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The Competitive Advantages of a PEO

Human Resources
Article
01/13/2017

A PEO – or professional employer organization – is a company that allows other businesses to outsource some of the key aspects of their HR and business operations: benefits, payroll, recruiting, and training and development for example. The National Association of Professional Employer Organizations (NAPEO) notes that a PEO can help clients grow up to 9% faster and reduce their chances of going out of business by 50%. Whether it's providing better benefits and services to employees or freeing up business leaders to focus on essential business tasks, here's a closer look at some of the competitive advantages that a PEO may offer employers:

Expand your benefits without increasing costs

In today's increasingly competitive talent market, companies are often looking for ways to offer value-added services to their employees without dramatically increasing costs. Top job candidates often pay attention to the benefits that companies provide and whether they're competitive with other offers they may be considering. For small and mid-size businesses, it's not always feasible or cost-effective to administer multiple benefits programs in-house. By becoming part of a PEO, your benefits may get a significant boost — without adding to the bottom line. For example, small businesses that partner with a PEO may be more easily able to offer employer-sponsored retirement plans, robust healthcare options, and more diverse benefits versus a company that administers all their programs in-house.

Improve employee service options

For small businesses, it can be a challenge to offer your employees the service and flexibility that they desire in processing HR transactions. From expert answers to retirement benefits questions to the ability to provide self-service portals for routine information updates, your HR infrastructure has to be stronger than ever before. Working with a PEO can help companies provide a modern and effective human resources experience that may improve employee service. Reducing frustrations and making individual transactions more effective can benefit individuals throughout the company.

From more competitive benefits to solid service that helps employees feel appreciated, a PEO can be a secret weapon in attracting and retaining your company's most important talent.

Reduce employee turnover

Employee turnover is costly. Replacing an employee can be expensive, time-consuming, and disruptive to workflows and client services. NAPEO reports that PEOs help reduce employee turnover by ten to fourteen percent below the industry average. From more competitive benefits to solid service that helps employees feel appreciated, a PEO can be a secret weapon in attracting and retaining your company's most important talent.

Eliminate the clutter to focus on your business

A PEO can allow you to outsource some of the critical administrative tasks associated with operating a business. As a result, it can help give a boost to your internal performance while freeing up your team to focus on their business. A lean HR staff can focus on major issues like recruiting top talent, aligning your operations with increasing compliance demands, and internal training plans.

If you're a busy small business owner that wants to provide more consistent service and a better range of benefits to your employees, a PEO may be the right option. Determine your unique outsourcing needs and work to find a PEO that provides custom solutions that can scale with your business over time. Thinking ahead may allow you to capture the benefits, from great employee satisfaction to more time for your HR team to focus on key value-add business activities.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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