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Is a PEO Right for You in 2017?

Human Resources

PEO may be the right step for your business in 2017. A PEO – or professional employer organization – can allow companies to outsource key human resources functions like payroll, benefits, and compliance tracking so business owners and their teams can focus on running their company. Take a closer look at how you can determine if a PEO is right for you this year and beyond.

The Benefits of a PEO

According to Paychex, between two and three million businesses in the US utilize a PEO, and they reap significant benefits. A business that works with a PEO is 50% less likely to fail and grows approximately 9% faster than average. PEOs can offer small businesses a wide range of benefits, from access to better employee compensation and benefits – which can assist in recruiting and retaining talent – to streamlining administrative functions that are critical to running a business.

Why Businesses Choose a PEO

Often, deciding to go with a PEO to outsource human resource functions is about bringing the same level of expertise to your back office that you deliver to clients. "One of my clients was a recognized expert in their field, and they wanted that same level of expertise when they were shopping for HR providers. That's why they eventually opted for our PEO. As a result of their decision, their HR competence was on par with their business competence," says Jillienne Allgäuer, a Paychex HR consultant.

A business that works with a PEO is 50 percent less likely to fail and grows approximately 9   percent faster than average.

In addition, a PEO often provides a strategic advantage to companies seeking new opportunities to recruit and retain top talent. "When employers start to realize what HR means to developing their workforce, the light bulb comes on. They see the strategic side of HR and how it helps them be more competitive," says Allgäuer.

Deciding if a PEO is Right for You

While there are many reasons working with a PEO can be a smart choice for business owners, it is important to choose a solution that's right for your company. Asking the right questions can help you to ensure you have evaluated the most important factors when determining if you should utilize a PEO and whether a specific PEO is right for your business. Some questions to consider include:

  • Do you want to offer a wider range of benefits to your employees, from more choices on health care to diverse benefits such as retirement planning? Often, a PEO can give businesses access to a wider range of benefits at an affordable price point.
  • Are you fully up to speed on the compliance and risk management regulations your business may be facing in the year ahead? If not, a PEO may help you access the resources you need to safely navigate this growing – and important – aspect of owning a small business.
  • Are you overwhelmed by the complexities of payroll? Employee payroll is a complex area, and it's critical to get it right for your business – both for team morale and government compliance. Payroll often involves setting up new employees, managing tax withholdings, overseeing benefits deductions, and much more. If you don't have the expertise in-house, a PEO can assist with a smooth administration of payroll-related tasks.
  • Is your human resources function working smoothly? HR is a demanding area, ranging from benefits and payroll administration to hiring and firing employees, and many companies must accomplish their full mandate with a lean team. A PEO can add additional capacity to your HR administration, ensure that all aspects function seamlessly, and free up in-house resources to focus on your human capital management strategy and other areas.

When employers start to realize what HR means to developing their workforce, the lightbulb   comes on. They see the strategic side of HR and how it helps them be more competitive. Quote from Jillienne Allgauer, HR consultant, Paychex.

By understanding the leverage a PEO can give your business, and asking the right questions, it is possible to make a personalized decision on how best to move forward with your human resources administration. Outsourcing your HR function may open up a wider range of benefits to your team, improve recruiting and employee retention, and free up time for your management team to focus on running your business.


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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