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Common Misconceptions About Working with a PEO.

Common Misconceptions About Working with a PEO.

  • Nov 28, 2019

Most success in business is built on the principle of delegation. Whether that’s in HR, customer service, or any other facet of the business.While this concept typically refers to assembling and trusting the right team to execute the company mission and deliver value, in many cases, it refers to choosing the right alliances and strategic business partners for outsourcing key functions like HR and legal (e.g., vendors, contractors, agencies).

PEO vs Other Providers

Yes, finding the right employees and partners is key. In the world of HR, outsourcing to a company like a “Professional Employer Organization” (PEO) can be one of most important decisions a company makes. It can improve access to benefits, profitability, exposure to risk, decrease HR costs and so much more. But what are the mislead assumptions or misconceptions employers have about PEOs?

For companies looking to outsource payroll and HR, a PEO is among the top choices because it is such a comprehensive solution to all-things-HR. And due to the nature of what a PEO can do for employers, misconceptions can exist.

Misconceptions of Outsourcing to a PEO

In contrast to choosing a PEO, your organization may be considering outsourcing to a CPA or payroll company that primarily focuses on processing payroll and related technologies. This is often referred to as an “ASO” or “Administration Service Organization.” With a PEO, however, you typically gain everything offered by an ASO, plus numerous other benefits to help you grow more efficiently.

If you're weighing such a decision, consider the following misconceptions:

  1. Losing control – A PEO relationship is designed to help you better run your business, not have you be pulled away by paperwork and HR administration. As co-employer, the PEO is designed to save employers on the cost of benefits, HR, technology, insurance and so on while providing consultative support.

    The PEO assumes the co-employer status in order to, in part, group the client with others for savings on insurance and other HR costs. It assumes responsibility for many of the administrative or non-revenue producing tasks, such as payroll, payroll taxes, wage and hour compliance and so on, but not to assume supervisory, strategic or day-to-day control, such as performance management and pay negotiation.

    Ultimately, the PEO works along side the client from an administrative and compliance perspective. It provide resources, performs numerous administrative duties and has expertise to assist. And as such, the employer gains additional control over their business with better reporting, tools and less disruption with HR related functions.

  2. The employer must use all the PEO's offerings - PEO's offer tremendous flexibility, from simple payroll processing to full-scale HR outsourcing and operations. A PEO is perhaps the best type of HR partner to grow with your business, particularly as you seek to offer leading benefits to your employees. Be sure to ask before you assume you must use your PEO for anything and everything. With Zamp HR, however, as an example, you're able to add solutions to your administrative service without additional costs, such as automated timekeeping and employee scheduling.

  3. Existing HR staff are no longer needed – The scope of HR, payroll, benefits, safety and compliance can be daunting. One goal of a PEO is to help your HR staff focus on more strategic initiatives that align with company goals, not paperwork.

    When working with a PEO, while you gain access to experts across all areas of HR, a PEO seeks to align with your existing staff to provide the relief you desire and at the scope you desire. You gain access to options operates with flexibility based on your needs. While a PEO can be a comprehensive HR partner to the business, they can also be a very complementary partner.

  4. Our employees will become temporary employees – A common misunderstanding is that a PEO is the same as a staffing agency. This is not the case. Your employees will continue to act and “feel” as your own because the PEO becomes a “co-employer” along side you for HR administrative purposes.

    While it’s true that a PEO takes the role of co-employer for the benefit of insurance savings and administration, the employee’s day to day is likely to only change (improve) in terms of how they interact with HR processes, such as checking pay stubs. Yes, your HR processes will improve, such as new hire onboarding, but your employees will not become employed exclusively by the PEO or feel as though they have become temporary.

  5. My employees will not support the change – A PEO is designed to enhance the employment experience for the employer and employee alike, including a company’s benefits, HR process and administrative operations. Employees are likely to gain access to benefits they couldn’t otherwise enjoy. They also will gain visibility and tools to better manage their time within and away from work.

  6. I don’t want to lose control of hiring decisions – Simply put, a PEO relationship is not intended to determine who you hire. While a PEO can help provide tools to attract better talent and streamline the hiring experience for both parties, it will not assume control over your hiring efforts.

A PEO is an exceptional resource for employers, insomuch that it provides all-things-HR from a single relationship and at an economical price. If you have questions about working with a PEO, we invite you to contact Zamp HR.

Consider a Professional Employer Organization for HR Outsourcing

We encourage you to contact a PEO specialist with Zamp HR to learn more, and to experience the Zamp HR difference for yourself. For additional questions, please contact us online or by phone.

Download the "Why Outsource HR to a PEO?" (PDF)