Outsourcing administrative and business operations is a common strategy for businesses, with 29% of small businesses using outsourced services. That number rises to 2/3 of companies when you count those with at least 50 employees.
One popular option for organizations of any size is working with HR outsourcing partners like professional employer organizations (PEOs). These services can help lighten your organization’s workload by managing HR tasks and projects on your company’s behalf. PEOs have HR professionals with the expertise and experience to manage benefits, payroll, compliance, and other aspects of human resources.
Rather than simply supplying temporary employees like many staff agencies, PEOs work with your organization long-term. They manage workers’ compensation claims, handle vendor renewals and medical plans, answer employee questions, and complete other in-depth HR functions. Learn more about the differences between staffing agencies and PEOs to find the right solution for your growing business.
Why Do Businesses Partner with PEOs?
Professional employer organizations partner with companies with all the elements of a business — a plan, a product, etc. — but need a solution for complex HR tasks and benefits management.
PEOs and businesses interact through a co-employment relationship: the PEO offers comprehensive HR solutions such as providing and administering employee benefits ranging from retirement plans to group health insurance.
On the other hand, temp agencies only offer businesses short-term staffing solutions.
The talent found by the staffing agency will work temporarily with a business until the end of the arrangement, at which point they will leave to work with a different company.
PEO co-employment is designed to be a mutually beneficial long-term relationship. Client businesses benefit because PEOs offer HR help with administrative burdens such as:
- Payroll Management
- Benefits Administration
- Providing and administering Workers’ Compensation Insurance
- Guidance from experts on HR compliance
- Improving your recruitment process
- Managing and attending unemployment claims hearings
- HR software for the entire employee lifecycle
Why Do Businesses Partner with Staffing Agencies?
Some businesses may need temporary staff augmentation or assistance filling hyperspecialized roles.
In these situations, organizations might turn to staffing agencies that specialize in providing likely candidates or temp staff. Depending on the business’s needs, it would choose between temporary employment and permanent employment agencies:
Temporary staffing is a work arrangement with a set agency. The temp worker is primarily employed by the staffing agency and then is on loan to the business that needs additional staff.
While this can seem like a convenient, quick solution, there is a potential liability. It may result in a joint employer obligation, a situation in which both the staffing agency and the business codetermine the employees’ terms of employment.
For example, your company may be liable for non-compliance if the worker doesn’t receive overtime pay or the staffing agency’s pushes workers below minimum wage.
Partner With a PEO to Avoid Joint Employment Problems
Working with an external hiring company can jumpstart your organization’s staffing so you can get on track with your business goals. However, entering into a messy joint employment situation can be dangerous in the long term.
Instead, when you opt for co-employment with a PEO, you get the security of a service that revamps your HR operations, helps you find the right qualified candidates, and protects your organization with a comprehensive virtual HR department.
