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Top 9 Benefits Of Using A Professional Employer Organization (PEO)

PEOs refers to professional employer organizations that provide complete HR packages in terms of management, as well as employee benefits for smaller firms. A PEO partnership enables corporations to enjoy additional services and assistance at reasonable rates as compared to operating in isolation with these functions. This article focuses on the potential advantages that business owners may encounter when utilizing PEO service companies.

  • Reduced Administrative Burden

A PEO offers significant relief on the part of an HR-related administrative workloads for its participating businesses. PEOs can also undertake payroll processing, tax payments for employees, administering benefits to employees, and also comply with labour and safety standards set by the government. These routine but necessary processes are carried out by their own HR specialist using a complex and well-organized system. By doing so, they give more focus to the parent organisation for better services with no records or paperwork. With an external human resource, businesses relieve themselves from the burden of dealing with human resource issues like these ones.

  • Compliance Expertise

Compliance specialists employed by the PEOs ensure that their clients are on the right side of the law. The labour laws and regulations are an on-going process and monitoring them is a 24/7 job. PEOs spare their clients this hassle because they have specialized staff that monitor changes in federal, state and local laws. Experts ensure compliance with rules related to wages leave disability, healthcare, work place security insurance, among other fields by client businesses. Companies will be assured that their organization is protected from penalties or any legal problems arising from disregarding compliance regulations by working with a PEO. This allows clients to concentrate on their work and not worry about such a headache, because PEO always ensures that they comply with the law

  • Cost Savings on Benefits

The companies ranging in size can access group insurance and employee benefits at low cost PEOs. This is how they use economies of scales whereby multiple employer clients are aggregated together as one plan. This results into a greater bargaining ability for them against insurance companies compared when businesses buy on their own behalf independently. This is what translates into cost savings which are eventually forwarded to the PEO client companies. Businesses can expect administrative fee discounts of about 20 – 30% on common features such as healthcare insurance (health, dental, vision care), Life and disability plans, retirement savings etc. Through combining a number of individuals in employment into one group, their health insurance costs are reduced, since they attract cheaper offers from insurers for having a large pool in which to cover. It helps client companies save a lot of money in terms of employee benefits costs.

  • Access to HR Expertise

The employees acquire professionals who possess unmatched expertise in the industry through partnership between companies and a PEO. The specialist fields for PEO includes employee relations, performance management, recruitment and so forth. This includes understanding well the best practices in these vital HR activities. The PEOs also play a significant role in managing employee leave, ensuring occupational health and safety, and addressing employee complaints. These professionals with rich expertise are readily available for any HR policy related issues or anything involving employee management by clients in a PEO situation. Their phones, emails, and online systems are always open to respond to any general HR concerns as necessary.

  • Improved Employee Retention

Partnership with PEO ensures their ability to have extensive benefits to the employees including full health insurance services offered by big companies. As a result, top talent becomes harder for PEO client companies to keep. The employees know their worth when they work in an organisation that provides good employee benefits programme. Additionally, they value the advice offered by the PEO regarding employee complaints which is essential in creating an office culture where employees would not like to leave. Higher retention leads to a decrease in turnover among the PEO clients. This helps them evade the unnecessary expenditure spent on replacing workers after regular recruitment exercises. Open job positions also lead to fewer business operations disruptions and thereby allow more continuity.

  • Global Mobility Solutions

PEOs act as an entry to global mobility programs for companies with international operations. The company undertakes cross-border payrolls, benefits administration as well as immigration and visa assistance, tax equalization and relocation services for employees on foreign assignments. Multinational companies are easily able to move their employees from one country to another, complying with laws and directives of various jurisdictions. It gives people reassurance in the process.

  • Performance Metrics & Benchmarking

PEOs gather very rich information about its client bases, as well as individual company performances. They measure key performance indicators such as turnover rates, worker’s compensation rates, benefit use and cost. Comparisons between businesses’ statistic and industry average can be obtained through the use of benchmarking reports which are helpful in giving businesses a deeper understanding. It also provides an opportunity to identify such potential strengths which also formulate some of the weaknesses within an organization. Analytics generated by PEOs also assist in formulating strategic advice that can help in maximizing operations.

  • Scalability & Flexibility 

PEO services can be scaled up or down to suite a company’s needs depending the prevailing circumstances at a particular time. Support level has a capability to grow or reduce depending on how workforces oscillate. No long-term agreements, no huge outlay of cash. Companies pay for PEO services on a monthly basis and pay for what is needed unlike many other services that are offered yearly contracts. Such flexibility enables the company to channel all available resources into expansion and avoid excess hire or fixed overhead cost.

  • Focus on Core Business

Through PEO, companies can outsource HR tasks, which enable them to commit all time and efforts to develop more of their product lines. This enables them to enjoy freedom from administrative tasks and compliance issues. This enables management remain laser focused on revenue yielding activities that are vital to the business line. They enhance productivity, efficiency and hence effectiveness. PEO partnering enables organizations to operate effectively in an attempt to meet the customer demands and boost revenue.


Small and middle-market businesses currently face a very complicated regulatory environment surrounding employment. The weight that the company removes through PEO companies ranges from the management of payroll to the administration of benefits and compliance. In this way businesses are able to tap into an economy of scale by achieving reduced expenditure on HR processes without having an internal HR function. Outsourcing non-core functions allows companies to reduce cost, increase efficiency in operations, and divert attention towards its money spinners. In general, outsourcing of PEO services creates a great opportunity for developing companies with a vision of expansion.

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