What Is A PEO, And Why Does That Matter To ME?

What Is A PEO, And Why Does That Matter To ME?

Posted by Tony Farago on 5/16/18 2:17 PM
Tony Farago
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Posted on: May 16, 2018
Understanding Professional Employer Organizations, Or PEOs

The term PEO stands for Professional Employer Organization. These groups specialize in certain aspects of operation which would be infrastructural, rather than core, to most businesses. Generally, such tasks revolve around employee management. Services PEOs provide include:

  • Employee Benefits
  • Payroll
  • Workman's Compensation
  • Recruitment
  • Legal/Regulatory Compliance
  • Management Of Safety And/Or Risk
  • Employee Development
  • Employee Training

AdobeStock_168532739-571177-editedNo Business Is An Island

Every one of these things can be done internally. Similarly, individuals need never drive a car, live in town, or use any trappings of modern civilization. Your business could be like some antiquated mountain man, living so independently you prepare all things for sustenance internally—from meals to clothes—you get the idea. But we all have in our minds the quintessential image of the mountain man—he's a hermit decked out in skins that have been cobbled together seemingly without rhyme or reason. Is such an individual likely to be a socialite?

Your business is like a mountain man if you do everything internally and neglect to use that which is advantageous beyond your operations. If you're trying to run everything internally, you're likely to end up appearing as some socially-estranged vagabond in the business community. Because you do everything yourself, you may find certain businesses are wary to work with you. Consider a brewery that only sells their own product, and refuses to carry any mainstream beers. They're going to lose money over time. Well, your employees, your internal infrastructure, compliance issues, employee training—these things have all been professionally maximized through PEO organizations. They have made a business out of providing such things more efficiently and cost-effectively than internal businesses can. So doing everything only internally can work against you, when better options are available.

PEOs Save Time And Money While Providing Better Employees

Meanwhile, a PEO regularly provides qualified individuals who are screened in advance for a variety of Business man trying to stop time. Man hanging on clock arrow isolated on gray office wall background. Time pressure passing past conceptapplicable positions. They make it their core prerogative to source personnel which fit the needs of their clients so that, at a moment's notice, they can provide solutions nigh-instantaneously.

Something else to consider is that there are over 700 PEO organizations throughout the United States, from South Carolina to Texas to Alaska, and everywhere in between. This means not only are employee management tasks a PEO's core prerogative, additionally they are in competition for your business with other PEOs. This is a natural factor inducing qualitative services.

Proper Legal Compliance

It is additionally worth noting that PEOs are apt to have breaking information pertaining to market trends and legal compliance issues. Dealing with multiple clients, they've really got no choice in the matter if they want to remain competitive. This means should there be some legal issue lurking in obscurity, you will be made aware of it immediately—and new changes as they come will also be passed on to the appropriate people in your organization as your PEO becomes aware of them.

Statistically Vetted Growth

For the last 14 years, PEOs have been able to provide steady growth for businesses to the tune of a 7% to 9% annually given proper implementation. This is coupled with further statistics from the same NAPEO website which indicate between 10% and 14% less employee turnover, allowing you to maximize ROI, expanding resources.

Upgrading Your Operations

Altogether, what these things indicate is that you stand to have more streamlined, profitable operations through engagement of a qualified PEO organization. If you haven't looked into such an option, it may be worth considering. 7-9% annual growth can definitely give you competitive advantage, and additionally is likely to make your business more sustainable.

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Topics: Human Resources, PEO, Employee Management

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