Topic Outsourcing HR / PEO,

How to Find a PEO You Can Trust

How to Find a PEO You Can Trust

According to the NAPEO, there are over 487 Professional Employer Organizations (PEOs) in the United States alone. As HR outsourcing is a growth market, that number will only go up. 

When you consider both time and cost savings, outsourcing HR to a PEO is a no-brainer. However, figuring out which one will give you the best returns is much more of a challenge. Ultimately, you are placing a very high degree of trust in your PEO.   

The average ROI of partnering with a PEO is 27.2%, but this is, of course, variable. A quality, trustworthy PEO will give you an even higher ROI, while a bad one will provide you with less, possibly a lot less. 

So how can you tell if a PEO can be trusted? Here are five things to consider: 

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Ignore Non-Certified PEOs 

PEOs can be certified or non-certified. An IRS-certified PEO gives you several advantages.  

While certification does not mean the IRS has endorsed the PEO, it does mean that the PEO maintains specific regulatory and legislative requirements, which include:  

  • Having a bond of at least $50,000 or 5 percent of the firm’s federal employment tax liabilities for the previous year, whichever is higher. 
  • Submitting annual independent financial statement audits to the IRS. 
  • Providing quarterly proof of payment of all employment taxes. 
  • Paying an annual fee of $1000. 

Certification is also a sign that the PEO takes its responsibilities seriously and is more likely to do its best for you and your employees.  

Look For Referrals 

Ask other business owners you know and trust what PEO they use and whether they would recommend them.  

Make sure you ask people you trust and watch for referral bonuses, which can incentivize people to recommend a lower quality service. A good company does not need to offer large bonuses to get referrals because they will have satisfied customers willing to speak out anyway. 

Review Case Studies 

While case studies posted by the PEO are biased in their favor, case studies can help you understand that particular PEO’s process. They can help you determine whether it is a good fit for you at the culture and values level. 

You will also get an idea as to what results they have achieved in the past. They also provide evidence of the PEO’s experience in your industry. You might want to think twice before going with a PEO if you are their first client in a particular area. 

Learn more about what makes Questco different with this infographic

Ask For References 

Any decent PEO should be able to provide you with several references. Avoid PEOs that refuse to do so; they may be inexperienced, or they may have issues.  

While the PEO will choose satisfied customers as references, talking to them is still a good idea. They can give you an idea of how suited the PEO is to your needs. If possible, call references in your industry so that you can assess their experience with your specific needs. 

Expect Pricing Transparency 

Finally, take a look at their pricing model. Make sure that the price tiers or system are crystal clear, and that there are no hidden fees or “administrative charges.” 

Bad PEOs will try and bait and switch you either on the price or what you get for it, so make sure that none of it is confusing. A good PEO does not need to offer low starter rates and jump them up later, add on fees after you have signed, or nickel and dime you on administrative charges. Instead, they can stand by their prices because they are confident in what they have to offer. 

Another red flag is overly complicated exit protocols. A good PEO isn’t worried about you leaving, because they know they offer good services. Bad PEOs will try and keep you around by making it too much of a pain to switch. 

Trustworthy PEOs Produce Higher ROI 

Ultimately, finding a PEO you can trust produces significantly higher ROI. When you can depend on your PEO, you free up more time for your in-house HR team, increase your cost savings, and get more peace of mind. Also, choosing a good PEO in the first place helps you avoid the costly and tedious process of changing PEOs. 

Ensure that the PEO you choose is certified by the IRS, has good referrals and references, provides quality case studies, and is transparent about their prices. Choose a PEO that meets all of your requirements, and you can build a long-term relationship. Partnering with a PEO is fantastic, but you need to make sure it is one you can trust. 

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Derek Carlstrom

Derek Carlstrom

Derek is the Vice President of Sales Growth. He is a proactive leader with refined business acumen and exemplary people skills. He has progressive experience in sales leadership with the skills to drive business growth, capitalize on new revenue potential, and execute proper territory maximization