This question comes up often from prospective clients, and although our answer is almost always “you should!” (depending on each company’s special circumstances), we are listing some of the pros and cons of outsourcing human resources to give our readers direction when making the choice.
Professional Employer Organizations (PEOs) save busy companies the time it takes to do consuming payroll administration.
PEOs can help small companies offer more comprehensive benefits packages, leading to happier employees and competitive hiring packages that attract high-quality employees.
Partnering with a PEO means you don’t have to spend time working on the things that aren’t your core competencies such as benefits, workers’ comp, and compliance.
PEOs can provide employment practices liability insurance in case a company gets sued by an employee for discrimination, or wrongful termination. PEOs can also assume civil defense duties and court filings on your behalf.
Most PEOs provide companies with online platforms accessible via a Web browser, allowing for electronic staff onboarding, timekeeping, and employee and manager self-access.
The company will give up control. If you are used to doing all HR administration yourself, handing off some of these time-consuming duties might feel weird at first. However, PEOs keep companies in the loop and almost all information is available through the online platform.
Health care benefits could change. It’s true that PEOs can change health care providers, which impacts your business, but in most cases, the change saves you money and still benefits employees.
The company might lose the personal touch with employees. Because the PEO handles the payroll processing, claims processing and so on, business owners sometimes fear they won’t be able to give the same kind of personal attention to staff. However, the right PEO provides personal service, and also as most companies have on-site staff, employers and employees still maintain face-to-face contact.
The decision to hire a PEO is an important one with a lot of details to consider. In the end, once you know the facts, only you can decide partnering with a PEO works for you.
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