Deciding on whether to use a Professional Employer Organization (PEO) can be a tough decision, but let’s demystify the dilemma.
Here are 8 key signs that indicate you need to research using a PEO for your business.
- You are overwhelmed with inefficient administrative processes
If you are trying to find more hours in the day for you and your staff, then using a PEO may be a good way for you to free up time. Many businesses, particularly those with multiple locations, find it hard to maintain efficient administrative processes as they expand. A PEO can streamline and automate administrative processes, such as payroll, timekeeping, employee data management, and the hiring process among many others.
- You are not 100% confident that you are compliant with all regulations affecting your business
Let’s face it, the business of being an employer has become more and more complicated. Just through the Affordable Care Act alone, there have been about 900 new regulations enacted in recent years. It’s impossible for you to keep up with all the rules and regulations, in addition to knowing how to comply with them. A PEO provides the HR expertise coupled with the HRIS platform to ensure compliance with all federal and state employment regulations.
- You want access to HR expertise that you currently don’t have
You started your business because of your desire to be an entrepreneur and leverage your subject-matter expertise. You did not start your business to keep with employment laws and become an expert in insurance. Using a PEO gives you access to experienced, certified HR managers, as well as experts in payroll, compliance, risk management and employee benefits.
- You don’t have the financial resources to build an internal HR department
Building an HR department can be time-consuming and expensive. Depending on the need, an in-house department can involve the following: hiring an HR Director, using a payroll company, securing an EPLI policy, paying a 401(k) audit fee and paying attorney fees – which collectively can total up to $200,000. As you see, the list can be long and pricey. PEOs can often provide a greater depth and breadth of services at a reduced cost.
- You want to position your company as a Best Place to Work
What makes a great company to work for? Many things, including having access to an employee perks program, Fortune 500-caliber benefits, and innovative training content. It’s no coincidence that many companies who use PEOs have been named to the Best Places to Work lists in their respective markets.
- You are at an inflection point and are currently growing or about to undergo a growth phase
How can you best make that leap to the next level? Will your current HR infrastructure support your organization when it is 30% larger? 50% larger? 100% larger? The bottom line is that every internal resource needs to be optimized and focused on growing the business. Any resource spent on non-core functions is an opportunity cost that the business bears. PEOs can implement a turnkey HR infrastructure that can scale as you scale.
- You just acquired a company and want to professionalize the business
Congratulations! You just acquired a company and are excited to grow it and make improvements. Many acquirers realize that shortly after the acquisition, the HR function was either missing or significantly under managed. That can represent a huge risk to acquirers, especially in a stock purchase. A PEO can wash the acquired company of employer risk in a short period of time.
- You lost a long-time, key employee who “handled HR”
Unfortunately, whether you like to admit it or not, there is a strong likelihood of this very scenario occurring. Prevent yourself from being subject to “key person risk” and have a PEO work together with your “key person.” You never want to be in a position where HR processes and practices are driven by only one person in your company.