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What Does a Professional Employer Organization Do?

What Does a Professional Employer Organization Do?

It's a common question... what is or what does a Professional Employer Organization (PEO) do? The brief answer is... 

by partnering with a PEO through a "co-employment" relationship, employers significantly simplify HR operations by outsourcing these administrative and non-revenue-producing HR tasks to the PEO. The employer also benefits from access to modern HR technologies for tasks like payroll, timekeeping, HRIS, benefits enrollment and more. PEO's also save employers on workforce and HR-related costs, such as Workers' Compensation and Benefits. This is accomplished through the PEO's unique ability to group worksite employees together to qualify for increased buying power with insurance carriers and HR solution providers. PEOs are an all-in-one HR outsourcing solution for small, medium and large employers.

For many employers, the term "PEO" is an unfamiliar concept altogether, but particularly as it relates to HR outsourcing. For those who have discovered the numerous savings and benefits received in partnering with a PEO, the relationship is recognized as a key strategic and operational resource to the business. In simple terms, it's the ability to have one source for all-things-HR while improving HR processes and saving on costs related to a workforce (often an employer's greatest expense). But what are the benefits of a PEO an what a PEO "does" is a broader discussion.

Benefits of a Professional Employer Organization (PEO)

Some of the key items include:

  1. How are your benefit offerings? Offer better benefits to your employees to attract and retain the right staff. Whether you're a small or larger business, your ability to compete for talent and retain your best people long term is critical. A PEO can enable employers, both small and large, to offer a full suite of benefits. This is made possible with PEO's increased buying power to lower a variety of benefit-related costs. Employers working with PEO's experience lower turnover rates compared to the national average (by 10-14%), which is largely a result of increased benefits and HR processes.
  2. Do you have an HR department or staff? With a PEO, you can access an entire team of HR, payroll and technology pros for the less than the cost of single employee - HR is growing in complexity with respect to payroll, tax and labor compliance alone. When you add all the expertise required for payroll, safety, wage and hour law, HR technology, it's a lot for one or two people to manage successfully. A PEO brings you an entire team of HR, payroll, benefits and other experts to work with.
  3. Simplify HR administration and focus on growing your business - Paperwork and people relations can interfere with your business and your key staff. The cost is often not measurable, and the opportunity perhaps is known. But with a PEO, are you able to delegate all these non-revenue producing tasks to professionals, positioning your company for better accuracy, compliance, reduced risk, growth, and increased workforce profitability.
  4. Save on Benefits, Workers' Compensation and more - A Professional Employer Organization has the unique ability to group employees through a co-employment relationship with its clients. As such, it is able to bring premium benefit offerings to its clients for core benefits, supplemental insurance, Workers' Compensation, and more unlike other payroll outsourcing organizations or benefit brokers. Partnering with a PEO in this respect is very advantageous for small and medium businesses.
  5. Increase your workforce profitability and performance - Your people are likely your greatest asset and expense. Their performance varies greatly and is heavily influenced by HR processes and productivity tools such as employee scheduling and timekeeping. You also face risk in employing staff, which may include safety concerns, harassment and discrimination, and more. When you partner with a PEO, whose sole focus is the HR aspect of your business, you're able to use better technology productivity tools, elevate workforce profitability, reduce risk, minimize disruption and administration hours for both supervisors/employees, and empower key staff within your organization to focus on people and growth... not paperwork.
  6. Reduce HR-related costs while upgrading HR processes - Consistent with the points above, HR is something that requires expertise, time and tools. Technology is one of the first examples. While you are able to lower key costs related to HR, you're also able to upgrade the processes and the impact of HR by using experts. When was the last time you conducted employee harassment training or updated your handbook? How much time is spent on managing accruals, paid time off, holiday pay, and employee scheduling? What effect does it have on your staff when employees are unable to effectively manage their schedule, flexibility or paid time on and off the clock? These and many more processes affect your people, business and bottom line. These and countless more are upgraded when you partner with a PEO.
  7. Access leading HR technology - If you're still managing spreadsheets for employee records, scheduling, and timesheets (countless other examples exist), you're already spending endless hours of unnecessary time and real wages that could be avoided with HR technology. How long does it take to approve timesheets and process payroll? How effective is your applicant tracking, new hire onboarding, performance reviews, benefits enrollment, and so forth? These are time drains. The HR department is the perfect fit for innovation related to software, which is why a PEO can offer an all-in-one HR suite to drastically improve your HR and workforce performance.
  8. Reduce your risk and liability - The National Association for Professional Employer Organizations published a study reporting that businesses who use a PEO are 50% less likely to fail. At the same time, they have a 7-9% faster growth rate than the national average. There are numerous contributors to these statistics. Ultimately, PEO's can protect employers with respect to wage and hour law, safety, violations and fines, and are able to increase access to key insurance sources such as Workers' Compensation. As a Co-employer, PEO's also share in the risk with their clients and add support to complex HR compliance challenges.
  9. Peace of mind. We'll help you stay compliant - As was mentioned above, PEO's are positioned to help you remain compliant. We offer a team of HR Consultants and specialists from differing areas of expertise, including safety, payroll, benefits and labor. PEO's offer best-in-class HR Compliance support and tools to assist you both in preventative efforts and when responding to challenging situations. Compliance is a rapidly evolving challenge for employers, and staying ahead of these legislative changes can be a full-time assignment. By partnering with a PEO, you have a partner to help you plan for success. Zamp helps you keep pace with the constantly changing HR regulatory laws.

The PEO Model is an Innovative Approach to HR Outsourcing

The PEO relationship is an innovative and exceptional approach to HR outsourcing and benefits for employers. It offers unique and cost-effective ways to make HR a strength of your small, medium or large organization, so that growth of the organization becomes priority.

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)