (NAPEO), there was an average ROI 27.3% compared to companies that did not outsource.
  • PEOs clients often have access to benefit plans, that other small businesses do not have access to. Clients of PEOs are often able to offer their employees competitive benefits including retirement plans, life insurance and health benefits, often at a lower cost.

Reduced Risks

  • Partnering with a qualified PEO reduces risk exposure. When something goes wrong in human resources, the impact can be devasting for a company. Risks include expensive and time-consuming litigation, costly, high turnover, negative publicity, and a loss of public confidence.
  • Contracting with a PEO ensures business continuity in human resources, an area essential for risk management.
  • Out-of-date policies put your business at risk, yet policies and procedures are often at the bottom of the to-do list. An expert review and update that takes into account, federal, state and local regulations protect your employees and your business.
  • Many PEOs offer secure platforms to manage payroll, benefits, annual reviews, and training.
  • High-quality training for supervisors and employees on key issues like sexual harassment and discrimination is effective and meets compliance requirements.

Better Employee Relations

  • Using a PEO often provides employees a sense of security that sensitive matters are handled objectively and anonymously. This reduces the risk of exposure related to confidentiality breaches. It also ensures that sensitive issues are handled without perceived favoritism or discrimination.
  • Small and medium-sized businesses that are PEO clients experience lower employee turnover (both voluntary and involuntary).
  • A trained expert is available to consult with your business on emerging trends in management, benefits, and engagement strategies for more attractive recruitment and more compelling engagement strategies.

More Time for Growing Your Business

  • Your team is freed from time-consuming human resources tasks like compliance and administration. Your employees can focus on the core business functions that draw our customers to your business. PEO clients have higher rates of business revenue growth.
  • Using a PEO eliminates time-consuming research and errors on rarely utilized human resources processes and tasks. Supervisors and employees have the proper forms and procedures that are up to date, saving time and energy and preventing costly mistakes.
  • According to NAPEO, small businesses that use PEOs grow 7-9% faster, have 10-14% percent lower employee turnover, and are 50% percent less likely to go out of business than those who do not.

Peace of Mind

  • PEO clients were less likely to have major or moderate concerns about employee interactions including recruitment, retention, and engagement.
  • Because PEOs bring expertise to the table, businesses that work with PEOs agility when faced with large-scale challenges. During Covid, companies using PEOs were 119% more likely to secure Paycheck Protection Program (PPP) loans during the COVID-19 pandemic.
  • When faced with unexpected challenges, PEO clients have access to certified human resources professionals who can advise and recommend solutions.

Contact us today to discuss your human resources, payroll, and benefits needs.

Susan E. Manno, P.A. SCP, CEO & Director of Legal Compliance, TANDIUM Corporation

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