What Are the Responsibilities of a Professional Employer Organization?
What if one change to your business could simultaneously boost your profits while protecting your business from major disruptions?
That may sound too good to be true, but that’s exactly what you get by partnering with a professional employer organization (PEO). In fact, recent research shows businesses using PEOs during the COVID-19 pandemic were 32% less likely to have suffered overall negative effects on their companies. And they were 58% less likely to have permanently closed amid the pandemic!
PEOs provide both stability and flexibility to companies around the world, but many businesses don’t know how these organizations work. Wondering what a PEO can do for your company? Keep reading to discover the different responsibilities of a PEO!
What Is a Professional Employer Organization?
Our guide is going to help you learn the most important things about what a professional employer organization can do. First, though, we need to answer a more fundamental question: what is a PEO, exactly?
PEOs essentially serve as remote human resources for global businesses. A PEO can provide most of the services of a full HR department at a fraction of the cost of doing everything in-house.
To better understand what a PEO can do for your business, we’re going to explore how a typical PEO actually works.
How Does a PEO Actually Work?
Traditional businesses function with an in-house human resources department that handles a variety of responsibilities. If you were to rely on a PEO instead, then how would the relationship actually work?
Basically, you would split certain responsibilities, though the PEO will handle the bulk of traditional HR tasks. For example, PEOs can handle things like payroll, taxes, employee benefits, and some of the traditional employee guidance you expect from an HR department.
However, the PEO otherwise stays out of your way. This means you or your managers will handle things like sales, marketing, hiring, firing, and so on.
PEOs and Streamlining Daily Responsibilities
Still unclear what a certified professional employer organization can do for you? For most businesses, and especially for smaller businesses, hiring a PEO is all about streamlining daily responsibilities.
The HR responsibilities that we mentioned above, like handling payroll and tax matters, can never be ignored. However, small businesses and startups may not be able to afford the salaries and benefits packages for an entire in-house HR team.
When this happens, someone else gets “stuck” with the responsibilities. This is effectively a “lose/lose” situation for your business because someone less versed in HR matters is likelier to make a mistake. And even if the employee can handle these responsibilities, they cannot focus all of their attention on their chief responsibilities while also handling HR responsibilities.
But with a good PEO, you can have a “win/win” situation. All of your most important HR needs are covered while your employees can focus on what they do best!
Advantages of Professional Employer Organizations
Still on the fence about whether you need a PEO? To help you make that decision, let’s review some of the primary advantages of using professional employer organizations.
We’ve already touched on two of the biggest advantages: PEOs can handle payroll and employee benefits. These are both complex issues that many struggle to understand, and a PEO can handle all of your needs in these matters.
PEOs can also help to keep employees safe by helping create safety training programs and auditing your existing safety. Focusing on protecting workers in this way can help build employee loyalty while also reducing your legal liabilities.
Speaking of liabilities, a PEO can make sure your business is fully compliant with various local, state, and national laws and regulations. This is especially important if you are globally expanding your brand into countries where you are less familiar with the relevant laws and regulations.
PEOs also help prepare and file your taxes. No matter the size of your business, the last thing you want to do is end up on the radar of the IRS due to incorrect filings!
Disadvantages of Professional Employer Organizations
We’ve covered the primary advantages of using a PEO. But are there any disadvantages you should be aware of?
There are really only a couple of potential issues. The first is that using a PEO means that you are giving up some of the control you would otherwise have from handling these HR tasks in-house. But as we noted before, handling everything on your own can be expensive and time-consuming.
Additionally, some current employees may have trouble initially adjusting to working with a PEO. But the right PEO mostly works in the background and will not disrupt the existing work culture. And the past few years have effectively normalized working remotely with various professionals and organizations, so partnering with a PEO should be relatively seamless.
How to Determine If You Need a PEO
A professional employer organization offers plenty of benefits. However, not every business actually needs a PEO. With that in mind, how can you figure out if your own business needs one?
One way to determine if your company needs a PEO is to determine if you can afford to hire a full-time human resources staff to work in-house. If you can afford to do so, and you don’t want to experience the serious savings of switching to a PEO, then you may be better off without one.
Another way to determine if your company needs a PEO is to figure out if you are interested in switching to a fully-remote workforce. If everyone is already working remotely, then you may be better off saving money by using a remote PEO rather than a remote HR department.
Finally, you should determine if you plan to expand your business globally anytime soon. If so, a PEO is an invaluable way to help you recruit and hire talent around the world while staying compliant with the laws and regulations of different countries.
Your Next Move
Now you know everything a professional employer organization can do for your business. But do you know where to find a PEO who can help your company reach its full potential?
We specialize in helping businesses around the world expand their brands and boost their bottom lines. To see what we can do for your own business, all you have to do is contact us today!