Professional employer organizations (PEOs) serve 173,000 small and mid-sized businesses employing a total of 4 million people. The concept and benefits of companies working with PEOs have obviously caught on since their inception in the 1960s and 70s.

PEOs provide comprehensive HR solutions, including payroll, benefits, tax administration, regulatory compliance assistance, and general talent management functions. Companies that partner with PEOs grow seven to nine times faster, have 10 to 14 percent lower employee turnover, and are 50 percent less likely to go out of business than their non-PEO competitors.

While the growth of the industry has been strong and steady, for many businesses, working with a PEO has never made more sense than today – given changes like remote and hybrid work brought about by the coronavirus pandemic and the current highly competitive talent market.

The Value That Comes with a PEO Partnership

Why Use a PEO

Through PEO collaborations, the employees of small and mid-sized businesses gain access to big-business benefits, including 401(k) plans; health, dental, life, and other insurance; dependent care and other perks that may not otherwise be feasible or affordable for their employers.

Here are some other benefits of a PEO partnership:

• Through a co-employment agreement with a PEO, you remain the worksite employer and retain full control of your business and all related decision-making, including staffing and employee supervision. Your PEO serves as the administrative employer of record, which means they handle the time-consuming tasks associated with talent recruitment and management. Your PEO also administers the payment of wages to employees and taxes to the appropriate agencies.
• Your PEO provides ongoing expertise and guidance regarding government laws. Like the other areas of HR they handle, PEO staffers are subject matter experts. This takes the responsibility of keeping up with myriad regulations, updates, and details off your plate so you can focus on running your company.

Businesses in virtually every industry work with PEOs. A PEO partnership enables you to continue your management relationship with your team, as well as offer improved HR products and services. More of your time and resources can be allocated to revenue-producing activities like product development, sales and marketing, and customer service – as tasks ranging from maintaining personnel files, records, and documentation to screening job candidates, scheduling interviews, and negotiating better benefits offerings are handled by your PEO partner.

Guidelines for Selecting a PEO

As you assess PEOs, consider these guidelines to ensure you make the right choice for your company:

• Assess your workplace. Determine your HR, payroll, benefits, and risk management needs and see where you could benefit from outside expert assistance.
• Ask for client and professional references.
• Check to see if a company is a member of the National Association of Professional Employer Organizations (NAPEO), is IRS-certified and is independently certified by the Certification Institute or accredited by the Employer Services Assurance Corporation (ESAC). These ensure you’ll partner with a PEO that meets industry gold standards.

Looking to Find the RIGHT PEO?

To learn more and get your business on the right PEO track for 2024, contact KeyHR today.