Human Resources Matters: What is a PEO?

If the people in your human resources department have too much work and too little time, you may be considering hiring a Professional Employer Organization (PEO). Of course, you want to make sure that you understand what a PEO is and what it can do for your company before moving forward with this decision.

Purpose and Function of PEOs

A PEO can take over tasks such as payroll, compliance issues, benefits administration, creating job offers, and other typical tasks of a company’s human resources department. It can do this either on-site at your location or off-site at the location of the PEO. It is similar to a Human Resources Outsourcing (HRO) organization except that the PEO is larger and offers the on-site option.

If your company decides to contract with a PEO, it will continue to manage its on-site employees and decide on the direction of the company. This is a comfort to know when you opt to outsource all or most tasks currently completed by the human resources department.

One major advantage of a PEO is that it provide access to health insurance plans with lower premiums than what your company and its employees currently pay. That is due to the PEO participating in one or more large networks of health insurers. Thanks to this partnership, your business can avoid workers’ compensation audits, making a large deposit to a health insurance company, and spending too much time on administrative details for the various health plans.

When Choosing a PEO Makes Sense

When you need an immediate turn-key solution to reduce time and money spent on administrative tasks, hiring a PEO can be ideal. It also helps to reduce liability for your human resources department and gives you more affordable options for health and workers’ compensation insurance. That means greater profit for the company and the opportunity to pursue growth without the weight of so much administrative work.