Successful, Established Businesses Should Consider PEOs
There are all sorts of compelling reasons why startups and young businesses should consider working with a professional employer organization (PEO), not least of which is freeing up time and resources on basic HR functions that they can apply to their growing business. Established businesses may be comfortable -- and even happy -- with their existing health care, benefits, and payroll administration. Why, then, would they consider rocking the boat by forming a relationship with a PEO?
The truth is that even long-successful businesses can benefit tremendously from partnering with a PEO and going through the process of deciding whether a PEO is the right fit for their HR needs.
Evaluate What’s Working and What Isn’t
Whether you’ve been in business for 5 days or 50 years, it’s important to conduct a full periodic audit of your benefits administration. Do your employees have the services and resources they need? Are you able to provide them at a reasonable cost? Have you experienced any problems with efficient workers compensation claims, payroll issues, or onboarding new employees?
Spend some time working over everything related to payroll and benefits -- and ask the people around you. From management to part-time employees, everyone’s perspective is valuable when you’re determining whether you’re doing a solid job with core services. The most useful part of the process is getting an answer to a seminal question in running a sustainable, successful business: Are my employees happy?
Work Up the Opportunity Cost
Once you have a handle on your operations, it’s time to consider the opportunity cost -- that’s what else you could be doing with the time, money, and effort you’re spending on fulfilling core HR functions. How much are you spending on providing the services a PEO may be able to do more cheaply? Could the man hours dedicated to solving HR problems be better allocated to more productive work that would lead to your company’s growth? Will eliminating uncertainty and stress from your employees’ HR interactions help them be happier and decrease turnover?
There’s a lot to consider here, but opportunity cost is a driving factor in deciding whether to work with a PEO. Good owners and managers make sure things run properly -- great owners and managers look for how they can run better.
Explore What to Do with Your Time and Resources
Now that you’ve analyzed your processes and thought about how much time and money you can reclaim, you can start thinking about what your business can do with it. Perhaps you can fill a critical need by making a new hire. Maybe you can allocate free resources to some business development or marketing initiatives.
Whatever you come up with, that’s the endgame for working with a PEO -- realizing what a PEO can do for you, how it will affect your business, and what you’re able to do to capitalize on a PEO relationship. Even if you ultimately decide that a PEO isn’t the right fit for you now, you’ll have positioned your business to work more efficiently and advanced the conditions that will allow it to grow.