Professional Employer Organizations (PEO) offer many benefits to small and mid-sized businesses. The right PEO can provide your company with a positive ROI while simultaneously freeing up your HR team. This allows your team to focus on core business priorities and revenue-generating activity.
When you compare PEO companies, it can be confusing trying to figure out which one is right for you. Continue reading to learn more about factors to consider when choosing a PEO for your business.
Compare Employee Benefits
Employees across the country consistently report that one of the most important factors they consider when deciding to take a job or leave a job is the benefits package. Offering a stellar benefits package can help your company attract and retain top talent in your industry. However, for many small and mid-sized businesses, offering benefits can be cost-prohibitive.
When you partner with a PEO company, you enter a co-employment relationship. Co-employment is an agreement between your business and your PEO where you split employer responsibilities. Your PEO will take on certain tasks like payroll and benefits administration. This frees you and your team up to focus on more important business goals. You keep sole control over your employees and your company's day-to-day operations.
Through a co-employment relationship with a PEO, you can also provide best-in-class benefits to your employees by providing access to the PEOs healthcare plans, retirement plans, and other benefits offered. Not only does this let you provide your employees exactly what they want, but it also comes at substantial cost savings to your business.
Compare Workers' Compensation Coverage
Workers' compensation insurance coverage can be difficult for small and mid-sized business to obtain. And when they do, the rates are usually very high. PEOs offer two distinct options for workers' compensation coverage.
Some PEOs will only search for a workers' compensation carrier for your business. They will try to find the best fit for you so you do not have to waste time searching yourself. The problem with this approach is that you still end up paying the same premium.
The better approach is to partner with a PEO that gives your business access to the PEO's reduced e-mod rates and workers' compensation premiums. This gives you the coverage you are required to carry while also helping your business save money.
Compare Case Studies
Every reputable PEO company will have case studies. These case studies will show potential clients like you the PEO’s successes. You should ask for these case studies (more than just one) and review them in detail. Ask for case studies of businesses similar to yours in size and industry. This will give you a good idea of how the particular PEO can add value to your business.
If a PEO does not have case studies, will not provide them to you, or gives you ambiguous or vague answers, it might be time to look elsewhere. If a PEO has provided valuable and cost-saving services to existing and previous clients, they will want to share that information with you. If they do not, that's a red flag.
When choosing between different PEOs, you must weigh several factors. You definitely want to partner with a PEO that makes you feel comfortable. This is a partnership that could last decades, and you must treat this decision similar to making an important hire.
As with all business decisions, however, the cost is also a vital factor. It may not be the first consideration, but it is important as it impacts your ability to maximize your ROI with a PEO. Outsourcing HR through your PEO partnership will save your company money. To maximize that savings, investigate a local PEO.
Local PEOs tend to have the best HR outsourcing price models. They generally cost less than national PEOs and can provide a higher quality of service. National PEOs advertise nationwide. So you are paying for the PEO's New York City advertising budget.
A local PEO also understands your needs as a small business in your community. Your local PEO may be in the same state or even the same city. They have an acute understanding of the local employment laws you must adhere to, because they face the same hurdles. National PEOs cannot provide this same level of detailed service that a local PEO can. Combine the specialized service with additional cost savings, and a local PEO might just be your best choice.
Save Time and Money with the Right PEO
Partnering with a PEO is an important business decision. Finding the right PEO for your company can seem like a daunting task. By asking the right questions and carefully reviewing the information provided to you, you can determine which PEO is best.
By weighing your business’s needs and understanding the level of benefits you want to provide to your employees, your potential PEOs can give you a breakdown of your monthly costs. You will soon find that partnering with a local PEO will give you the best ROI.