Topic Outsourcing HR / PEO

The Goldilocks Approach to Finding the Perfect PEO

The Goldilocks Approach to Finding the Perfect PEO

Aside from her haphazard approach to wildlife, business leaders can learn a great deal from Goldilocks. For companies looking to outsource their HR needs, they need to understand their options but also how those options fit their specific business needs.   

A Professional Employer Organization (PEO) may be able to support your needs now as well as in the future, when your needs grow and change. Whether referring to beds, porridge, or PEOs, it is crucial to look for a solution that is not too big, not too small, but just right. 

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What is the Goldilocks Approach?

We all remember the story of Goldilocks, and how she wanted porridge. It took her a few tries to find the porridge that was just right for her. The same approach can be used to finding a PEO that meets your specific business needs. 

The Goldilocks approach is a way to compare different PEOs to see which one is just right for you. Alternatives to the Goldilocks approach are looking for the biggest PEO competitor or the smallest, most local PEO available. Neither extreme will serve your business well. 

This PEO is Too Large… 

There are many national PEOs offering services to small businesses anywhere in the country. These PEOs often focus on providing broad services and saving costs by cutting corners. They may even offshore their customer service to a call center, so clients never speak with the same representative twice. This makes it hard for clients to establish a relationship with a representative who learns their business.  

Larger PEOs are also more likely to push unnecessary services on you so they can charge you more. They may also just offer one plan and be inflexible to your unique business needs. These one-size-fits-all plans are easy for the PEO to manage but costly for small businesses that end up with lots of services they don’t use or even need. 

This PEO is Too Small… 

On the other extreme end of the porridge spectrum is the too-small PEO. Smaller and local PEOs can be attractive, especially to newer businesses. But small PEOs also have some potential downsides that you need to consider. 

Very small PEOs can be wiped out by a few large workers’ compensation or health insurance claims. With too many claims to process and premiums increasing, a PEO may struggle financially. This can bankrupt companies and could leave you stranded. 

Small PEOs may also not be able to offer you access to a master health plan. One of the biggest benefits of working with a PEO is the healthcare plan options they can provide. But a PEO can only provide this coverage by negotiating a health plan at scale, which means they need to represent many employees.  

A local PEO may also limit your ability to grow. Local PEOs are often only able to do business in the state where they are located. If your company plans to hire employees in other states, a local PEO may not be able to do their payroll or manage their benefits. This is a huge burden that could mean you have to find another vendor to help manage your employees.  

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This PEO is Just Right! 

The right PEO is just small enough to provide you with flexible support options. Instead of offering a one-size-fits-all plan that may charge you for services you will never use, a small enough PEO can be flexible with its service offering to give you just want your business needs, charging you nothing more. 

A small enough PEO will also be able to support you with a dedicated team of HR experts. They can get to know your business and your goals while you know that you won't speak with a new person at a call center every time you call for help.

PEOs that are small enough will also invest in your company’s success rather than push the maximum amount of services. A PEO of this size can align with your business goals. 

The right PEO is just large enough to provide you with assistance when you have employees in more than one state. Growing beyond your current location may be a goal of yours, or you may intend to hire remote employees. A large-enough PEO can support you in this endeavor. 

A right-size PEO will also help your company thrive by accessing Fortune 500 benefits without worrying that a few claims will put your company in financial hardship. Offering these plans will help protect your business while not breaking the bank. Administering these plans is hard enough. Having to deal with claims can be downright overwhelming. With the right size PEO supporting you, they can deal with the headache of claims and proactively work to keep your premiums from skyrocketing. Your PEO can also help you develop return to work and training programs to help employees get back to work faster and reduce the number of on-the-job injuries suffered. 

Learn more about the Goldilocks approach by reading our free eBook “The Questco National Advantage.” 

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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