The business of staying in business is tough. Competitors, an evolving marketplace, economic factors—these combine to make running a successful company as much a matter of fortune-telling as intelligent strategizing. And the fact is, not every business is equipped to manage the many internal operations necessary to keep the doors open, the lights on, and the compliance paperwork, well, compliant. Such businesses have the most to gain from working with a professional employer organization (PEO) in outsourcing key business functions.
PEOs exist under a somewhat broad definition, with important differences separating one such organization from the next. That said, there are several aspects of the relationship between a client employer and the PEO which tend to be consistent across the board:
- Professionals working under a PEO umbrella are essentially “shared” employees.
- The PEO is responsible for administrative oversight of each employee operating within a co-employment arrangement.
- The client employer is responsible for each employee’s workload, hours, et cetera.
- Co-employment personnel effectively work for the client employer in a direct sense.
- Co-employment personnel roll-up to the PEO in an official sense.
Put simply, PEOs exist to streamline the human resources (HR) outsourcing process. Companies in need of certain types of professional expertise can partner with a PEO in a co-employment arrangement. These arrangements bring essential talent in-house while the PEO manages all employment considerations. Businesses get the expertise they need without the burden of additional hiring and onboarding responsibilities.
Benefits of Using a PEO
In many smaller/mid-sized companies, the work necessary to maintain a solid administrative foundation is often overly burdensome from a time, knowledge, and expertise standpoint. Lean operations might excel in one or two areas, client-facing or otherwise, all while finding it difficult to manage certain “behind-the-scenes” functions.
A fruitful PEO partnership can create a solid co-employment arrangement which will allow you to focus on your core proficiencies. Vital administration, HR, finance, benefits, or payroll work will be handled by trained professionals, without creating more personnel obligations in the process. Those fall to the PEO. The benefits of working with an excellent PEO include one or more of the following:
- Saving valuable time in the hiring/onboarding process
- Save money
- Operate efficiently
- Ensure compliance requirements are met
Save Time in the Hiring Process
The challenges that so often accompany effective hiring present a major challenge for even the best-run businesses. These include:
- Attracting talent
- Scheduling interviews
- Preparing offer letters
- Running orientations
A PEO can eliminate the need for such a laborious process by delivering the experts your company needs to manage these steps fluidly, and without the burden of hiring staff expressly for that purpose. As much as anything else, this is an important time-saving measure.
Filling requisitions requires, without exception, a good deal of time on part of those charged with that mission. The more skilled the team handling it, the shorter your time-to-hire will ultimately be, and the more time saved in the aggregate.
Save The Company Money
Administration, human resources, finance, payroll, benefits—these are costly arms for a business to maintain internally. Fortunately, small and middle-sized companies can turn to a PEO. An effective co-employment agreement brokered by a reputable PEO can provide a cost-effective solution for expensive bureaucratic requirements.
If your company is necessarily running with a small headcount, thereby limiting your ability to oversee crucial HR or finance functions, your options are not at all limited to simply increasing that headcount. Summon professional expertise as needed but do so under the umbrella of well-negotiated co-employment agreement. You can strategically control your overhead and keep the budget intact in so doing.
Business Operates More Efficiently
Many smaller and medium-sized businesses run a lean operation, so to speak. The emphasis is on turning out a good product or providing a valuable service. What isn’t spent on, say, research and development is used to hire sales and sales support personnel. A few rungs down the ladder you will find compliance, HR, finance, and maybe one recruiter (likely the CEO’s nephew).
Operationally speaking, this sounds terrific. Keep the business simple and fewer things are likely to go wrong. Except, of course, when they do. Unexpected turnover, a complex HR matter, or messy payroll mishaps can disrupt operations in the worst sort of way. A PEO can help you maintain efficiency while addressing administrative vulnerabilities.
The expertise you need to oversee HR functions, for instance, will exist in-house but as employees of the PEO. Your headcount remains effectively unchanged while your collective professional pedigree is heightened.
Remain Compliant With Laws
Though it serves an important sociocultural purpose, the concept of compliance amounts to a sort of Rubik’s Cube for modestly sized companies ill-equipped to puzzle out its minutiae. Furthermore, intent is not always considered where falling out of compliance is concerned. Your business might have intended no harm in failing to honor a given regulation, but the ensuing fine(s) will nevertheless be all too real.
Compliance personnel may not be a priority for you in the here and now but remaining compliant should be exactly that—a priority. Mercifully, you don’t necessarily need to focus your energies on building out a fully staffed compliance department.
A responsible PEO will meet with you to gain an understanding of your business and the industry regulations to which it is subject. From there, they will perform the work finding the personnel/expertise solution best suited for your needs. Once the solution is in place, your compliance infrastructure will be equal to the task of keeping all operations within regulation.
Find Out If Your Company Could Use a PEO
The business world is rife with aggressive competition, relentless change, and government regulation—and that observation scarcely scratches the surface. Dive a bit deeper and you will see that the small business community is frequently scrambling to keep pace with internal demands on time, resources, patience. But the expertise and knowledge to overcome that struggle is out there, and NetPEO can be of help in pairing your company with it. Contact us today for a free, quality consultation.
