If you are considering a professional employer organization but don't know quite how they work, you aren't alone! Many business owners don't understand how PEOs work or even what PEO questions to ask and how they can help you streamline and improve your HR processes.
Here are some questions to ask a PEO to decide if one is right for you.
1. What Kind of Services Can I Expect?
When you partner with a PEO, you can expect services supporting human resources' administrative tasks. We have the expertise, economy of scale, and resources to help you with overall Human Resources (HR) management, including the following.
- Payroll. While a PEO is not a "payroll service," we do handle payroll for you. Furthermore, unlike a payroll service, we can not only tell you what you owe in taxes but actually remit the taxes for you, reducing errors.
- Compliance. Most smaller businesses can't afford a compliance officer. With a PEO, you get access to a compliance team.
- Workers' comp. A PEO can lower rates by offering an improved experience rate modifier and diluting the effects of a claim.
- Benefits. Your employees can be added to the PEO's master health and retirement plans, which are negotiated by experts and have an economy of scale that allows you to offer Fortune 500 benefits at small business prices. They will also take over the tedious aspects of benefits administration.
- Safety and Training. PEOs can help you design a safety plan using what we have learned from working with our other clients. You can also expect periodic employee training, giving you peace of mind.
- Employee Wellness. PEOs can also help you with an employee wellness plan, reducing absenteeism and improving morale and productivity.
PEOs are a comprehensive solution, providing the above services so you can place your focus on the revenue generating parts of your business.
2. Do PEOs Take Over My Business?
One myth about PEOs is that you lose control over hiring and firing. People often confuse a PEO with a temp agency or employee leasing scheme.
You have complete control over your business. The PEO just provides the services and assistance you need and want and acts as an extension of your business in the HR sphere.
3. How Often Do You Communicate With a PEO?
As often as you need! The PEO's staff are always there to answer questions, give advice, and act as a support system for you and your internal HR personnel.
4. How Experienced Are PEOs?
PEOs are experts. Each staff member is well-versed in HR, state and federal compliance, safety, benefits, etc. Look for a PEO who has been around a while and is being run by people with experience. Remember that all these people do is HR, so they have the know-how to run your daily HR tasks.
5. What Kind of Businesses Should Work With a PEO?
Most types of small to mid-sized businesses will benefit from a PEO. The common image of the PEO is somebody who works with office staff, but PEOs work with manufacturing companies, construction firms, high-tech, and accounting.
PEOs work with the stuff universal to all businesses and the industry-wide tasks you need so that you can use one regardless of your business.
6. What If I Already Have a Small HR Team?
Another myth about PEOs is that they replace your internal HR team. This could not be further from the truth. Instead, a PEO complements your HR team. They take care of the daily tasks.
This means your HR team is free to do the stuff that requires what the PEO doesn't have; intimate knowledge of your company and goals. Your HR team can focus on strategic functions such as employee development, improving the company culture, designing a new performance review system, etc. They will be free to do the exciting parts of their job. If you don’t have an HR team, you won’t have to hire one when you’ve already partnered with a PEO.
7. Will My Employees Be Affected?
Understandably, your employees may be nervous about the change and even afraid the PEO will be able to fire them. However, the truth is that PEOs only positively impact your employees. They will enjoy better benefits and training and the advantages of HR having the time to support them properly. Your employees will appreciate all the benefits of a PEO, though a PEO is there for the business owner too. If you have concerns about how to properly terminate an employee, a PEO can walk you through those steps and help you avoid a sticky situation or potential lawsuit.
8. Is a PEO Worth It?
For most companies that use one, the answer is a resounding yes. In fact, survey results recorded 98% of PEO clients would say those who don't use a PEO – should. The typical ROI of using a PEO is 27.2%, higher than any other form of HR outsourcing. Statistics also show that PEO clients experience 19.6% lower turnover and 5% higher growth in terms of revenues. Partnering with a PEO also improves productivity and profitability for most clients (70% reported an uptick in revenue and 66% in profitability).
A PEO also has a lot of intangible benefits, such as improved employee morale.
If you have more questions about what a PEO can do for you, want to know how much a PEO costs and how to choose a PEO, or if you’d like to talk about our services, contact PRO Resources today.
