How Small Businesses Achieve A Double-Digit Growth With a PEO

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“Conformity is the jailer of freedom and the enemy of growth.” ― John F. Kennedy

Kennedy was writing about the need to break apart from the competition in order to grow. In order to break apart, you need to first focus on your core competencies. According to a NAPEO study, companies that hire Professional Employer Organizations have been shown to grow 9% faster than those who manage their HR, benefits and payroll in-house. More from this study:
“If PEOs are successful in enabling small businesses to focus more directly on what it takes to succeed in a competitive marketplace, it follows that PEO clients should grow faster than other comparable organizations. And, indeed, this is what the evidence shows.”
We love this study for obvious reasons. It proves what our clients have said to us for years — that working with a PEO makes facilitating the growth of a business much easier. As a business or a nonprofit, you’ve all experienced the headaches associated with HR — the great many minutia involved with human resource management.

(Download the NAPEO study here)

So… What is a PEO?

Many of you probably aren’t too familiar with the term PEO. Very simply, an accredited PEO or Professional Employer Organization acts as your Human Resources and payroll department, performing the non-revenue generating functions of HR for you, so you can focus on growing your business! A PEO company is a business that provides human resources outsourcing services to clients through the use of a co-employment relationship. Here’s how theNational Association of Professional Employer Organizations defines a PEO:

A PEO provides integrated services to effectively manage critical human resource responsibilities and employer risks for clients. A PEO delivers these services by establishing and maintaining an employer relationship with the employees at the client’s worksite and by contractually assuming certain employer rights, responsibilities, and risk.

What is co-employment?

Co-employment is a relationship where the PEO company conducts all the administrative employer tasks & the client deals with tasks that a client does best. Because of the co-employment relationship, a PEO company can help small & medium-sized businesses accomplish valuable human resources tasks that they may not be able to accomplish on their own. The administrative side of having employees can be daunting, and partnering with a comprehensive PEO company can help your business succeed. This graphic shows 3 ways your business benefits from using a PEO:

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PEOs provide the expertise and experience that small to medium-sized businesses need to effectively manage human resource functions and risks that are inherent in operating any business. PEOs deliver integrated services through establishing and maintaining a relationship, called “shared employment,” with employees at your worksite and by contractually assuming certain administrative and legal functions, employer rights, responsibilities and risk.This means helping your business succeed by providing:

  1. Access to and administration of comprehensive employee benefits packages, allowing your company to be competitive as an employer. Benefits are a key piece to your employees’ compensation package.
  2. High-end payroll services including online access to reports. Partnering with a PEO will allow you to virtually eliminate payroll errors and mitigate tax-related risk, leaving you time to do what matters most: grow your business.
  3. Unique to PEO’s: Shift of much of the legal and fiduciary liability associated with employment away from your organization onto your PEO. Certified risk management professionals will aid your organization in understanding and overseeing implementation of federal workplace regulations, minimizing the risk you face as an employer through premium HR outsourcing.
  4. Unique to PEO’s: Pool together all of the employees of the PEO’s clients for superior buying power and spread risk across a large number of employees.
  5. Workers’ compensation and comprehensive worksite risk management. Traditionally you pay for workers’ compensation insurance at the beginning of the plan year, go through an audit at the end of the year, and either pay a “true-up” or get a refund at the end of the year. It’s impossible to plan ahead… you lay out all that cash at the beginning of the year, and cross your fingers.
  6. Professionally trained employment teams who know the latest laws and requirements and how they can affect your bottom line. One way PEOs do that is by becoming your human resources outsourcing department. For those of you that already have an HR expert, PEOs work hand-in-hand with him/her to handle the hundreds of tasks so they can focus on strategic HR for your organization.
  7. Improved employment practices, compliance and risk management to reduce your liabilities. With PEOs, certified risk management professionals will aid your organization in understanding and overseeing implementation of federal workplace regulations, minimizing the risk you face as an employer through premium HR outsourcing.
  8. Employment Services. Some PEOs are able to offer Employment Services to track time management and the recruitment and retention of top talent. These HR services allow companies to acquire top talent, manage employee time systems and align workforce goals with high-level company objectives.
  9. Accreditation by the Employer Services Assurance Corporation (ESAC), which provides a $1 million surety bond to the PEO, plus a $10 million surety bond to provide assurance of the timely and appropriate performance of key employer services. (Read more about Merit’s ESAC’s accreditation here.) Be sure that your PEO is accredited!

For more benefits of PEOs, feel free to go here to download the NAPEO study showing how PEOs fuel small business growth.