How do Professional Employer Organizations(PEO’s) help in the dynamic landscape of modern business? Today, companies are constantly seeking ways to streamline operations, enhance efficiency, and focus on their core competencies. One effective solution that has gained prominence in recent years is the use of a Professional Employer Organization (PEO’s). But are PEO’s a good idea for your small business?
This blog the ClarityHR team dives into the concept of PEOs as well as their pitfalls and benefits.
What is a Professional Employer Organization (PEO)?
A Professional Employer Organization (PEO) is a third-party service provider that partners with businesses to manage various human resources (HR) functions. This partnership allows businesses to outsource HR tasks such as payroll processing, employee benefits administration, and compliance with labor laws. In essence, a PEO acts as a co-employer, sharing certain employer responsibilities and liabilities with the client company.
What are the Potential Downsides to using a PEO Provider?
While Professional Employer Organizations (PEOs) can offer many benefits, there are some potential downsides to using one. First there is the potential to feel like you lost control. When a company partners with a PEO, they share some employer responsibilities and give up some control over HR processes. This can be challenging for businesses that prefer to have more autonomy.
Cost of a Professional Employer Organization:
Second, PEOs can be expensive, especially as your small business grows. Pricing can be stipulated based on the number of employees that you have. As you grow, those expenses to use a PEO grow too.
Communication:
Third, the downside to using a PEO could be the level of communication you have with your extended PEO partner. PEO adds another layer of communication between the company and its employees. This can slow down the resolution process if questions or issues arise. Do you get the same people when you call? Are they familiar with your team and your account?
Data Security and Governance:
Technology is great, but it has also put security at the top of mind when using a Professional Employer Organization. PEOs share employee and client data with third-party organizations to integrate with other software providers. This can increase the risk of employee information leakage. No one wants a data breach. It is important to know how your data is being stored, and what their governance for retaining data is. Make sure if you choose this path, that your provider manages your employee’s data the same way that you would want it held in house. There is a risk of security issues with the vendor’s system. For example, in 2016, ADP, a major PEO, was the subject of a data breach that compromised the personal data of thousands of employees.
Quality Human Resource Support:
Another common complaint is that at larger PEO is not able to provide the quality of HR services to their customers. PEO’s can be efficient at streamlining the generalist tasks but the strategic and the “human” part of human resources can get lost in the shuffle. This is because often, the people assigned to an account can change often or go to a call center for help instead of a human. It is just much more difficult to have an intimate relationship with a larger company that doesn’t really have the time to understand your unique business footprint, your employees, or your community. All of that is related.
Compliance:
Compliance is also something that is hard when small businesses are subject to a lot of local, state, and federal regulations. It is important to understand that there are nuances for all businesses and unless someone is familiar with your area, things may get overlooked. As a small business owner, it is important to hire human resource help from a company that is familiar with your regional requirements. That is a big advantage to a small business in Ohio using a company like ClarityHR and AUI. We work and live in your community. Compliance is such a big part of what we do to help small businesses.
How Do You Choose What is Right for Your Small Business?
Selecting the right partners for your small business is a critical decision. Making the right choice can significantly impact your business for the better. For instance, with ClarityHR you have a dedicated account team to answer your calls, you are not calling a call center. We know your business; we know your employees. Heck, we probably know all of your employees’ birthdays. That matters. No two businesses are the same and we don’t put your business in a box.
In addition, because we work and live in your community, our team knows our region and our economy. We work with other providers seamlessly to improve your team.
Here Are Some Other Factors to Consider:
Reputation and Experience
Research the PEO’s reputation and track record. Look for client testimonials, industry certifications, and reviews. ClarityHR and AUI are part of the Gibson Myers & Associates Inc. We have been living and serving the Northeast Ohio community for 50 years.
Specializations
A local partnership like one with AUI and ClarityHR helps you with local laws and regulations in both HR and benefits, so you always know your small business is compliant.
Cost and Contract Terms
Understand the pricing structure and contract terms before signing on. PEOs typically charge a fee based on a percentage of payroll or a flat rate per employee. AUI and ClarityHR are different. You do not pay a penny to have the local healthcare brokers at AUI on your team. ClarityHR is different because we charge you based on a yearly contract which simplifies your expenses. Transparency is important to us. We simplify the complicated.
Combine AUI for Employee Benefits and ClarityHR for Human Resources.
While we are not a PEO, ClarityHR can help you streamline your HR management and employee benefits with AUI. Together we can ensure compliance and allow your team to focus on core activities. We make a great alternative to a traditional PEO and we work with you as an extension of your team. Together, we bring support that is so valuable for your small business.
Don’t get your small business put in a box from a large PEO provider. Keep it local, with a team that can support your small business for years to come. We want you to flourish in our community. Contact Us today to learn more.