Have you thought about partnering with a professional employer organization (PEO) to outsource some or all of your company’s HR functions? But, you haven’t taken the leap just yet, because you’re still wondering: is it really worth the investment? And what exactly could a PEO do for my small to mid-sized business?
- PEOs provide HR solutions for companies through a co-employment arrangement. They allow you to focus on running your company – making final HR decisions and leading long-term strategic direction – while they relieve you of day-to-day administrative tasks that can quickly devour your time and in-house staff resources.
Here are four areas in which a PEO can help your business thrive:
Attracting and Retaining Top Talent
Working with a PEO allows you to offer a broader array of benefits. Your PEO has group purchasing power, as they are the employer of record for your employees, and they pool them with those of their other business partners. In essence, you can offer Fortune 500 level benefits, even though yours is a much smaller company.
- As reported by the National Association of Professional Employer Organizations (NAPEO), employee turnover is 19.6 percent less for PEO clients.
- Better benefit packages made possible via your PEO affiliation can be the deciding factor for candidates who are considering working for your company – as well as those who may be considering leaving your organization to work elsewhere.
Focusing on Your Core Business Goals
Business growth is 4.2 percent higher in PEO client companies in terms of number of employees, and five percent higher in terms of business revenue. And, 98 percent of companies surveyed noted that they would recommend a PEO to their fellow small business colleagues. Working with a PEO enables you to step away from time-consuming HR administrative tasks and concentrate on strategic and long-term planning and high-priority business initiatives.
Lowering HR Costs
NAPEO research shows that the annual ROI, from cost savings alone, of using a PEO averages out at 27.2 percent. This is based on a survey of 132 PEO clients, as well as 44 organizations that do not work with PEOs. When you break this figure down, it means that for every $1,000 spent on PEO services, a company saves $1,272, yielding a net benefit of $272. Your company realizes bottom-line savings when it comes to:
- Personnel costs.
- Health benefits.
- Workers’ compensation.
- Unemployment insurance.
- Other related areas, such as payroll services.
- Maintaining Compliance
Depending on the size of your company, you may see a massive drop in the amount of time and effort your in-house staff spends on maintaining ACA compliance, when you work with a PEO.
- According to one recent survey, 44 percent of businesses said they were keeping up with HR employment laws. Among companies partnering with PEOs, this percentage shot up to 81.
What Can A PEO Do For You?
Lyons HR can function like your off-site HR department, helping you to strategically fill open positions and handling training, policy development, payroll and benefits management, tax administration, regulatory compliance and other needs. If you’d like to learn more about our services or PEO partnerships in general, read our related posts or contact us today.