Posted By:

Tim O'Brien on October 21, 2014

What’s a PEO and How Will it Help My Company

Operating a business of any size comes with challenges, and many business owners find it difficult keeping up with the daily barrage of tasks. As a result, many small to mid-sized companies choose to outsource a portion of tasks to a professional employment organization (PEO).

According to the National Association of Professional Employment Organizations, “PEOs enable clients to cost-effectively outsource the management of human resources, employee benefits, payroll and workers’ compensation. PEO clients focus on their core competencies to maintain and grow their bottom line.”


How a PEO Works

The premise is pretty simple. Business owners outsource a variety of tasks to a PEO such as employee acquisition, payroll processing, performance management, worker’s compensation and employee benefits. These are primarily HR and administrative duties that are often too time consuming for a company to do on its own.

Business owners may also delegate tasks where they need guidance and aren’t equipped with the necessary knowledge to adequately complete. For example, things involving government compliance may be outsourced to reduce a company’s liability and lower the chances of lawsuits.

Now that we know how a PEO works, here are some of the ways it can help your company.


Fewer Administrative Responsibilities

Even fairly small businesses have to deal with a plethora of administrative tasks on a continual basis. You probably already know what a hassle these can be and how it can prevent you and your employees from working on what’s really important…growing your business. By outsourcing some of these responsibilities, it can free up a considerable amount of time so you can focus more on sales, marketing and overall growth.

Consequently, it’s common to experience increased productivity, while lowering your stress. Because a PEO will have in depth knowledge and experience, you know that your administrative tasks are in good hands. In many cases, outsourcing means an even higher level of professionalism with task completion than if it was done in-house.


Reduce Your Costs

Any time there are inefficiencies, it can increase your operational costs and put a damper on your profit margins. Whether you’re overspending on staff, or spending excessive time on administrative duties to the point where you can’t focus on sales, this can be a serious detriment to success. A PEO is beneficial because they help your business become leaner and operate at optimal efficiency.

According to the Department of Labor, “a PEO can handle its administrative responsibilities at one-third to two-thirds of the cost an average business would incur to provide similar services. Some of the savings are achieved through staff reductions.”


Reduce Your Liabilities

Staying compliant with federal and state laws is extremely important in today’s workplace. As a business owner, you have to deal with OSHA regulations, equal employment laws and a host of other rules. The problem is that laws are continually changing, and it can be difficult to stay on top of everything.

Outsourcing to a PEO is helpful because they always know what’s going on in terms of rules and regulations. In turn, they can help you fine-tune business operations and develop policies to ensure that you remain compliant. This greatly reduces any liabilities on your end and can prevent you from getting into legal backwater.

If you’re having trouble keeping up with HR and administrative tasks, a PEO is definitely worth looking into. Not only can it simplify operations and make your life easier, it can also save you a significant amount of money.



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