Why PEOs Don't Replace Your HR Team – They Enhance It

Understanding the Role of PEOs in Your HR Strategy

There's a common misconception that partnering with a Professional Employer Organization (PEO) means you can eliminate your internal HR team. In reality, a PEO is a powerful tool to enhance your HR capabilities, but it doesn't replace the need for an internal HR advocate. Here’s why:

The Myth: PEOs as a Complete HR Replacement

In the PEO sales process, you'll often hear that outsourcing your HR means you have 100% support. They provide an HR business partner, accessible via phone or even in-person visits. While this sounds comprehensive, it overlooks a critical aspect: knowing what you don’t know.

The Reality: Unconscious Incompetence

As an employer, you might be unconsciously incompetent in HR matters—not because of a lack of intelligence or capability, but simply because you don't know what you don't know. For instance:

• Legal Pitfalls: Did you know that writing on a candidate's resume during an interview could expose you to legal risks?
• Proactive HR: If you’re unaware of potential HR issues, you can't address them before they become problems.

The Solution: Internal HR Advocacy

To truly benefit from a PEO, you need an internal HR advocate who can:

1. Identify Problems: Recognize potential HR issues that might not be immediately obvious.
2. Communicate Effectively: Relay these issues to the PEO for expert advice and solutions.

Why Internal HR Is Crucial

Even with the support of a PEO, having a fractional Chief People Officer or an internal HR person is essential. Here’s why:

• Proactive vs. Reactive HR: An internal HR advocate can spot issues early, allowing the PEO to provide proactive solutions.
• Specialized Knowledge: Internal HR personnel have specific insights into your company culture and operational nuances that a PEO might not grasp immediately.
• Compliance and Best Practices: They can ensure daily compliance with HR laws and regulations, reducing the risk of costly lawsuits and penalties.

Case Study: The Interview Process

Imagine you’re conducting an interview and inadvertently ask a question about the candidate's proximity to the office. This might seem harmless, but in places like California, it could lead to a lawsuit.

An internal HR advocate would know the best practices and could quickly check with the PEO for guidance. This proactive approach ensures compliance and mitigates risk.

Enhancing HR with PEOs

Think of a PEO as a resource, a coach, and a compendium of knowledge. They are there to support and guide your internal HR team, not replace them. Here’s how to make the most out of your PEO partnership:

• Utilize Expertise: Use the PEO’s resources to supplement your internal HR knowledge.
• Stay Informed: Keep up with best practices and legal updates provided by the PEO.
• Collaborative Approach: Foster a collaborative relationship where your internal HR team and the PEO work hand-in-hand.

The Role of Technology and AI

While technology and AI tools like QuickBooks or automated HR systems are incredibly useful, they cannot replace the human touch. Your HR decisions are based on strategic goals, creativity, and nuanced understanding—areas where human insight is irreplaceable.

Conclusion

Partnering with a PEO provides immense value, but it’s not a replacement for a robust internal HR team. Instead, view it as an enhancement, bringing additional expertise and resources to your HR strategy. By maintaining an internal HR advocate, you ensure that you’re not just reacting to problems but proactively creating a supportive and compliant workplace.

Thinq HR & Insurance Services

Need Help?

Schedule a PEO & Employee Benefits Strategy Session

Learn about Thinq HR & Insurance Services

Helpful Links:

YouTube Channel

10 Minute Business Insurance Policies through Next