To PEO or not to PEO

There are two types of companies, ones that either use a Professional Employer Organization (PEO) and those that do not.

Companies who use a PEO have numerous reasons for doing so and the ones who do not typically are either misinformed about PEO or have never truly evaluated the benefits that PEOs offer to their clients. 

Several misconceptions plague PEO's and the intent of this post is to dispel those myths and misconceptions. It goes without saying that not all companies are a fit for a PEO.

However, if you are interested in streamlining your providers, gaining access to Fortune 500 benefits, reducing your workers’ compensation cost and eliminating annual audits, while adding HR expertise, then a PEO makes sense for you. 

A common misconception about PEOs is that the PEO provider will take over your company and dictate how you can run it. That’s entirely false. PEOs aren’t interested in running your business. PEO's are interested in helping you focus on growing your business, while providing the services that they are hired to do. Since we’ve still never come across a company that was founded by HR experts, it’s highly likely that HR is a business function that you wouldn’t mind handing to someone else. 

Many people believe that a PEO is more expensive than what they are currently doing.  While PEO's aren’t free, nothing worth having ever is. PEO's charge an administration fee, per employee, for their services, but those costs pale in comparison to what it would cost to employ and have those resources in-house. The typical savings a PEO helps their clients realize almost always offsets the administration fees charged in the first place AND the client company gains access to better benefits. 

Another common myth is that you can obtain similar medical plans on the open market. That’s impossible, unless you have the buying power of a PEO.  Small businesses do not have the employee count to do so. The medical plans offered on the open market do not compare to the PEO medical plans, by cost or by the richness of the benefits, or both. A PEO also can keep their renewals down because of their buying power - which is simply not possible in the open market. 

There are numerous options out in the open market that tout themselves as better alternatives to PEO - some are even free, but they are not a PEO and will never be.  In many cases, they offer a menu of services without the liability shield that PEOs offer their clients.

If you are a growing business that wants to attract and retain the best talent possible, then a PEO will make sense for you. If you are interested in exploring PEO, it’s best to shop several and to compare costs and benefits.

99% of the time, we save clients money, regardless of how they initially found their benefits plan.  Even current PEO users often reduce costs when they work with us.  This is largely because the providers know who we are and know that we expect simple and straight-forward pricing.  We eliminate the “blind spots” that some PEOs use to add fees into their offerings, because we have been working with clients and PEOs for years. 

Hopefully, by addressing some common PEO myths, we’ve eliminated barriers that might keep you from taking the next step and allowing us to bring you a short list of PEO providers who are the best match to your company.