How to Choose the Right PEO for Your Business

PRemployer on December 29, 2020

How to Choose the Right PEO for Your Business

You did not join the competitive business world just to get tied down with health insurance and payroll paperwork. When you outsource those tasks with an experienced and competent Professional Employer Organization (PEO), you can focus on the work that has made your business what it is today. However, it is important to know that there is no one-size-fits-all model for a PEO.

Even if you have narrowed your search to all PEOs that have decades worth of experience, the key to finding the right PEO is choosing a PEO that will be able to fulfill the needs and wants of your business.

What Matters To You?

According to NAPEO, the United States has over 900 PEOs. Over 175,000 small businesses and mid-size businesses in all 50 states partner with PEOs to obtain the same support and benefits you are looking to obtain. 

With so many options, how can you possibly choose the right PEO for your business? You must take the time to meticulously investigate every PEO candidate before signing an agreement. 

You will want to choose a PEO that can focus keenly on the proper details in order for you to take a sigh of relief knowing that the PEO you choose is following through on its end of the agreement. 

Since employment laws will differ for each state, you will definitely want to partner with a local PEO that is knowledgeable of the laws governing the state your business is operating in. 

When choosing a local PEO, your business gets the personalized and unique services it needs, the convenience of being closer to the workplace of your PEO, and the benefits of partnering with a vendor that understands the culture of the city and state you are operating in. 

There are over 180 federal employment-related laws. That does not include state and local laws. Partnering with a local PEO will ensure the highest level of understanding of state laws and regulations. State laws will continue to change, so choosing a local PEO that understands the compliance laws and regulations will be a major key to success. 

As you search for a local PEO, there are steps you can take to narrow down which PEO will be right for your business. 

Screen Shot 2020-12-15 at 10.37.45 AM

How to Choose a PEO

HR Gap Analysis

When you think about your HR department, what things come to mind right away? 

What impact does your HR department have on your business? 

Businesses that do not perform consistent HR analysis and audits are at a disadvantage. It is crucial to examine HR to determine which areas are intact and which areas are falling apart. 

Your HR department needs to perform at a high level of efficiency, but it cannot perform at this level if you are not aware of what areas need a boost. For example, when you perform an HR audit and discover that your recruiting process needs to be improved, the HR audit can lead to you identifying more opportunities to improve your recruiting, interviewing, and onboarding processes. 

When performing an HR gap analysis, we recommend prioritizing HR tasks by whether the tasks are revenue-generating. Most PEOs will take on the responsibility of the non-generating responsibilities, so any  task you perform that are not revenue-generating can be  outsourced

Assess PEO Capabilities

The majority of PEOs will take on the responsibilities of managing payroll, employee benefits packages, employee training, and more. The more your business grows, the more you can find yourself getting tied down with HR responsibilities. As you assess the capabilities of a potential PEO partnership, it is important to find the answers to the following questions:

  • Can the PEO scale with your business as it grows?
  • Will the PEO offer the services that you have targeted for outsourcing?
  • What type of  technology will the PEO implement?
  • How much can the PEO improve your benefits offerings?

A primary purpose of partnering with a PEO is to make HR and administrative tasks easier. The resources and technology available to PEOs is often one of the keys to help level the playing field. PEOs are able to use a variety of tools that will make it easier to manage payroll, benefits, insurance, and other information. Do not hesitate to ask about the tools, resources, and technology that a PEO will use.

Due Diligence

When choosing a PEO, one of your first lines of defense will be to ensure their operations are as efficient and smooth as possible. It is essential to completely conduct your due diligence when examining a PEO and its knowledge base, skills, qualifications, and history. The option to perform background checks and examine their requirements do exist. You will want to partner with a business that is compliant with all rules and regulations.

While conducting your due diligence, you can also perform an investigation on whether the PEO has an established history of following the industry's protocols and performance practices. Through this investigation, you will determine how many other businesses the PEO is partnering with, how many years of experience the PEO has within the industry, and its retention rate. 

Establish Trustworthiness

Do not blindly choose a PEO that you can potentially form a partnership with. It is essential to check their history and their quality of services. An open and honest PEO should not hesitate to provide the information at your request. A trustworthy PEO will have nothing to hide and will be willing to answer your questions to prove their credibility and trustworthiness

When searching for a PEO and attempting to establish trustworthiness with a PEO, there are essential questions to ask such as:

  • How long have you been in business?
  • What are your values and mission?
  • How many years have your longest client been with you?
  • What quality of service should I expect?
  • What will be my role in this partnership?

To ensure the best fit between your business and a PEO, it is important to look very carefully at all aspects of the PEO because the PEO you choose will ultimately take on a wealth of responsibilities. A mismatched partnership can disrupt your workplace culture and it can result in problems for both sides.

Trust should be at the center of every business, and trust will form the basis of your partnership with a PEO. When there is that trust, a PEO can offer the peace of mind that will allow your business to move ahead. 

To learn more about finding a PEO you can trust, download  "How Do You Find a PEO You Trust?"

PEO you trust


Related posts

PRemployer's All-in-One Tech Stack

Author: PRemployer December 29, 2020

Many companies have found that utilizing all-in-one, single-sign-on HR technology is a safe, efficient, and convenient option for handling key HR acti...

Read More

The Advantages of a Local PEO

Author: PRemployer December 29, 2020

The whole point of outsourcing HR functions to a Professional Employer Organization (PEO) is to have a partner that you can trust to be there when you...

Read More