Is a professional employer organization right for your business? More and more businesses are experiencing the benefits of a PEO partnership; PEO clients grow faster, have lower turnover, and are less likely to go out of business compared to similar non-PEO businesses.

How PEOs Work

Professional employer organizations (PEOs) provide human resource services for their business clients. In a PEO partnership, a business can cost-effectively outsource the management of human resources, employee benefits, payroll, and workers' compensation responsibilities.

In addition to taking care of employee administration tasks, many PEOs also provide workers with access to benefits such as 401k plans, health, dental, and life insurance, dependent care, and other benefits that many small businesses may not provide.

The PEO clients continue to be in charge of production, business operations, marketing, sales, product development, and the “business of doing business” while the PEO takes care of the employee-related responsibilities.

The Biggest Reason to Use a PEO

So, is a PEO right for your business? Let’s look at it from another perspective.

Imagine that you’ve just purchased a vacant lot of land and you want to build a custom home. You don’t have any experience in the construction field, but you’re certain that you can assemble all of the necessary people and materials needed to have your dream home built.

You’ll need an architect to draw up your vision. You’ll need permits. You’ll have to purchase materials, meet with plumbing, electrical, roofing, painting, and finishing contractors. You’ll need to set a schedule and coordinate all of the moving pieces. You may have a construction loan that is dependent on certain conditions to close.

Can it be done? Sure.

Is it complicated and time-consuming? Definitely.

Now imagine that you look for a better solution to achieve your vision. You want to build your dream home on the lot that you purchased. But this time you decide to partner with a general contractor.

Someone with lots of experience building custom homes for people just like you. Someone with established relationships with trusted sub-contractors. Someone with the bulk-buying power to get raw construction materials at a lower cost. An experienced professional who knows the ins and outs of every aspect of home construction and project management.

Would you partner with the general contractor or would you still try to piece your project together all by yourself?

What if the overall cost of going with the general contractor ended up being less than trying to build the home all by yourself?

For most people, the answer is easy. Partner with a professional, save time and money, and get the desired results.

And that’s exactly why so many businesses are turning to PEOs.
 

PEOs: Partnering with the Professionals

Many business owners and their HR staffs are operating just like the first example above.

They’re figuring out the ins and outs of employee management and human resources as they go. They’re using dozens of different vendors with dozens of different systems to manage payroll, taxes, compliance, and benefits issues. Each time they find a new vendor solution and system, they have to try and integrate it into the existing maze of vendors and systems.

Essentially, they’re trying to build a house all by themselves.

But when a business owner partners with a PEO, they turn over the employee-related aspects of their business to a “general contractor.”

With a PEO, your HR and employee management tasks can be streamlined into a single vendor solution.

Your HR staff can spend less time managing a complicated maze of systems and vendors and spend more time focusing on the people behind your company.

Business owners, executives, and their staff can focus their time, talent, and resources on company growth, rather than being bogged down in a sea of payroll, compliance, and benefits tasks.

What Does a PEO Cost?

PEOs bring big benefits to a company’s bottom line.

PEO’s are able to provide businesses with a greater array of HR services at a lower price then they would normally pay to receive less comprehensive offerings. The National Association of Professional Employer Organizations (NAPEO) put forth a conservative estimate that PEO clients with fewer than 1,000 employees enjoy a 21% savings on HR services.

And for many other clients, this savings is much higher.

Your cost for a PEO partnership will depend on a variety of factors, including the specific type of PEO services that you select. For most businesses, a PEO results in cost savings and a greater array of HR services.

You’re not building a home, you’re building a business. But the similarities are there. So which owner- builder are you? To reach your vision and achieve your business goals, you can either put the entire thing together yourself, piece-by-piece and dollar-by-dollar. Or you can let a PEO be the general contractor for your HR needs, and partner with a professional who will free up more time, resources, and money for you to invest in business growth. Which will you choose?