A PEO, or Professional Employer Organization, takes on the responsibility for handling another organization’s human resources (HR)-related activities. These firms do payroll tasks, make sure that your company is compliant with labor and other HR-related regulations, and get your company better prices on health insurance by using their accumulated purchasing power. Best in class PEOs can even help with recruiting and termination of employees.
Clients of PEOs have found that they have lower turnover rates compared to similar companies that do not use PEOs. Retention is aided, in part, by the fact that PEO clients typically offer reasonably-priced employer-sponsored retirement plans and other sought-after benefits. According to a 2013 Towers Watson survey, 45 percent of employees considered retirement benefits an important reason to stay with a company, and 29 percent said that these benefits were an important reason they chose to come to a company in the first place.
While retirement benefits are some of the things that are administered by PEOs, they are far from the entire package. A full-service PEO can handle all of the roles in the HR department if a client desires, including assistance in employee recruiting and termination.
What Cost Savings Do Full-Service PEOs Provide
Hiring a PEO provides a surprising array of benefits to a company. These include:
- Payroll tax benefits – We administer all of your tax-related paperwork, ensure that the right taxes are paid, take care of 1095Cs and 1094Cs, and more. No need to worry about paperwork errors leading to fines or federal investigations.
- Health insurance and employee benefits administration – By working with our providers, we can offer health, dental, vision, and workers compensation plans at a lower cost than if your company bought directly from insurers. We also offer 401k and other custom benefits packages.
- Reduced administrative costs – Your company is saved from having to hire, train, and maintain its own HR department. You also gain the benefit of the experience of the PEO, which already knows what it is doing and thereby eliminates the learning curve that would be required if you hired fresh HR employees of your own.
How Do Full-Service PEOs Reduce The Administrative Burden?
This is accomplished in several ways:
- Time and attendance solutions increase productivity – Keeping track of who came in and when typically takes up a large block of an HR department's time. With our solutions, a variety of time clock systems may be employed – including online ones for your remote workers. These are integrated with fast, efficient record keeping apps to keep track of everything related to attendance.
- Your employees only do the most valuable tasks – Outsourcing repetitive, simple tasks frees up expensive administrator hours for use on more important projects.
- A PEO's expertise allows onboarding to be streamlined – Your PEO can make sure that you have essential documents, take care of hiring and orientation, and then handle things like HR-related complaints or regulatory documentation requirements.
- Full service PEOs offer recruitment services – Here at PRemployer, we offer recruitment services for both temporary and permanent employees through our sister company, Personnel Resources.
How Do Full-Service PEOs Reduce Risk?
Full-service PEOs reduce the risks associated with 401ks, help prevent lawsuits, and help ensure that tax-related laws are properly followed. Upon request, your PEO can conduct an HR audit and spot problems that could otherwise result in hefty fines, such as the misclassification of employees or failure to keep proper records on all of your workers.
Typical PEO companies tend to have one set offering, and if it doesn't fit your company, you're out of luck.
However, a full-service PEO can customize its offerings to meet your needs. It will be able to do all of the related duties, so if you want full service, you're all set. Full-service companies can also offer services on an ala carte basis, so if you only want to outsource part of your HR duties, they can accommodate this desire as well.
The full customization options is even better than the "bundles" that ordinary PEOs offer, because the result truly fits your company. To learn more about how PRemployer can help put together a tailored HR outsourcing solution for your company, contact us here.