PEO Services: A Cost-effective Solution for Small and Mid-Sized Businesses
The growing complexity of HR strategies coupled with looming economic uncertainties makes it hard for small and mid-sized businesses (SMBs) to stay competitive and keep turnover rates down.
SMBs struggle to maintain top operational efficiency while cutting costs and adapting to modern technologies. To solve these mounting issues, some of them choose to work with a Professional Employer Organization (PEO).
Understanding how PEO services work can help you make educated decisions about streamlining your HR operations.
Navigating Economic Uncertainty
Over the past few years, the world has been facing one challenge after another. Economic uncertainty went from an occasional problem to a systematic issue. For SMBs, navigating times of uncertainty is especially challenging.
Fluctuating market conditions make it hard to predict revenue streams while constantly increasing competition demands a stronger grip on the market share.
During these times, businesses must search for new ways to streamline operations, cut costs, and increase efficiency. That's where a PEO steps in.
Cost Savings through PEO Services
While SMB owners focus on optimizing operations to stay ahead of the competition, they need effective ways to cut costs. PEO services can help your company reduce expenses while improving employee satisfaction and position you as an employer of choice.
Economies of Scale
PEO works with many companies that have different numbers of employees. All these employees become part of a large pool. A PEO uses this pool to gain access to high-quality employee benefits, including excellent health insurance.
As a result, each business that works with a PEO can offer its employees high-level benefits at reasonable rates. This dramatically cuts benefit-related costs and allows the company to make more appealing offers to top candidates.
HR compliance is a complex niche that requires continuous monitoring, auditing, and implementation. Smaller companies struggle to stay on top of the ever-changing employment laws and often face sizable fines. For example, just one OSHA violation can cost the company $70,000.
Hiring full-time labor law experts or paying part-time consultants to handle compliance can take a significant toll on the HR budget.
Compliance expertise is part of the services offered by professional employer organizations. Their team of experts can navigate the legal landscape, monitor the latest changes, and help with their implementation. This doesn't just save the company time and money but also prevents fines and legal problems.
When you work with a PEO, it assumes some of your company's liability. In essence, they partner with you as a co-employer for your workforce. This means that while a business owner is still responsible for all decisions, the PEO team becomes responsible for filing payroll taxes and administering employee benefits.
A PEO can also formulate policies, standards, and plans to mitigate potential risks in the workplace, helping you cut workers' compensation costs and avoid legal disputes.
Enhancing Operational Efficiency
By providing a wide range of HR services, a PEO can increase the company's operational efficiency and help it obtain new market share even at times of economic uncertainty. Here is how.
Focus on Core Competencies
SMBs usually don't have enough resources to handle mounting tasks simultaneously. Each employee juggles multiple responsibilities, many of which don't have anything to do with their line of work. As a result, the work process slows down.
A PEO can handle many HR tasks, including payroll, benefits administration, risk management, compliance, and much more. This leaves your team more time to focus on their competencies to streamline operations and drive revenue.
Access to Technology
Seamless HR operations require access to comprehensive tools that automate HR tasks and improve employee experience. Many SMBs don't have the resources to invest in such technologies and end up using low-cost options with limited functionality.
A PEO provides access to advanced HR technology platforms that don't just streamline HR processes but contribute to improving operational efficiency. In addition, such tools as employee portals, improve employee experience and increase satisfaction rates.
Talent Attraction and Retention
In a highly competitive market, SMBs often lose top talent to larger companies that can offer better benefits. Working with a PEO allows you to make Fortune-500-level benefits a part of your package to make your company more appealing to the best candidates.
By attracting top talent, you can navigate the times of economic uncertainty better than the competition.
Leveraging a PEO Partnership to Improve Your Business
With economic downturns hindering operations and increasing competition, SMBs must change their strategies to stay afloat. Working with an HR outsourcing partner allows these companies to cut costs, adapt to the changing environment, and stay competitive.
A partnership with a professional employer organization is a comprehensive cost-effective solution that allows your team to focus on revenue-generating activities while HR experts handle administrative tasks.
If you are ready to explore the transformative benefits of PEO services, contact PRO Resources today.