May 17, 2022 | By Brandon Hartsaw
Managing your company's costs and expenditures is critical to reaching your aspirational growth objectives. Certain aspects of the business, such as HR, cannot be eliminated without risking fines for noncompliance.
As a result, many businesses resort to Professional Employer Organizations (PEOs). A PEO gives you access to HR specialists who can assist you in keeping costs under control while also giving your employees a pleasant place to work.
In its broadest meaning, HR outsourcing is when a corporation hires another company to manage some or all of its HR functions. In most cases, HR outsourcing entails a mix of technology and people.
Some companies keep most of their HR services in-house while contracting only some tasks, such as payroll processing and benefits administration. Other businesses prefer a more comprehensive outsourced service covering all their HR needs.
A Professional Employer Organization (PEO) is an outsourced firm that provides businesses with comprehensive HR services, including HR technologies, payroll administration, employee benefits, workers' compensation, safety advising, and access to a team of HR professionals.
PEOs provide a sustainable, customizable solution to companies of all sizes, and they work with clients to find the best fit for their specific needs. The PEO and the respective company operate together as co-employers.
Most small businesses lack the depth of HR competence or system capabilities for services like payroll and HRIS. Adopting a PEO can help them easily accomplish such tasks.
However co-employment does mean that the business owner loses control over the everyday decision making process. This arrangement just gives PEO the ability to process and file payroll taxes, maintain workers' compensation coverage, administering employee benefits.
By handling such responsibilities, PEOs free you to focus on day-to-day operations, such as offering goods and services to consumers and recruitment
PEOs are becoming increasingly popular across businesses due to their numerous advantages. Here are the 7 reasons why you should consider using PEO in your company:
Administrative responsibilities can slow down even the most accomplished HR staff. Keeping up with ever-evolving labor regulations and devising plans to introduce changes to your business procedures requires time, effort, and legal understanding.
When you hire a PEO, their HR professionals will supplement your internal staff by advising you on how to make changes. Other administrative tasks, such as payroll and tax payments, will be handled by your PEO. These are time-consuming HR duties that are vulnerable to errors. Giving these to your PEO will provide you with peace of mind. You can rest easy knowing that the tasks will be handled by professionals. Assigning such tasks for the PEO also frees up your internal HR personnel to focus on the firm's primary business.
Aside from a competitive wage, a world-class benefits package that includes high-quality health insurance and retirement choices such retirement accounts are one of the effective ways to attract, keep, and motivate employees.
However, most small and medium-sized businesses struggle to offer these perks. Since these businesses are small, their risk pool is small, making them more sensitive to rate hikes.
If you work with a PEO, you can enroll in the PEO's existing master benefit package, giving your team precisely what they want through this program at a rate your firm can afford.
Risk is part of any business, but you can take steps to avoid these risks and lower the chances of a worker lawsuit or government sanctions.
One of the ways to do this is through your PEO, which offers a handbook consultation where HR experts can examine your policies and determine your compliance with the set standards and procedures. HR experts will also look over or assist you in developing a top-notch safety program that can help reduce the number of workplace accidents. The safety program also provides individuals who have been injured on the job with a return-to-work program that will assist them in making a quick and smooth transition back to work.
As with most small businesses, you probably use multiple systems to perform your everyday HR functions. While such systems help you get by, adopting a harmonized system would help you to be more effective.
A PEO does exactly that by allowing you access to their software that hosts all of your HR data in one place. PEO has security levels, ensuring only authorized individuals have access to certain information. For example, employees will only access the information you want them to view, such as their pay stubs and perks, while more detailed business information, such as entire company payroll and taxes, is only available to you and your HR team.
Keeping up with federal, state, and municipal labor rules can prove a hassle. Tasking a single employee to keep tabs on the changes in policies and regulations across these jurisdictions while also handling HR functions can result in inadvertent, costly errors.
Incurring government fines and penalties for basic mistakes that could be avoided is the last thing you need in your business.
When you work with a reputable PEO, its HR professionals will notify you whenever it's time to make changes. They keep an eye on employment rules and regulations and inform you of the latest changes.
A high experience modifier rate (EMR) means that many small enterprises suffer significant workers' compensation expenditures. Even when workers' compensation insurance is required, getting coverage with a high EMR can be discouragingly expensive.
Partnering with a PEO means you can enroll in their workers' compensation plan that gives you access to their EMR, potentially lowering your premiums.
When you work with a PEO, you gain access to specialists who can help you with potential claims. In addition, your PEO will assist you in developing a return to work plan so that employees who suffer on-the-job injuries have a clear back-to-work formula. Your chosen PEO's HR professionals will also conduct a fraud check on your workers' compensation claims, ensuring that you only pay out valid claims.
A high-quality benefits plan enables you to attract and retain the industry's finest professionals. You'll be able to assemble and keep your dream team if you offer these desirable perks through your PEO.
Your PEO frees up time for you to concentrate on your essential company needs by handling administrative tasks. Your internal HR team will have more time to focus on creating and sustaining an appealing business culture that rewards employees who stay loyal to your company.
PEOs are becoming extremely prevalent, and the seven reasons listed above explain why. Outsourcing HR administration activities, lowering your overall expenditures, and complying with employment rules all ensure smooth business operation. Working with the proper PEO can assist you in achieving these objectives.
Acting as the Chief Operations Officer, Brandon actively promotes an environment of creativity, collaboration, and individual ownership to empower Questco team members to deliver exceptional client experiences.