Employers are looking for ways to simplify HR, manage rising costs, and navigate an increasingly complex benefits and compliance environment. As a result, Professional Employer Organizations (PEOs) are becoming a bigger part of the conversation.
Understanding how PEOs work and where they may fit is important.
What Does a PEO Do?
A PEO enters into a co-employment relationship with an employer, taking on many administrative responsibilities such as payroll, HR support, compliance and employee benefits. For small and midsize employers, this model can provide access to resources, technology and expertise they may not have internally.
But a PEO is not the best fit for every employer.
5 Signs It May Be Time for a PEO Conversation
Every employer is different, but there are situations where it may make sense to explore a PEO as one of the available options:
1. HR is becoming too much to manage
As a company grows, payroll, benefits, compliance, and employee administration can quickly become more complicated. Employers without dedicated HR resources may need more support.
2. The business is growing or expanding
Hiring more employees or expanding into new states can introduce new payroll, compliance, benefits and HR requirements. A PEO can help provide infrastructure to support that growth.
3. Benefits are becoming more challenging
Rising costs, employee expectations, and the need to remain competitive can make benefits strategy increasingly difficult. A PEO may provide another option worth evaluating alongside traditional group coverage.
4. The employer wants more HR technology and support
Some employers want better tools for payroll, benefits administration and workforce management without having to build or manage multiple systems themselves.
5. The employer is spending too much time on administration instead of the business
For many business owners, the real question is not simply cost. It is whether administrative responsibilities are taking time and resources away from running and growing the company.
Look Beyond the Benefits Quote
Even when a PEO looks attractive, the decision to partner with one should go beyond just comparing health plan rates.
Employers should understand the total cost of the PEO, available benefit plans and networks, service model, technology, contractual requirements, renewal strategy, and what happens if they eventually decide to leave.
That is where the broker can play an important role.
Our Role as a Broker to our Clients
Rather than viewing PEOs as competition, brokers have an opportunity to help clients evaluate the entire picture.
We want to help you answer these questions:
- Is a PEO the right solution for you today?
- How does it compare with traditional benefits and HR options?
- What are the short- and long-term financial implications?
- And does the solution support where the employer wants to be several years from now?
The goal is to make sure you understand your options and make an informed decision.
As the market continues to evolve, we continue to provide expert insight on PEO, traditional benefits, and emerging workforce solutions so that we may bring even more value to employers by helping them choose the strategy that best fits their business.
