The Impact of PEOs on Employee Engagement and Satisfaction

A professional employer organization (PEO) offers co-employment outsourcing services. This type of service includes full human resources management, such as payroll & payroll administration, benefits & benefits management, compliance, and more. Relationships between companies and professional employer organizations can be customized to suit the unique needs of the company, whether it's a small business with 13 employees or a larger SMB with 150 employees or more.   

By outsourcing the administration and management of core HR tasks to a third-party team, employers can rest assured that the tasks are handled cost-effectively and in compliance with local, state, and federal regulations. They can then focus on other core areas of their business, such as revenue generation and product development. Just as importantly, employees also receive many direct and indirect benefits when their company takes this route.  

Let’s take a closer look at the key benefits many organizations can access by partnering with a PEO. 

Access to HR Services 

In smaller organizations, HR services are scarce. Companies with very few employees may not have an HR professional on staff, let alone a full HR team. This can lead to unanswered questions about retirement benefits, uncertainty about what to do in the face of coworker conflict, and dissatisfaction with their current goal or future at the company.  

But clear access to HR services can resolve these uncertainties and lead to a much better work experience. PEOs can provide employees with the following: 

  • More responsive payroll services 
  • Professional benefits administration, including support, education, and faster change processing 
  • Wellness benefits and resources 
  • Training and career development resources, whether produced directly in the partnership or in wider professional development networks 
  • Answers regarding workplace violations, reporting conflict, and other compliance concerns.

When there is a resource of knowledgeable professionals employees can easily reach out to, conflicts and questions can get resolved quickly. Employees can also be confident that they receive prompt support and payroll management, leading to greater satisfaction.

Better Benefits 

This benefit is a bit more strategic, but it's just as valuable as direct services management. When small organizations look for benefits providers—ranging from health insurance to retirement account management—they often don't have a strong negotiating position. There simply aren't enough employees for these services to offer a lower per-unit rate or more incentives.  

But when small and mid-sized companies band together with a PEO, they collectively have more power. The PEO can much more effectively negotiate for lower rates, shop around the market, and create packages with better benefits.  

When your organization can offer employees great health care, more meaningful wellness programs, and 401(k)s with lower fees and better service, you can hire and retain more invested employees. Ultimately, when employers demonstrate care for their employees through access to better health and wellness services, employees are likely to respond with greater engagement and loyalty. According to a report by SHRM, you can expect the following: 

  • 38% more employee engagement and an 18% increased likelihood of employees providing extra effort 
  • 28% more employee referrals and recommendations for prospective candidates 
  • A 10x reduction in hostility 

Along with being able to present better benefits, PEOs also take on the responsibilities of managing those benefits, ensuring compliance, and cultivating communication about those benefits (and employee feedback regarding those benefits). 

More Attentive Leadership 

HR administration takes a lot of time. Done right, companies will often need entire teams committed solely to tasks like payroll, benefits administration, and compliance. That can be an expensive in-house commitment, even for larger companies. Even worse, if a leader in your organization is taking on HR tasks along with their core responsibilities, that can distract them from key areas like revenue growth, financial compliance, or networking to grow the business. Everyone in a lean organization needs to focus on their role, and trying to manage HR at the same time will be a costly distraction. 

When HR is outsourced to a trusted partner, leaders can return their focus to their core responsibilities, such as streamlining customer services or ensuring more sales. This ultimately leads to greater revenue potential and more opportunities for employees. Your leaders at every level of the organization can focus on managing a worksite, winning more project contracts, and fostering a safe workplace that follows OSHA and industrial guidelines. 

Bring the Benefits of Better HR to Your Organization 

Partnering with a PEO brings a lot of different benefits to the table because better HR is better for everyone. Along with savings opportunities and more protection for your business, it also harnesses these employee-centered advantages. A PEO can manage benefits and payroll, increase employee engagement and satisfaction, and give your internal leadership teams more time to focus on their core operational roles. Take a closer look at the benefits, so you can decide the right course of action for your own company and see how working with a PEO can transform your organization.