Finding The Right PEO For You
Professional Employer Organization (PEO) services constitute a multi-billion dollar industry. NAPEO, the industry’s professional organization, estimates that in 2012 alone gross revenue grew an astonishing 84 billion dollars. However, as with any large industry, participants can range rather widely in services provided, clientele, and yes, overall fit. In other words, all PEOs are NOT the same. And for a business looking to partner with a PEO or procure Human Resources Outsourcing (HRO) services, finding the right firm and the right fit can be a daunting task.
PEOs versus HR Outsourcing versus ASOs versus Employee Leasing
Now before we begin our search, let’s clear up some common misunderstandings and dispel the confusion associated with Professional Employer Organizations (PEOs), HROs, Administrative Services Organizations (ASOs), and other terms often used interchangeably.
First and foremost, not all HROs and ASOs are PEOs. However, almost all PEOs provide HRO and ASO services. Firms specializing in HR outsourcing typically only provide those HR services that can be purchased a la carte without entering into a co-employment relationship. PEOs provide a wide range of comprehensive employee services, of which HR is but one, and as a result often requires co-employment status. ASOs do NOT provide their clients HR services at all, but rather provide administrative support. The principle difference between HROs or ASOs, and PEOs, is that in a relationship with the former, the client firm and employer remains the employer of record for tax purposes.
Employee Leasing arrangements are another matter entirely, although often erroneously equated with PEOs. In the same way that HROs and ASOs deal quite specifically with HR services, Employee Leasing arrangements focus exclusively on providing labor to a client site. PEOs do NOT provide labor, although they are involved in hiring, training, and the procurement of employee benefits. In general, PEOs cover a broad and comprehensive range of employee services and typically operate in a co-employment relationship. Other arrangements typically focus on a narrow set of services for very specific needs.
Where to Begin
Begin by securing the services of a PEO expert and advocate like PEO Broker. The right expert can help you navigate the plethora of information and PEO options which in itself is daunting and can be overwhelming. Once you have secured the services of a PEO expert, they will want to perform an exhaustive evaluation of your needs, desires, and existing capabilities. They will want to learn about your industry and what type of workforce you have. These are the initial critical questions that must be answered before moving forward.
A PEO that specializes in servicing engineering firms and a white collar workforce would be a better fit for an architectural practice than a PEO that mostly works with hospitals and healthcare workers. Because PEO products and services are often designed with very particular industries and workforces in mind, finding the right PEO partner will depend tremendously on correctly assessing your needs and priorities.
Once an evaluation has been completed, your PEO expert will be able to provide you with a qualified list of PEOs that are a fit for your company based on the criteria that was established in your initial evaluation. The best fit will be a PEO whose benefits will cover your employees needs and benefits, without charging for services you don’t want or don’t need.
PEO Broker can help you do just that.