New research confirms what so many businesses already know: Businesses that work with a PEO are more likely to grow faster, have lower turnover, and are more resilient.

KEY FINDINGS

Small businesses often need help balancing growth and managing essential tasks like HR and payroll. PEOs offer a solution by handling HR-related tasks, including payroll, benefits administration, and navigating the complexities of compliance. 

Conducted by the National Association of Professional Employer Organizations (NAPEO), new research finds businesses that work with a PEO are more likely to grow faster, have lower employee turnover, and are more resilient. These are the marks of stable, robust businesses that remain better positioned for long-term success. 

FASTER GROWTH RATES 

🎯KEY FINDING: Businesses that use a PEO have a Growth Rate that is More than 2X Higher.

One of the biggest benefits of working with a PEO is the impact on growth. Businesses using a PEO experience employee growth rates that are more than twice as high as those of not working with a PEO. According to the study, businesses working with a PEO grew by an average of 4.3% annually, compared to 1.9% growth in similar businesses without a PEO partnership. How? For small businesses, time is often one of the most limited resources. PEOs streamline and handle time-consumer administrative tasks, allowing you to redirect efforts into scaling and innovating. 

LOWER EMPLOYEE TURNOVER 

🎯KEY FINDING: Businesses that use a PEO have an Employee Turnover Rate that is 12% Lower.

Employee turnover is costly, especially for small businesses where every team member plays a critical role. Businesses that work with a PEO benefit from a 12% lower turnover rate compared to businesses that do not use a PEO. Research shows that when employees feel secure and valued, they’re more likely to stay long-term. PEOs make it possible with perks like access to a more competitive benefits package—something smaller companies might struggle to provide on their own.

INCREASED BUSINESS RESILIENCE 

🎯KEY FINDING: Businesses that use a PEO are 50% Less Likely to Go Out of Business.

PEOs help businesses thrive - even during uncertainty. The NAPEO study found that businesses using PEOs are 50% less likely to go out of business than those that do not use a PEO.

In times of economic change, staying resilient is essential to overcome downturns that can lead to business disruptions, or unexpected expenses. PEOs help businesses make difficult decisions, such as layoffs, and provide support on payroll processing, benefits, as well as guidance on navigating the complexities of local, state, and federal laws. 

How a PEO Benefits Small Businesses

PEOs support businesses by providing a range of services, including payroll, benefits, compliance, and general HR. Here’s a breakdown of ways a PEO benefits small businesses:

Payroll and Tax Support. PEOs handle all aspects of payroll, including tax filings and regulatory paperwork. This saves time and reduces errors, helping businesses avoid costly penalties.

Compliance Management. Employment law is complex and constantly changing. A PEO has the expertise to ensure businesses stay compliant with applicable federal, state, and local regulations.

Employee Benefits. Through a PEO, small businesses gain access to more competitive benefits, including health insurance, and other perks that are typically out of reach for smaller firms. 

HR Expertise. PEOs provide expert HR support, which is invaluable for small businesses without a dedicated HR team. This includes everything from onboarding to performance management.

Focus on Growth. With a PEO handling time-consuming HR-related tasks, small businesses can invest more time and resources into revenue-generating activities.

Is a PEO Right for Your Business?

Consider the following questions to determine if partnering with a PEO is right for your business: 

🔹Is Your Business Growing? Leveraging the support of a PEO enables you to concentrate on what you do best - serving your customers and growing your business.

🔹Do You Have Limited HR Resources? If you need a dedicated HR team or find that HR tasks consume too much of your time, a PEO help by providing access to valuable expertise and resources.

🔹Do You Want to Offer Better Benefits? A PEO enables small businesses to offer benefits that make them competitive with larger firms, enhancing recruitment and retention.

🔹Is Staying Compliant Becoming More Complex? If you’re struggling to keep up with new and changing laws and regulatory requirements, a PEO can provide peace of mind.

By partnering with an IRS-certified PEO like Propel HR, you gain expertise and the tools to help you grow and thrive for the long-term. If you need help or want to learn more, just give us a call (800) 446-6567 or visit www.propelhr.com

NAPEO 2024 RESEARCH

▶️Download the complete NAPEO white paper, PEO Clients: Faster Growing, More Resilient Businesses, With Lower Turnover Rates, by Laurie Bassi and Dan McMurrer, McBassi & Company, September 2024,  HERE

About McBassi & Company.  McBassi is an independent firm that provides customized analysis and research reports for membership organizations, as well as “people data” analytics and survey services to employers. McBassi’s principals (Dr. Laurie Bassi and Dan McMurrer) are co-authors of Good Company: Business Success in the Worthiness Era and The HR Analytics Handbook. For more information, please visit www.mcbassi.com.

About The Authors. Dr. Laurie Bassi is CEO of McBassi and a global leader in the field of applying analytics in the world of HR. Bassi is the author of more than 90 published papers and books and was previously a tenured professor of economics and public policy at Georgetown University. She holds a Ph.D. in economics from Princeton University. Dan McMurrer is the chief analyst at McBassi. An analytics expert, McMurrer focuses on researching the relationship between organizations’ work and learning environments and their business results. He holds an MPP in public policy from Georgetown University.

About NAPEO. The National Association of Professional Employer Organizations (NAPEO) is The Voice of the PEO Industry™. NAPEO’s 220 PEO members provide payroll, benefits, workers’ comp, regulatory compliance assistance, and other HR services to more than 200,000 small and mid-size businesses employing 4.5 million people. Our members account for more than 90 percent of the industry’s $358 billion in revenue. An additional 215 companies that provide services to PEOs are associate members of NAPEO. For more information, please visit www.napeo.org.

About Propel HR. Propel HR is an IRS-certified PEO that has been a leading provider of human resources and payroll solutions for more than 25 years. Propel partners with small to mid-sized businesses to manage payroll, employee benefits, compliance and risks, and other HR functions in a way that maximizes efficiency and reduces costs. For more information, visit www.propelhr.co