Is It Worth It to Switch PEOs?

Navigating the complexities of human resources is enough to make any business owner's head spin. That's where a Professional Employer Organization (PEO) comes into play, offering the support and resources necessary to streamline HR functions.

However, what happens when your chosen PEO no longer aligns with your company's needs? Deciding when to switch PEOs is a significant question that requires careful consideration.

In this post, we discuss how you can tell which signs indicate it's time for a change and the benefits you can achieve when switching PEOs.

What Role Does a PEO Have?

Before determining if a switch is necessary, it's crucial to understand the role a PEO plays in your business. PEOs manage HR tasks such as payroll, benefits, and compliance, allowing you to focus on core business operations. They undertake certain responsibilities, which can alleviate administrative burdens and streamline your internal operations.

With a PEO, businesses gain access to better employee benefits and more streamlined HR processes. Ideally, this partnership should enhance your company's efficiency and employee satisfaction.

But what if these goals aren't being met? Recognizing a mismatch between expectations and reality is the first step in evaluating the need for a new PEO.

When is it Time to Switch PEOs?

Several indicators can suggest it's time to reconsider your current PEO arrangement. One common reason is when the level of support you're receiving no longer meets your growing needs. Perhaps your company is expanding rapidly, and the PEO can't keep pace.

Cost-effectiveness is another critical factor. If you've noticed a consistent rise in service fees without a corresponding increase in quality or support, it may be time to assess other options. Additionally, if communication with your PEO has become frustratingly sluggish or unresponsive, this can significantly impact your business operations.

When your PEO becomes more of a hindrance than a help, it's likely time to explore other options. The decision to switch should ultimately result in better alignment with your company's goals and values.

What Reasons Should You Switch?

Switching PEOs isn't a decision to be taken lightly. However, there are specific reasons that warrant serious consideration of a switch:

Medical Renewal Rates Rise Yearly

Health insurance costs are notoriously unpredictable, with renewal rates increasing anywhere from 10% to 60% annually. PEOs have considerable leverage to negotiate health insurance rates – which gives them the ability to stabilize these rates and help manage expenses effectively. They can pass that on to clients and offer them cost-saving options.

Lacks a Dedicated Service Team

If reaching out for assistance feels like shouting into the void, it's a red flag. A reliable PEO should have a responsive, dedicated team ready to address any issues promptly for all their clients. You want to have a steady response when you call to feel confident that your needs are listened to.

No Multistate Capabilities

In today's interconnected world, businesses often operate across state lines. A PEO without multistate capabilities restricts your growth and can complicate compliance and legal matters. It indicates that there are limits to their capabilities – and it presents a limit to how much they can offer. If your business grows or expands beyond your initial state, then they will not be able to help you.

Reporting Isn’t Customized to Your Company

Generic reports don't cut it. You need insights tailored to your business that demonstrate how the PEO adds value and contributes to cost savings and efficiencies. If your PEO partner is unable to customize reports to your company, then you have no ability to tell what they actually do to help you.

Inflexibility to Adapt to Your Needs

Every company is unique, with distinct HR requirements. A one-size-fits-all approach is inadequate. Customizing services to fit your needs is vital, as it ensures you have your specific needs addressed. Only paying for the services you need and use also ensures you get specific benefits for what you pay for.

Does Not Have Available Expertise on Hand

Beyond having a service team, a PEO should have experts in various HR domains to provide specialized advice as needed. If they lack specialized experts on their team, you can’t have the same level of confidence in their HR services.

Selectively Focuses on Getting New Clients, Not Supporting Old Ones

A PEO overly focused on acquiring new clients might neglect existing ones. Ensure your PEO values long-term relationships and client satisfaction because that indicates their services are qualitative. Look for a PEO that has a high renewal rate, as that shows that they invest in their current clients.

Is It Time to Make the Switch?

The decision to switch PEOs should be carefully evaluated based on your company's unique needs. While there's no universal answer, exploring what other PEOs offer is a prudent step if you're experiencing any of the issues mentioned.

Consider conducting a thorough analysis of potential PEOs, comparing their offerings, customer reviews, and service levels. Schedule consultations to discuss your specific needs and how they can address them.

Ultimately, the goal is to find a PEO that understands your business challenges and actively works to solve them. By doing so, you maximize the potential of your partnership, allowing you to focus on what truly matters—growing your business.

Recognizing the right time to switch PEOs can significantly impact your business's efficiency and growth potential. Questco has the expertise and customization to help your company with its HR needs.

Reach out to Questco today to learn what they can do to help!