What Are the Benefits of a Professional Employer Organization?

Are you a business owner looking to streamline your operations and enhance your employee benefits package? You may be wondering about the benefits of a PEO (Professional Employer Organization). 

Many companies turn to PEOs when they need to grow their company quickly but don’t have the administrative staff or experience to do it. In this FAQ, we’ll explore how a PEO company can help your business thrive.

What Are the Main Benefits of Using a PEO?

The benefits of a PEO are numerous and can significantly impact your business growth. Here are some key advantages:

• Enhanced Employee Benefits: PEOs allow you to offer competitive benefits packages typically reserved for larger companies.
• HR Administration Support: They handle time-consuming HR tasks, freeing you to focus on your business.
• Improved Compliance: PEOs help ensure your business stays compliant with various regulations.
• Cost Savings: By leveraging economies of scale, PEOs can often reduce your HR-related expenses.
• Risk Management: Many PEOs offer assistance with workers’ compensation and safety programs.

Can a PEO Really Provide Better Benefits for My Employees?

Yes, one of the most significant benefits of a PEO is access to better employee benefits. Through their co-employment model, PEOs can:

• Offer a wider range of health insurance options
• Provide access to retirement plans
• Include additional perks like life insurance or disability coverage

These improved benefits can help you attract and retain top talent, even if you’re a smaller business. One of the most significant benefits of a PEO is its ability to reduce your company’s benefits expenses through economies of scale. Here’s how this works:

Pooled Purchasing Power

PEOs represent multiple businesses, which means they can negotiate with insurance providers and benefits vendors from a position of strength. This pooled purchasing power allows them to secure better rates than most individual small or medium-sized businesses could obtain on their own.

Access to a Larger Risk Pool

Insurance premiums are often based on the size and diversity of the insured group. By joining a PEO, your employees become part of a much larger risk pool. This can lead to more stable and often lower premiums, especially for health insurance.

Reduced Administrative Costs

Managing benefits in-house can be costly and time-consuming. PEOs streamline these processes, spreading the administrative costs across multiple client companies. This efficiency often translates into cost savings for your business.

Better Benefits at Lower Costs

The combination of these factors allows PEOs to offer a wider range of high-quality benefits at lower costs than many companies could achieve independently. This can include:

• Comprehensive health insurance plans
• Dental and vision coverage
• Life and disability insurance
• Retirement plans
• Wellness programs

By leveraging these economies of scale, PEOs help you provide competitive benefits packages that can attract and retain top talent, without breaking your budget. This is particularly valuable for small and medium-sized businesses looking to compete with larger corporations for skilled employees.

What HR Administration Tasks Can a PEO Handle?

A major benefit of a professional employer organization is that they can take on a wide range of HR services, including:

• Recruitment and onboarding
• Employee training and development
• Performance management
• Payroll processing and tax administration
• Benefits administration

By handling these tasks, PEOs allow you to dedicate more time and resources to your core business functions. They can also keep you compliant with ever-changing employment laws and regulations.

Related: What Can I Do if I’m Having Problems With a Professional Employer Organization?

Will a PEO Help My Business Grow?

A whitepaper from the National Association of Professional Employer Organizations has shown that businesses working with PEOs experience several growth-related benefits:

• Faster Growth: Companies partnering with PEOs grow 7-9% faster than their peers.
• Lower Turnover: Employee turnover rates are 10-14% lower for PEO clients.
• Increased Stability: Businesses working with PEOs are 50% more likely to stay operational.

These statistics demonstrate how the benefits of a PEO can translate into tangible business success.

Related: What's the Best Way to Resolve Employer Vs. Employee Disputes?

How  does a PEO Assist With Workers’ Compensation?

PEOs can help manage your workers’ compensation program by:

• Providing coverage at potentially lower rates
• Assisting with claims management
• Implementing safety programs to reduce workplace incidents
• Offering return-to-work programs for injured employees

This comprehensive approach can lead to cost savings and improved workplace safety.

Related: Who Is The Employer Of Record With Co-Employment?

How Can I Access the Benefits of a Professional Employer Organization?

The benefits of a PEO are clear, from improved employee benefits and streamlined HR processes to enhanced compliance and potential cost savings. By partnering with a PEO, you can position your business for growth and success in today’s competitive market.

If you’re ready to explore the benefits of a PEO for your business, NetPEO can help. As a national PEO broker, we work with numerous reputable PEO firms and can assist you in finding the perfect match for your unique needs.

Don’t let HR challenges hold your business back. Take the first step towards a more efficient and prosperous future. Contact us today to learn more about how we can connect you with the right PEO to meet your specific business needs. Let’s work together to find a PEO solution that will help your business thrive.