Businesses outsource about 300,000 positions around the globe every year. Outsourcing is a popular way for business leaders to find the talent they need.
You might wonder how you can manage this situation, though. You might have thought about working with a staffing agency or an employer of record.
Have you thought about working with a professional employer organization? There are plenty of pros to working with a PEO, as well as some drawbacks.
This guide will help you understand what a PEO is and what it can do for your business.
What is a PEO?
The first question you have is, “What is a professional employer organization?” How are they any different than a staffing agency?
You can think of a PEO as a co-employer. A staffing agency or employer of record will employ your workers, then send them to your site.
You share your employer’s duties with a PEO. They can help you with anything related to employment, like payroll or compliance. You still have a say about policies like bonuses, vacation time, and much more.
The Pros of Working with a Professional Employer Organization
Many business leaders prefer working with a PEO because it has some serious advantages. The biggest is that you keep control over your employees.
When you work with a staffing company or employer of record, you have some say over who is hired and who is let go. Other than that, employment decisions are largely out of your hands.
A PEO shares responsibility with you, so your employees are still yours. You can make calls on who gets promoted, who earns a bonus, and how you’ll handle vacation and leaves.
Your PEO partner can also help you administer payroll. They may be able to use their expertise to help you find the right team members.
Your HR team can also benefit from working with the PEO. A professional employer organization will help with time-intensive tasks like compliance and monitoring. They can help you craft new policies and ensure you’re always in line with the law.
Some PEOs may also assist you by giving you access to the infrastructure you need. Some may be able to give you access to better group benefits or retirement savings plans. Others will offer access to the insurance policies you need, like workers’ compensation.
Finally, a PEO assumes part of the responsibility for your team. You’re never going it alone.
Expertise in New Markets
One of the biggest pros of working with a PEO is that they often have expertise in international markets. If you’re planning to expand your business, teaming up with a PEO is one of the smartest moves you can make.
Why? PEO’s team of HR experts has plenty of experience in these markets. They’re familiar with the rules and they’re keeping an eye on new legislation.
In short, they’ll help you manage your compliance. With their help, you can also adjust your policies to be sure you’re operating in line with the law. This helps you avoid penalties and lawsuits.
PEOs may also have more insight into the talent market in a new country. They may be able to tell you what areas to look in, which positions you’ll need to pay more for, and so on.
Working with a PEO can also give you access to the banking infrastructure you need, as well as insurance.
As you can see, if you’re planning to hire in a new market, then partnering with a professional employer organization is a safe bet! You may want to check out this PEO who does canada employer of record for your businesses.
The Drawbacks of Working with a PEO
Working with a PEO does have some disadvantages. Perhaps the biggest downside is that you are still expected to be involved in HR policy and practice.
If you’re a small business with no HR team, then a PEO partner may not be the right choice for you. You may prefer working with a staffing agency.
Working with a PEO also means you assume some liability. You’re still responsible for your team members. If you don’t have proper insurance or don’t pay properly, then you will need to pay the fines.
A PEO also doesn’t make hiring decisions for you. You’ll need to screen applications, interview candidates, and make the final call yourself. By contrast, a staffing agency will make hiring decisions, then let you choose from the people they’ve hired.
Finally, a PEO may not be the right choice if you’re not planning to expand into a new market. A PEO that doesn’t have experience in a particular market may also not be a good fit for your business.
Pricing may also be an issue for some small business leaders. PEOS isn’t just a staffing solution. They’re an HR solution, and they typically offer your business more.
As a result, the price point for working with a PEO may be a little bit higher than working with a staffing agency.
Is a PEO the Right Choice?
Now that you’ve read about professional employer organization pros and cons, you have another question. Is working with a PEO the right move for your business?
If you need help with payroll or compliance or a more robust HR solution, teaming up with a PEO makes a lot of sense. Working with a PEO also gives you more control over your team members.
If you want someone else to handle the entire hiring process, then a different type of partner could be the right fit.
For many business leaders, a PEO partner is the best solution.
The Right HR Help for Your Business
If you wondered if a professional employer organization could help you, this guide should have helped you answer the question.
Looking for more ideas about how to run your business more efficiently? We have plenty of helpful guides in the archives. Check them out and discover new ways to make your business better!