I work with the Executives on a daily basis. The #1 question I get is...I have an HR person so why do I need you? Well, the answer is pretty simple...who does your HR person have? Human Resources is supposed to help manage and oversee the most expensive asset a company has and it is always understaffed. A company may choose to work with a Professional Employer Organization (PEO) for several reasons, as PEOs offer a range of valuable services and benefits to support businesses and their HR Managers. Here are some common reasons why a company might opt for a PEO:
- Cost Savings: PEOs can help small and medium-sized businesses (SMBs) reduce HR-related costs. By pooling multiple clients together, PEOs can negotiate better rates for employee benefits such as health insurance, workers' compensation, and retirement plans, potentially resulting in cost savings for the company.
- Compliance Assistance: Employment laws and regulations can be complex and vary by location. PEOs have expertise in HR compliance and can help to navigate the legal landscape without the cost of an attorney, reducing the risk of costly compliance violations.
- Access to Benefits: PEOs often provide access to a broader range of employee benefits, including health insurance, dental and vision coverage, retirement plans, and other perks. This can help smaller companies attract and retain top talent.
- HR Administration Support: PEOs support various HR functions, including payroll processing, tax compliance, employee recordkeeping, and HR administrative tasks. This allows business owners and HR managers to focus on core operations and strategic growth rather than tactical paperwork.
- Risk Management: PEOs can assist with risk management by providing safety training, workers' compensation claims management, and safety programs. This helps reduce workplace accidents and related costs.
- Recruitment and Onboarding: Some PEOs offer recruitment and onboarding services, helping companies find and onboard new employees efficiently. This can be particularly beneficial for businesses experiencing growth.
- Scalability: PEO services can scale with a company's needs. Whether a business is expanding or downsizing, a PEO can adjust its services accordingly, providing flexibility for changing workforce requirements.
- Employee Development: PEOs may offer training and development programs that can help improve employee skills and productivity.
- Time Savings: Outsourcing some HR functions to a PEO can save business owners and HR managers a significant amount of time, allowing them to focus on strategic planning and growing their business.
- Access to HR Expertise: PEOs typically have HR experts on staff who can provide guidance on HR-related issues, reducing the risk of HR mistakes and legal problems.
- Employee Relations Support: PEOs can assist with managing employee relations issues, including disputes and conflicts, providing a neutral third-party perspective.
It's important for companies considering a PEO to carefully evaluate their needs, the services offered by PEOs, and the costs involved. PEO arrangements often involve a co-employment relationship, where both the PEO and the client company share certain employer responsibilities and liability. Businesses should thoroughly understand the terms of the agreement and assess whether a PEO is the right solution for their specific HR and business needs.
