If you’re a business owner and have never heard of a Professional Employer Organization (PEO), you owe it to yourself to find out what it is and what it can do for you.
PEOs provide human resources (HR), payroll processing, employee benefits, workers’ compensation and regulatory compliance assistance to small and mid-sized companies. By providing these services, PEOs help businesses improve productivity, increase profitability and focus on their core mission. Through PEOs, small businesses can offer their employees benefits such as 401(k) plans, health, dental, life, dependent care and other benefits typically provided by larger companies.
The National Association of Professional Employer Organizations (NAPEO) released a study in September that examined the benefits of using a PEO. The study found that the average client of a PEO can expect a return on investment of 27.2% based on cost savings alone.
“We have known for some time now that using a PEO is good for a company in a variety of ways, and we now have a compelling and impressive number on the actual ROI of using a PEO,” says Pat Cleary, NAPEO’s President & CEO. “When you put this new data on costs savings and ROI together with the data we already had on business growth, turnover, survival and employee satisfaction, it’s clear that there really is no better value proposition than PEOs in the HR space.”
While PEOs are not a good fit for all businesses, we have found that PEOs can work very well and help save a material amount of money for companies with certain fact patterns in terms of the insurance and overall cost savings that can be realized. A PEO’s services can save healthcare costs as well as workers’ compensation insurance costs. Small, multi-state employers are good candidates for using a PEO because they have extensive reporting requirements that can be difficult for a small staff to manage.
With open enrollment season here, now is a good time for companies to explore PEOs as an alternative for 2020. The choices range from large providers like ADP or Insperity to smaller, local providers – there are pros and cons to each.
Contact us at any time for more information and assistance if you have questions about whether a PEO is a good choice for your business.