What does PEO stand for ?
A Professional Employer Organization (PEO) is a business-to-business service that supports its clients with a spectrum of employee management tasks.
A PEO business model ensures to serve small to medium-sized businesses that need assistance in managing their daily human resource needs and responsibilities. The tasks may include running payroll, providing competitive health insurance plans (and other benefits), preparing workers compensation coverage, filing payroll taxes, drafting employee policies, handling and analyzing concerns of employees, and much more.
A PEO keenly focuses on the task of managing the most powerful and yet the most overlooked asset of a company: EMPLOYEES!
Hiring a human resource task management team can enormously increase the value of an organization. Thus, making a business more likely to achieve their goals, gain profits, and be on their way toward expansion.
The team of a PEO considers employees to be the reason why a company secures a continuum. Therefore, it significantly focuses on this resource to earn loyalty and contentment.
The workings of a PEO:
- Recruiting: Attracting an ideal candidate for a respective job to help stimulate the growth of a business and boost profits.
- Hiring: An effective hiring process can help a candidate learn about the comprehensive workings of a company. This can help produce more effective and motivated employees.
- Remuneration: Ascertainment of competitive salaries could influence better candidates.
- Employee Benefits: A complete and competitive employee benefits package can help attract and retain exceptional employees/candidates.
- Performance Management: Assessments of employee performance can help in supporting expectations and enhancing overall employee productivity.
- Training: Proper training and development programs can keep the workforce informed about any state-of-the-art technology and respective industry transformations. Training programs can also open doors to potential advancement opportunities for employees.
- Worker’s Compensation and Liability Management: Alleviation of penalties, lawsuits, and poor return on wage dollars spent can reduce the possibility of workplace injuries and employee disputes.
- Compliance: Employment regulation and compliance laws revolve around a legal framework. Companies are bound to operate and conduct lawful practices toward employees. A business must have a plan to protect its company from any unapproved fines and litigation.
- Documentation Management: Proper attestation of relevant data is essential because of the following:
- It is required by law
- It shields companies from frivolous lawsuits
- It fosters employee productivity
- Employee Departure: Parting ways can be the riskiest stage in the relationship shared between an employee and the company. This procedure must be executed properly. There shouldn’t be a negative impact on the clients of the former employee, the revenue of the company or other employees at the company.
The rules set by a PEO help in maintaining uniformity amongst all the employees of a company. A PEO considers the employees to be highly valuable and therefore provides considerably better benefit packages than most small businesses can offer. In addition, it ensures to earn a remarkable ROI on the capital invested by those businesses that utilize a PEO.
What are the advantages of working with a Professional Employer Organization?
- A business can grow 7 to 9% FASTER with a Professional Employer Organization.
- A business can experience a 10 to 14% decrease in employee turnovers when utilizing the services of Professional Employer Organization.
- A business is 50% less likely to go out of business when using a Professional Employer Organization.
- A business is 16% more likely to report an increase in profitability than non PEO clients.
How to work with a PEO?
A co-employment relationship could help a business yield the full benefits of a PEO. Utilizing a co-employment service can establish a partnership between the business, the PEO, and the businesses employees.
The client authorizes the PEO to be the Employer of Record.
The PEO can make payments to the client’s employees and file payroll taxes on behalf of the client (and perform the remaining functions as mentioned in the list above).
The client is still the one who maintains control over the employees under a co-employment relationship.
A PEO works because it standardizes and harmonizes a business. It creates uniformity in the human resource processes. PEOs handle each element of a respective process and ensure to make all its components fit together harmoniously.
Companies practice higher productivity and reduced risk when using a PEO. They attract better employees and increase their employee retention rate by collaborating with a Professional Employer Organization. This all leads toward the business owner being able to focus on growing and improving their business.