Rising numbers of companies are turning to Professional Employer Organizations to allow their employees to gain access to a range of benefits. These benefits range from retirement to health and helping with their tax documents.
These benefits stem from the whole ideology of the PEO company. When a company enrolls with a PEO business, all of its employees also become employees on paper of the PEO company. The pooling of all of these “employees” allows for access to better health insurance, and workers’ compensation usually only reserved for huge corporations.
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So let’s go through the pros and cons of using such a company:
Pros
Obviously, due to the way they work, the main advantages of using a PEO company comes from the power they gain from grouping up smaller businesses into larger entities. This leads to a lower cost to the company for increased benefits for its employees. This means that a small company can offer its workers the same health, savings, and retirement plans that a huge corporation would offer.
Cons
When you sign over to a large PEO provider, you give control of your benefits over to them. This includes the carriers used, the plans, and the risks undertaken by going with a particular provider. This means that even if a company and its employees love the plan, they are on currently if their chosen PEO providers decide to change plans, there is not much they can do about it.
Organizations often like to keep their HR departments inside their own doors. Often companies believe that doing this leads to a better trained, more efficient team. Often businesses lead by older CEOs may be less open to allowing external companies to control such a massive aspect of their company.
What to consider when deciding if a PEO company is for you
If you are in charge of determining whether to use a PEO HR provider, you need to weigh up the pros and cons. What works for one won’t work for another, so ultimately, you need to decide.
Some things to ask yourself are:
- Will they help out in an HR emergency?
- Will they commit to working the number of hours you think they should work for your company?
- Will you have good lines of communication with your PEO HR team
- Will, your employees, have good lines of communication with your PEO HR team
- Will they be able to make unbiased decisions for the good of your company, not themselves?
By asking yourself the above questions and analyzing your own answers, you should be able to determine whether hiring an external HR company is a good idea for you.
Make sure that if you decide to outsource your HR that the responsibilities are clearly outlined. You need to know who is responsible if the outsourced company makes a mistake. If they file the wrong taxes, who is going to be penalized by the IRS. As long as the lines are clearly drawn in the early days, using a PEO HR company can benefit a wide variety of businesses.
