A PEO can take the burden of HR, payroll, insurance, and risk management off of small business owners. This frees up time for other mission-critical tasks, increasing efficiency and lowering costs.
Additionally, a PEO can offer benefits usually only available to large companies, like tax-advantaged health savings accounts. This helps attract and retain top talent. Let’s dive into the benefits of a PEO partnership.
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Save Time and Money
Professional employer organizations oversee all HR-related administrative functions, such as onboarding, processing, filing payroll taxes, and establishing and managing employee benefit programs. They also provide access to a single point of contact for insurance-related questions and concerns. They liaise between your employees and the insurance carriers to enact changes, settle claims issues, and reconcile billing statements.
By allowing the PEO to manage benefits administration, businesses can focus on recruiting and retaining top talent without worrying about complex plan structures or high costs. Likewise, they can set themselves apart from their competitors by offering premium benefits at an affordable rate.
Finding a PEO that uses easy-to-use software that will be familiar and easy to navigate for your entire team is essential. Ask for a demo to see the system in action and ensure it will meet your team’s and employees’ needs.
Another significant savings for small and mid-sized companies is the money saved on workers’ compensation rates. Because a PEO has the purchasing power and relationships to negotiate deals at scale, they can offer you more competitive rates for health, dental, vision, life, and short-and long-term disability coverage. This can save your business thousands of dollars. In addition, you can gain access to risk management professionals who will help you prevent accidents that lead to ongoing loss prevention and lower your rates even more.
Boost Employee Engagement
A PEO can take much of the burden off business owners and in-house HR teams, freeing them up to focus on strategic leadership. This can foster a more engaging work environment, positively affecting employee morale and turnover rates.
In addition to handling a wide range of administrative tasks, many PEOs also offer employee benefits that would be cost-prohibitive for smaller businesses. They can do this by grouping employees from multiple small businesses into one large pool and negotiating with insurance providers to get them the best rates on health insurance and other employee benefits.
Depending on the PEO, additional employee services might include management coaching, employee training on sexual harassment and discrimination, and assistance with conducting employee engagement surveys. They might also offer access to benefits such as health savings accounts, flexible spending arrangements, and long-term and short-term disability coverage.
Some PEOs even offer 401(k) plans for their clients, giving them more options to recruit and retain top talent. With all these extra resources, a PEO can provide the competitive employee benefits necessary to attract and keep great workers. This may make a significant difference when competing with larger companies for talent, especially in a tight labor market.
Focus on Your Core Business
If your business is growing, you need to spend time on hiring the best candidates and creating a solid company culture. But administrative tasks like payroll, employee benefits, tax filings, and compliance management can distract you from these crucial activities. Moreover, one of the benefits of partnering with a PEO is that it allows you to hand off all these duties to a team of HR professionals, giving you more time to focus on your core business.
A PEO works through a co-employment arrangement where they become the employer of record for your employees while you retain control over daily operations. This allows your business to benefit from economies of scale in acquiring group health and workers’ compensation rates that are more affordable than individual insurance quotes for your employees.
In addition, a PEO can handle all of the complexities and paperwork associated with offering employee benefits packages, such as program enrollment, providing employee healthcare information and claims support, managing Affordable Care Act paperwork, and addressing employee compensation issues. This saves your in-house HR staff time and frees them up to work with current and prospective employees, boosting employee engagement and retention.
A PEO can help you build a solid and competitive employee benefits package that helps your business attract and retain top talent. In a crowded job market, offering a robust benefits package to help you stand out is increasingly important.
Focus on Your Employees
With a PEO partnership, your business can leverage big-company benefits to attract talent and increase employee engagement. This includes health and welfare plans, retirement services, a learning portal for career development and regulatory training, and performance management solutions, which will save you time by reducing administrative tasks and handling everything in one place.
You can save even more by bundling the services of a PEO with payroll and benefits administration. PEOs handle pay runs, deductions, taxes, and worker’s compensation, allowing you to focus on the business of running your company. You can also save on costs by leveraging the buying power of thousands of other companies to negotiate better rates for you.
When your employees’ benefit needs are taken care of by a knowledgeable team that you can count on, they feel supported and engaged. This leads to greater job satisfaction, resulting in increased retention for your business. A recent study found that companies working with a PEO experience 10%-14% less turnover than those who don’t work with a PEO.
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