What is a PEO and Do You Need One For Your Business?

You’ve been in business for a while now and have beat the odds. There’s constantly something new crossing your desk and one of those things is a PEO.

What is a PEO?

You don’t want to sound ignorant so here you are online searching to find out what a PEO is and whether you need one or not. Continue reading this article and we will teach you everything you need to know about a PEO so you can decide whether your company needs one or not.

What Is a PEO? – The 411

Many small to medium businesses use PEOs after going through the information that companies like this company offer them online. PEO stands for professional employer organization.

These organizations give small companies the ability to act like big companies without breaking the bank. PEOs are co-employers of your company’s employees which means they are partially responsible for them. Since they are partially responsible for them, this takes a major part of the burden off your company’s shoulders.

PEOs are not the same as a temporary employment agency. You will still have full-time employees but they will be managed and taken care of by the PEO. If your human resources department is feeling overwhelmed — this might be a good option for you.

What Are the Benefits of Working with a PEO?

Now that you have an understanding of what a PEO is, you might not be sure of the benefits your company would receive from working with them. It might just sound like someone else is going to have their nose in your business.

While it is true that you are going to have to be open and integrated with PEOs, there are major benefits of working with these companies.

1. No Longer Have to Deal with HR

If your company wants to get rid of their in-house HR altogether, that is an option. You don’t have to by any means but if you don’t want to deal with HR at all, the PEO can take over the whole process.

This means that you don’t have to recruit and keep records regarding your employees that might have otherwise been taking over a lot of your time. The PEO makes sure everyone is taken care of in your business so you don’t have to.

Unless you have a professional HR team in place, you won’t be able to take care of your employees properly and changing over to a PEO will do a great service to them and to you.

2. Stay Up to Date on Regulations

Regulations regarding employment are constantly changing. If your company isn’t up to date, you could be sued and go through many other challenges. When you work with a PEO, these professionals are always up to date on the law and best practices.

3. Stay Competitive with Bigger Company’s Employee Benefits

Smaller companies can’t get the big discounts that larger companies get on healthcare and other benefits. When you work with a PEO, they can pool all of the employees they co-employ and get the best rates available on the market.

If you don’t offer competitive benefits for your employees, they will often go over to the larger companies that can offer the benefits they need to take care of their families.

4. Peace of Mind Regarding Liability

Working with a PEO ensures you are protected from liability issues. You have access to their attorneys and other valuable resources that will help you keep your nose clean.

What Are the Drawbacks of Working with a PEO?

While everything above sounds amazing, there are some drawbacks to working with a PEO that you need to know about.

1. The PEO Has the Final Say

If you don’t like being told what to do or if you work with a company that has very different views than you do, this could be a big problem.

The PEO you’re working with has the ability to decide to change the insurance plan your company provides to its employees. If your employees love the current plan they use and then it changes all of a sudden, this can cause some major waves with your employees.

Any other decisions with the co-employment will also be at the final say of the PEO.

2. Disconnect in Company Culture

When you work with an outside company to do part of the work in your company, there may be a disconnect in the company culture. If you’re going to work with a PEO, you need to search until you find one that is as close to your company’s culture as possible.

If you can’t find someone that has the same values and vision as your company does, you might find this disconnect causes ripples of challenges throughout your company.

Should I Work with a PEO?

Some companies do very well with a PEO. The best thing to do is to look at your company’s needs to see if there are ways you’ll benefit.

You should also meet with and look through the PEO companies that you can work with to see if you find one that aligns with your company’s vision. If you do then you might decide this is a good decision and move forward with working with a PEO company. 

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