In today’s competitive marketplace, the need for a professional employer organization (PEO) is more important to a small business than ever before. PEOs are uniquely positioned to be very beneficial to small businesses. This is due to their extensive HR knowledge and ability to help key executives focus on their core business. Additionally, they help companies offer benefits that help them compete with a larger organization for top talent.
A company will only survive and profit if it can manage its employees better than the competition. The people of a company are a critical asset that companies depend on for success in a competitive marketplace. A common term for the employees and the value they bring to a company is “human capital.” It is essential that an organization manages this very valuable asset to the best of its ability.
Studies conducted by the National Association of Professional Employer Organizations in September 2013 have confirmed what many employers know instinctively—better people management equals better company performance. Since smaller companies have to compete with the larger ones in the same marketplace for the same market share, any competitive advantage a smaller company can get should be taken.
Companies that made Fortune Magazine’s 100 Best Companies to Work For list that were considered “people companies” continually outperformed the S&P 500. Why? The report suggests that better management of employees is the key. However, smaller businesses have a disadvantage compared to larger ones because the number of people working in HR is usually much less. Many smaller companies use their HR people to just do the basics.
PEOs can change the disadvantage of being “smaller” to an advantage with an attention to detail often overlooked in smaller HR departments. PEOs take over many HR responsibilities, like administering employee payroll, benefits and workers’ compensation. They also provide employees with a vast array of employee-related services. They also provide benefits that generate advantages for the business, all while saving money for the client.
PEOs free up management to do what they do best, grow the company. The experts employed by PEOs like Optimum are much more effective at HR management. In addition, they handle other “people” issues that often take an owner or executive away from the business of running their business. This type of partnership allows these executives to focus on company matters like operations, strategy, and innovation.
If you are a small business, hiring a PEO is an invaluable resource. This would allow you to offer your employees better benefits at lower costs. Why is this important? It enables you to be competitive with larger companies when attracting and keeping top talent. Benefits, such as retirement plans, play a major role in obtaining and retaining quality employees. As an executive partnering with a PEO, you would also be able to focus your attention on the matters that grow the company. Ultimately, this makes it more productive and profitable. Statistics show that PEO clients ultimately grow faster and larger than other businesses that do not use a PEO.
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