3 Advantages to Working with a PEO Company

A good business owner knows that its strongest asset is its people. Having happy employees means harder workers and more productivity. Overworking employees can be detrimental to a company’s success; therefore, many small businesses prefer to work with a professional employer organization, also known as a PEO.

While not the best choice for every business, using a PEO has some significant advantages for small businesses. Ask around at a local chamber of commerce meeting and I bet you will find a lot of businesses utilize these services. There are many advantages, but we are going to focus on three in this article.

1. It reduces the amount of HR-related and administrative tasks that the business has to handle in house.

This is huge for a small business. In order to continue to grow, many employees have to wear multiple hats, especially on the administrative side of things. Over-stretched employees can reach burn out level much faster, making them unproductive and stressed – two things that are detrimental to your business.

An administrative employee is likely to be very familiar with unexpected interruptions and can usually work in an ever-changing environment. However, when someone who handles multiple functions of administration is also tasked with handling something as important as HR and payroll, their level of interruptions can triple, leaving them completed unproductive toward their original job duties.

Outsourcing the HR and payroll functions can be a positive to both the administrative employee as well as every other employee that works for the business. They are able to get clear answers when they need them and will have someone’s complete attention when processing important tasks, such as benefit enrollment and payroll.

2. They help maintain federal regulation compliance and reduce risk.

Rules and regulations are in a constant state of evolution in the business world. Missing or misunderstanding a new regulation can land you in a lot of hot water, especially if that mandate is in a sector such as healthcare or the legal system. You can find yourself saddled with fines and other issues for even minor mistakes.

A PEO is able to combat this by employing people to stay up on rules and regulations and regularly check in on your implementation. They are going to keep you accountable to adhere to anything that comes down the pike.

Additionally, they can provide workplace training for new and old processes and procedures to ensure you are functioning at the highest level possible for your business. Industries like healthcare are heavily regulated when it comes to training its employees and it can be a daunting task creating the training and then ensuring all employees complete the training successfully. Having a hired company who will step in and fulfill that to you can be invaluable to your compliance and success.

3. You are getting high quality benefits for a lower cost.

When you hire a PEO, you are getting skilled individuals who are ready to take on whatever tasks they are hired for. There is no onboarding, training time or supervision required to get them up and running. If you have someone designated to work for your company and they choose to leave the PEO, someone is immediately ready to take on that workload, erasing your search cost and down time without that position. They are most likely going to be employees with experience in the sector you are using them for, therefore they come ready to work.

If you were to hire the same positions in house, you would need to take the time to find the right people, get them through the onboarding process and necessary background checks if your business requires them, train them, and then usually they will start a probationary period to make sure they are going to work out. Not only is this process timely, it is also expensive. You can almost guarantee a few weeks of paychecks without any real work being produced as the person gets acclimated.

Another benefit is when you hire a PEO, they traditionally have a team of people ready to take on the business functions you need handled. In-house hiring means hiring multiple people, which can be expensive. Beyond just the salary, you are saving on healthcare benefits and employee benefits such as paid time off, 401k matches, and life insurance. These costs add up quickly with each employee, so it is definitely a cost-saving measure to use a PEO.

There are a lot of benefits to using a professional employer organization. For a business owner, knowing you have a partner company looking out for your best interest and handling the day-to-day administrative tasks so you don’t have to worry about them can be the path to huge success. Having someone to turn to when you have questions about compliance and regulations can save you time and ultimately money. If you are a small business looking to grow, hiring a good PEO can start you on the right path.


Feature Image by Gerd Altmann from Pixabay