Long-term business survival has taken on a whole new meaning since the onset of the coronavirus crisis. Remote work, the need to economize as never before and above all, keeping employees, customers and other stakeholders safe, have dramatically changed people’s personal and professional lives.
What are your plans for your small to mid-sized company moving forward, regardless of the fallout? If you haven’t already considered working with a professional employer organization (PEO), now may be the time to incorporate it into your business plan.
Two critical issues faced by any business are employee retention and continued survival. PEOs significantly reduce turnover for their clients, enabling them to hold onto top talent while simultaneously lowering the costs associated with staff churn. This is the result of PEOs providing a combination of HR-related services that allow business leaders to focus on their core areas of expertise.
Four reasons an increasing number of businesses each year are partnering with PEOS include:
- Reduced employment risks: Even in the best of times, myriad risks including workers’ compensation claims, litigation and employee misclassification can keep business leaders up at night. PEOs offer specialized experts who can ensure you stay compliant, reduce your risks, and protect your company’s assets.
- Eliminate wasted time: At times, your laundry list of personnel administrative tasks like payroll processing, benefits negotiation and administration and safety programs can seem endless. Your PEO can take these vital yet highly time-consuming duties off your plate, making room for running your business and building your bottom line.
- Control employment expenses: Your PEO offers the right combination of expertise and buying power to significantly reduce your employment costs in areas including workers’ compensation and unemployment insurance and group health insurance.
- Provide better benefits: When you contract with a PEO, you enter a co-employment agreement whereby you retain overall control and decision-making abilities, while the PEO becomes the employer of record. PEOs pool employees from all their clients and as such, you can offer benefit options typically possible only for much larger employers.
The Numbers Tell the Story
The employee turnover rate for PEO clients is 10 to 14 percentage points lower per year than that of comparable companies. And, only about half as many PEO client businesses fail. As proven through research done by the National Association of PEOs (NAPEO):
- The turnover rate for non-PEO businesses averages 42 percent per year versus 28 to 32 percent for PEO clients, among companies that have utilized PEOs for at least four quarters.
- The overall business failure rate among U.S. private companies is approximately 8 percent per year, compared to approximately 4 percent for those that work with PEOs.
- PEO client businesses grow 7 to 9 percent faster than their non-PEO counterparts, likely due in large part to the fact that their executives are better able to focus their attention on core business planning, strategy and development.
Want more information?
Is now the time for your company to consider a PEO partnership? If so, contact the Lyons HR team today.