Over 175,000 businesses across the United States make use of a professional employer organization (PEO). These companies can engage in a vast number of steps to help you with employee hiring and retention. Still, many people much like yourself do not know what they are or what they do, and this article can help.

Below, we investigate the purpose of employer organizations and what they can do for a company. By reading through these, you can have a better understanding of if you want to engage with one in the near future.

What Are Professional Employer Organizations?

A professional employer organization company tries to provide HR services to businesses. They can either act as a replacement for an HR department or as a partner taking over specific tasks the company cannot perform. These tasks might include:

  • Payroll
  • Benefits management
  • Hiring
  • Ensuring compliance
  • Tax filing

While they do this, the business is still in charge, and a level of supervision and oversight is necessary to ensure the company performs as needed. This can often streamline the existing processes the business has and can act as a stop-gap while the company expands. At other times, the PEO can replace HR departments entirely, acting as “HR as a service” throughout the lifetime of the business.

1. They Save You Time and Money

Establishing and growing a human resources department can start to get costly as a company grows. Their role expands to the point where you must employ more people with more specialized knowledge. This can start to expand your HR budget beyond what you had scoped for the department.

A certified professional employer organization can be a much more cost-effective alternative. They have an already-existing infrastructure and a focused skillset. This ensures they can provide you with the specific services you need without you needing to go through the motions of hiring and expanding.

PEOs often also have very good contacts throughout the world of HR. They have dedicated teams focused on finding good deals for employee benefits and insurance, for example. This often means you can improve your company’s offerings and save money while doing so.

2. PEOs Are Perfect For Global Expansion

PEOs are also great when it comes to needing to either establish a foreign office or start hiring remote freelance workers. They will have the contacts and pool of employees from all over the world that you can work with to build up your core skillset.

They can also act as the “Employer of Record” in a foreign country and as such handle some of the more complicated facets of such an arrangement. For example:

  • Local taxes
  • Payroll management
  • Employment law compliance

By working with a PEO, you also have many more options when it comes to expanding your business. By negotiating with employer organizations, you can grow your workforce over time, or even shrink it when necessary. You offset a lot of the risk onto the company, allowing you to focus on other areas.

By not being the employer, you will not need to handle issues related to redundancy or firings. This can help take a lot of the emotional labor out of the role, and allow people to focus on their work tasks instead.

3. They Often Have a Wide Talent Pool

A professional employer organization company will often maintain a long list of potential hires. This means they are likely to always have someone with the skillset you need at the drop of a hat. By maintaining good relationships with potential hires, they can keep such a pool open in case you ever need to expand further.

PEOs are also well-placed in the modern era of working. With remote working on the rise for several reasons, they will often have access to employees with specific niches. They can seek out people with a specific focus on any skill you sorely need without you needing to wait for a traditional hiring process to conclude.

Once they bring people in, they can also onboard hires with any internal material you have. This removes the need for you to undertake any early training and ensures anyone who joins you does so ready to hit the ground running.

4. PEOs Act As HR Support

As well as acting as a full HR department, a PEO can work with them to reduce their workload. This can happen permanently, or only in times of upheaval such as during layoffs or mass hiring.

With the high level of experience in HR, they can also act as consultants. Instead of performing the work of HR, they can work with the department to create or evolve any specific policies they might need.

If contractual changes must occur, or an employee handbook needs development, they can liaise with existing HR to help that happen. The HR department will likely have “boots on the ground” and a better context of the day-to-day of a department. At the same time, a PEO can offfer legal and professional feedback to ensure any creations match both regulatory and business needs.

5. They Have Specific HR Expertise

PEOs have the experience to know about employment laws and best practices all over the world. If you need to bring someone in from remote locations, they can ensure the employee receives the right treatment. By doing this, they can help you avoid falling foul of local regulations or even local customs such as traditional holiday bonuses.

A PEO will also have access to technology your own HR department might not use. This includes performance management software and an applicant tracking system. These can help you always be at the top of their game without you needing to pay for any software subscriptions.

Bring On a Professional Employer Organization

These are some of the best reasons why working with a professional employer organization can ensure you keep your focus on what matters. If you want to know more about what it means to have a PEO working with you, we would love to help you out.

Our experts are ready to teach you how we can provide you with a range of different benefits, including the ones listed above. So, talk to us to find out how we can apply our specialist knowledge to your business today.