Tag Archives: professional employer organization

Need a Professional Employment Organization? What to Look For

Human resources and employee management related tasks are a critical component to any business regardless of size. But unfortunately, they can be incredibly time-consuming and often stressful. According to Entrepreneur, “from payroll and human resource management to benefits and compensation, entrepreneurs can spend up to 40 percent of their precious day engaged in these necessary but time-sucking tasks.”

One trend that’s catching on is outsourcing to a professional employment organization (PEO) to save time and money. Here’s what to look for when choosing a PEO to ensure that you find the right fit for your business.


A Positive Reputation

First and foremost, you want a company with a proven track record of success. Ideally, they’ve been in the industry for at least a decade and have helped numerous businesses with their day-to-day operations. A PEO should be able to provide a solid list of references, preferably of businesses in your same industry. They should also have positive testimonials and/or reviews from unbiased clients who have first hand experience.


Comprehensive Services

Each business will have its own specific needs, and a PEO should be equipped to handle all aspects of your employee management and HR operations. Even if you only have minimal needs initially, this could easily change a few years down the road, so you want to look for an organization that can help you grow. For example, a legitimate PEO will offer a variety of services including:

  • Payroll processing
  • Benefits management
  • Assistance with hiring and termination
  • Employee performance evaluation
  • Policy development
  • Worker’s compensation
  • Risk management
  • Regulatory compliance

When making your decision, be sure that a company’s services are capable of handling both your current and projected needs for the future.


A Variety of Employee Benefit Plan Options

Employee benefits are often necessary for acquiring top industry talent and keeping these individuals around for the long haul. Consequently, it’s helpful to choose a PEO that can assist you with benefits management and offer a robust variety of options. While health and retirement benefits are a good starting point, it’s ideal for an organization to offer other services such as:

  • Life
  • Dental
  • Vision
  • Disability
  • Voluntary benefit plan options

This should ensure that your employees are fully covered and have access to the benefits that they want.


Outstanding Customer Service

It’s inevitable that you’re going to have questions and concerns at some point. That’s why you want a PEO that’s fully committed to customer service and that can be reached whenever you need them. Ideally, there will be no extra charge to speak with a representative, and there are enough representatives available at any given time to efficiently help you without hassle.

Rather than having to go through a call center where you can get lost in the mix, it’s best to have access to a dedicated support staff that’s able to handle your unique needs and provide you with a personal touch.

There’s no doubt that a professional employment organization can be a huge asset for businesses across numerous industries. When you look for these elements in a PEO, you’re likely to find a firm that’ll mesh well with your business and help you succeed.

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Understanding Co-employment

The concept of co-employment where an employer outsources tasks to a professional employer organization (PEO) has gained some serious ground in recent years. According to a survey by the National Association of Professional Employer Organizations (NAPEO), “it is estimated that 2-3 million Americans are currently co-employed in a PEO arrangement. The average PEO has grown more than 20 percent per year for each of the last six years.”

Due to the results that many companies have experienced, co-employment is attracting the attention of more and more business owners. Let’s now discuss the basics of this type of arrangement to help you get a better idea if it could work for your business.


What is Co-employment?

The proper definition is “a contractual allocation and sharing of employer responsibilities between a professional employer organization (PEO) and client.” Simply put, you outsource various tasks to a third-party and they help you run your business more effectively and efficiently. There is a high degree of customization with this arrangement, so you can determine how much or how little you want to outsource to a PEO. Some companies only outsource a handful of tasks, while others opt for a large percentage.


Co-employment is a Partnership

With this type of relationship, you transfer many responsibilities to a third-party. You’re collaborating with a professional firm that will handle the duties that you either don’t have the time for or don’t feel comfortable with doing on your own. You also minimize some of your risks because and don’t have the sole burden of ensuring compliance with laws and regulations. A PEO maintains a certain level of control over the direction and culture of your company because they have the right to hire, reassign and terminate employees.


Common Services of PEOs

Although PEOs can run the gamut in terms of the specific services they provide, some common ones include:

  • Hiring, training and terminating employees
  • Benefits management
  • Assessing performance
  • Payroll processing
  • Tax compliance
  • Risk management

These firms understand that each business is unique and there isn’t a one size fits all formula. Consequently, they are usually willing to work with you and determine the best approach for your company.


Benefits of this Work Arrangement

By outsourcing a portion of responsibilities, it gives you more time to focus on the overarching vision of your company. You won’t be bogged down with as many redundant or time-consuming tasks, so you can concentrate on your natural strengths to grow your business. This should lead to increased productivity and less stress.

You can also minimize your amount of risk dramatically. Because a PEO will have an in depth knowledge of laws and regulations, as well as the inner workings of the EEOC and OSHA, this can greatly reduce your odds of getting hit with fines or lawsuits.

Finally, you can expect to see higher profitability over time. With many tasks that were formerly arduous becoming streamlined, you can improve performance across the board. Better quality goods or services combined with talented employees and regulatory compliance is a realistic way to increase your profits.

Although making the transition to co-employment takes time, it’s usually well worth the effort when you look at the big picture. While it’s not for everybody, you should definitely take it into consideration if your business isn’t currently operating with the level of efficiency you’re looking for.