There are three types of People in this world:
- Those that have no idea what a PEO is or does
- Those that have had an awful experience with a PEO
- Those that have had a great experience with a PEO
Regardless of which of the above categories you identify with, your past experience alone, should not determine whether or not your organization should utilize PEO services.
A PEO can provide a ton of value to some organizations and can be absolutely worthless for others. The question is not whether the PEO is right for your organization; Rather, is your organization in a position to benefit from a PEOs services?
What types of organizations can benefit from utilizing a PEO?
Here’s the short answer for that question; Small-to-medium sized business that are looking to grow.
Let’s put that in perspective. A smart PEO Salesman is not going to jump on a plane to Cupertino with intentions of making a client out of Apple. Why? Because, let’s be honest, Apple can do anything a PEO can do, only better.
On the other side of that, don’t expect your favorite, hole-in-the-wall, family-run deli to utilize a PEO either. Mom and Pop don’t need someone to help them manage themselves. That’s what counseling is for.
That leaves us with a pretty big chunk of companies that can benefit from using a PEO. The ideal-sized PEO client is an Employer that has anywhere from 20-500 employees.
Now, let’s talk about why a company would use a PEO.
Three words: Compliance, Savings and Time. Here’s what I mean.
Employers are expected to comply with so many different laws and regulations that it is nearly impossible for a small business to keep up. According to the Bureau of Labor Statistics, the median Salary for a Human Resource Manager is $100,000+. Needless to say, most small businesses are not in the market for a $100,000 HR Professional.
Next up, benefits. The Affordable care act has now extended its reach to employers with 50 or more employees. Although it seems that employers have caught up with ACA enough to avoid fines, Health Insurance is just one aspect of a comprehensive benefits plan that is essential to retaining key Staff members. Some employers have decided that it is easier to not offer benefits than to expose themselves to liability.
Lastly, Payroll. Calculating hours and cutting checks are not the most difficult things to manage. However, Payroll tax withholdings and filings can prove to be detrimental to a small business if not handled properly.
For some companies, a PEO has the ability to save a them money in multiple areas of their organization. For some though, the Workers’ Comp savings alone, are enough to justify using a PEO. PEOs usually have an arrangement with an insurance carrier through which they are able to offer discounted Workers’ Comp Rates to a client.
Some PEOs specialize in helping companies that have Workers’ Comp issues and are stuck with high rates. Companies with Workers’ Comp issues can also benefit from a PEO that has an excellent Safety department. The implementation of safety can help a client bring Workers’ Comp costs back down to normal and even secure good rates for the future.
What’s something that even a rich man can’t buy back? Time! We all know how valuable it is. Perhaps, the best thing a PEO can do for an organization is take over administrative tasks and allow for more time to focus on the important things. Learning to value your own time will take you from where you are, to where you want to be.
If your organization will not benefit from help with Compliance, savings or more time, then a PEO may not be a good fit for your organization.
Now that you know whether or not a PEO is right for you, the next step is choosing a PEO that is right for your organization. You may want to consider using a broker for this step. We happen to know a pretty good one. Ahem.
Good luck and remember, nothing good comes easy!
Partner – The Corporate Advocate