3 advantages of using a PEO

By managing many of the HR jobs that you would usually outsource to multiple service providers, PEOs can help you spend less time managing various vendor relationships.

PEOs commonly help their client companies with services that:

  • Increase operational efficiency
  • Reduce risks 
  • Maximize the talent in your organization

Here are three specific advantages to using a PEO.

1. Provide better benefits and employee experience

A PEO can usually give you access to a wider range of benefits options, often at better rates, than what you could access on your own as a small or medium-sized organization.

Through a PEO, your employees gain access to big-business benefits and have a single point of contact for information and questions. This can help you recruit and retain better talent for your organization.

When you join a PEO, your employees may have access to:

Employee benefits

  • Medical, dental and vision coverage
  • A health care flexible spending account
  • A retirement plan
  • Life insurance
  • Personal accident insurance
  • Short-term and long-term disability insurance
  • Adoption assistance
  • Commuter benefits
  • Educational assistance

Training and development

Many PEOs can offer you training and leadership development services for your employees, such as an online learning management system containing interactive courses and digital books. 

A PEO’s training services may also include live or virtual training seminars.

2. Reduce risk

Through a co-employment relationship with a PEO – your company can effectively and efficiently mitigate a substantial portion of the risk and responsibility associated with having employees, including risks associated with things like:

  • Correctly reporting, collecting and depositing taxes with state and federal authorities
  • I-9 requirements
  • EEO reporting and claim resolution
  • Management of certain employee-related claims and provision of Employee Practice Liability Insurance (EPLI)

Most PEOs employ specialists who are responsible for monitoring many employer-related state and federal laws. Armed with this knowledge, the specialist stays abreast of constantly shifting laws, regulations and reporting requirements that impact the services the PEO provides to your business.

To help you reduce risks, PEOs often provide:

Workers’ compensation

Joining a PEO provides you with workers’ compensation insurance coverage. The PEO also manages and resolves injured employee claims in the event of an on-site injury. 

To prevent injuries before they even happen, PEOs often offer loss prevention specialists who can review your safety practices and design return-to-work programs.

Payroll processing

  • Paying your employees
  • Payroll record keeping and compliance
  • Online paystubs and W-2s
  • Payroll management reports
  • Garnishment and deduction administration
  • PTO accruals

HR administration

Supporting your internal HR team, a PEO helps you manage your liabilities as an employer, providing: 

  • Employee handbooks
  • New hire onboarding
  • Termination assistance
  • Leave of absence request management
  • Employee relations support
  • Drug testing services
  • Liability management training
  • Employment verification

3. Reduce costs

Not only do PEOs help their client companies save time. They can also help you save money through:

  • Better hiring practices that reduce turnover
  • Finding new ways to motivate your employees
  • Making strategic plans for the future

And when you begin accessing HR services and benefits through a single source, you’ll have a better sense of your overall investment in your workforce.

Here’s what services PEOs can provide to help you reduce costs:

Recruiting support

A PEO can help you design the ideal recruitment process that fits your unique business. It may also work with you to: 

  • Develop job descriptions
  • Conduct wage and salary surveys
  • Improve your hiring managers’ interview and candidate selection skills

Performance management support

A PEO can help you design and conduct employee performance appraisals on a regular basis. In addition, to support ongoing performance improvement, PEOs often provide you with: 

  • Compensation resources and tools
  • Supervisor coaching
  • Assistance with job descriptions
  • Reward and recognition program design
  • Base pay structures
  • Self-help tools and worksheets for variable and sales compensation structures 
  • Company climate surveys

Strategic HR support and planning

A PEO can help you develop a strategic HR plan that allows you to make HR management decisions now that will support the future direction and growth of your organization.