Growth is one of the primary goals of any company. With this growth comes increasing HR responsibilities, which can quickly fill up your day and prevent you from working on other tasks.
There is an increase in demand for outsourced HR solutions, as they take some of the load off and allow you to focus on other priorities. When it comes to outsourced HR, the two primary options to choose from are a PEO or an HRO.
What’s the difference? Our team at Questco has years of experience outsourcing HR services. We’ll go over the basics of each option and how to choose the right one for your business.
A Professional Employer Organization (PEO) handles all of your administrative HR tasks. This HR model is a co-employment relationship, meaning they handle all your HR responsibilities as an extension of your company and become the employer of record for certain responsibilities.
With a PEO, your company gains access to comprehensive employee benefits. Not only that, but the PEO handles everything from payroll and compliance to risk management support. This setup is ideal for small to mid-sized companies that are looking for bundled, fully integrated HR support.
Human Resources Outsourcing (HRO) allows you to outsource your HR to a third party without the co-employment status. This means you get to decide which responsibilities stay in-house and which you outsource.
This flexible, service-by-service format offers extensive customization options that are often favored by larger companies with pre-existing internal HR teams.
When comparing PEO vs. HRO, it can be tough to spot the difference if you’re new to HR outsourcing. Some of the key distinctions that set these two apart from each other include:
In a PEO, you enter into a co-employment model. This means that you still control hiring, promoting, or firing your employees, but the PEO takes care of things like benefits and filing taxes. This also means the PEO is responsible for HR compliance.
In an HRO, there is no change in employment status. Your business can outsource as many HR services as you want while keeping your primary HR in-house.
PEOs offer bundled services you can choose from. You get to pick the bundle that works best for your business, and they’ll take care of multiple HR responsibilities.
In comparison, HROs are modular. This means you can pick each HR service you want à la carte to take some of the weight off your internal HR team.
PEOs often have a higher up-front setup cost, and they typically charge a certain rate per employee. Some even ask for a percentage of your payroll each pay period. However, the long-term costs are often less than an HRO.
On the other hand, HROs often have a lower upfront cost. You’ll also have higher insurance premiums, so your long-term costs may be higher.
With a PEO, you get to choose between a variety of service packages. Each package comes with certain HR services at various rates, so you can pick the right one for your business.
With an HRO, you pick each individual service you want outsourced. This gives you a slightly higher degree of control over what HR services you keep in-house and which you outsource to a third party.
If you’re not sure whether to go with a PEO or an HRO, take a look at the current state of your business. Consider the size of your business and your current internal HR capacity, and think about how human resource outsourcing may help your business flourish.
You can also factor in your current growth plan and budget considerations. This can help you determine the right outsourcing plan for your business.
PEOs are a great option for smaller to mid-sized businesses struggling to offer quality employee benefits. When you partner with a PEO, your employees are added to their master benefits plan.
With so much misinformation on the internet, we want to set the record straight. PEOs and HROs offer smaller businesses a variety of benefits that can help your company soar, and we want to make sure you have the correct information to make the best decision.
Two of the most common myths regarding PEOs and HROs include:
“A PEO takes control away from my company.”
When people hear that a PEO is a co-employment agreement, they start to worry that they will lose decision-making power for their company. In reality, a PEO takes certain HR services off your plate so you have time to focus on other things. You are still the boss.
“HROs are only for very large enterprises.”
HROs are not just for massive enterprises with thousands of employees. These HR outsourcing services help streamline the process while allowing you to keep certain services in-house. No matter the size of your company, an HRO can help manage your HR responsibilities.
At Questco, we understand the value of dependable HR services. Our partnership with our clients creates positive results that will allow your company to continue to grow and strengthen.
We offer flexible PEO models tailored to your specific needs as your business evolves. Whether you’re a small startup or a mid-sized company, our team is ready to help you manage your HR services.
Getting bogged down with administrative HR work? Outsourcing your human resource services to a dependable PEO or HRO can help lighten the load and allow you to focus on growing your business. Picking the right service for you comes down to your company’s needs and values.
If you’re looking for quality PEO and HR outsourcing services that will take your business to the next level, look no further than Questco. Consult with our HR experts today to find the best HR service package for your company.