Most small business owners spend at least one day every week on HR tasks. That’s a full day every week they're not spending on their actual business and generating. Between paperwork, payroll, workers' comp, and compliance, HR can quickly become overwhelming.
So, if SOS is your most-used acronym, keep reading to see how a PEO could be the solution you've been looking for.
A PEO, or Professional Employer Organization, is a business that provides HR services to other businesses.
They typically work with small and medium-sized companies and provide admin paperwork, compliance oversight, payroll, employee benefits, risk management, and culture support.
A PEO does not take over ownership of your business. You still have complete power over personnel and business operations. The PEO acts as a partner, absorbing some of the cost and liability of being an employer.
While it differs from PEO to PEO, these are typically the services they offer. Some operate on a "buffet-style" model, and others require you to pay for each service.
Partnering with a PEO offers both direct and indirect benefits. While they depend on how you choose to partner with a PEO, these are typically the most significant benefits.
Partnering with a PEO allows businesses to focus on core operations and growth. By freeing up time and resources, companies can redirect their efforts towards revenue-driving activities, enabling them to concentrate on what truly matters for their business success.
PEOs provide access to comprehensive benefits packages that are typically out of reach for small businesses. By leveraging economies of scale, PEOs can offer better health insurance and retirement plans, helping smaller companies compete with larger corporations in attracting and retaining top talent.
Regulatory compliance becomes much easier with a PEO partnership. PEOs stay up-to-date on complex labor laws and regulations, ensuring that their client companies remain compliant. This reduces legal risks and saves businesses the time and effort required to navigate the ever-changing regulatory landscape.
The cost savings associated with PEO partnerships are substantial. On average, businesses save $1,775 per employee per year. Moreover, the return on investment (ROI) for PEO services is impressive, with companies experiencing a 27% average ROI. These financial benefits can significantly impact a small business's bottom line.
Companies that partner with PEOs typically experience accelerated growth. Studies show that businesses working with PEOs grow 7-9% faster than their counterparts. This increased growth rate can be attributed to the efficiency and support that PEOs provide, allowing businesses to expand more rapidly.
Employee retention is another area where PEO partnerships shine. Businesses using PEO services see, on average, 14–16% lower employee turnover rates. This improved retention can be linked to better benefits, more efficient HR processes, and the ability of business owners to focus more on creating a positive work environment.
There are some misconceptions out there about PEOs, so let's set the record straight.
❌ Myth: PEOs are only for general businesses.
✅ Fact: Some PEOs, like PRO Resources, have niche industry experience.
❌ Myth: PEOs are only for larger businesses.
✅ Fact: Some PEOs (*ahem* PRO Resources) specialize in serving clients with as few as 10 employees.
❌ Myth: PEOs are more expensive.
✅ Fact: PEOs can be very affordable for small businesses.
❌ Myth: PEOs take control of your employees.
✅ Fact: The co-employment model ensures you retain control over your workforce.
Determining if a PEO is right for your small business depends on several factors. Consider your company's size, growth stage, and specific HR needs. If you're spending significant time on administrative tasks instead of focusing on core operations, you should at least reach out to a PEO.
Evaluate your current HR challenges, such as managing payroll, ensuring compliance, or offering competitive benefits. A PEO can be particularly valuable if you're struggling in these areas or if you're looking to scale quickly without expanding your internal HR team.
Finally, assess your budget and the potential return on investment a PEO could provide. While there are costs associated with PEO services, the efficiencies gained and potential savings on benefits and compliance often outweigh the expense for many small businesses. Ultimately, if you're looking to streamline HR processes, reduce administrative burden, and gain access to better benefits for your employees, a PEO partnership could be a smart move for your business.
You know that what you're doing right now isn't cutting it. But there are other options. If any of the benefits
of working with a PEO resonated with you, get some more information. We've put together a guide on the financial benefits of working with a PEO that you might like. And once you're ready to talk, we're ready to listen.