10 Key Benefits of Hiring a Licensed PEO

Date posted: March 8, 2018


By Mark Sinatra

If Human Resource issues have got you in a bind, then the best solution may be to outsource your HR needs to a licensed Professional Employer Organization, or PEO. Here are 10 reasons to check out this often overlooked industry in 2018:

A license is a promise of quality…and accountability.

First things first: while it’s true that not every state requires PEOs to be licensed, hiring an unlicensed PEO is essentially gambling with the well-being of your business. PEOs can lose their licenses if they don’t perform adequately and/or engage in shady business practices, so if a certain PEO is operating without a license, then there’s probably a reason why.

Partnering with a PEO can enable you to offer your personnel better “perks.”

The best employees are worth their weight in gold—and they expect to be compensated accordingly. When you partner with a PEO, you can offer the kinds of benefits (e.g., insurance options, training programs, retirement and savings plans) that will help attract new talent and make your existing staff members happy.

PEOs can make sure that you’re complying with laws and regulations, keeping your business operating “on the up and up.”

Unless you’re an accountant or work for the federal government, tax laws can be difficult to wrap your head around. This is also true for labor laws and regulations. For many PEOs, though, these are areas of expertise—and a representative will be happy to steer you in the right direction.

Allow business owners to delegate responsibilities, thereby reducing your stress.

Running a business is not for everyone, especially the faint of heart! A PEO can’t make all of your responsibilities disappear, but they can help you stay on top of things. While the PEO is taking care of administrative duties and busting through red tape, you’ll focus on growing your business and overseeing your employees.

A licensed PEO will never “take over” your business.

This is probably the #1 fear of business owners who are reluctant to hire PEOs, but it’s a total misconception. A PEO will only ever work with you—you don’t have to cede total control, and they’ll only fulfill the duties that you’ve mutually agreed upon.

Help you build your company culture.

Every company has a unique set of values that affects how its employees relate to each other, their work environment, and their clients. Is your culture a healthy one that encourages cooperation or growth? Or is it stagnant and stifling? If you think your business could use some improvement in this area, a PEO may be the key to turning things around.

Assist with finding new employees…

It’s one thing to post a job listing on a website or place a “HELP WANTED” sign in your office window. It’s another matter entirely to actively seek out new talent and determine whether or not a specific person would be the right fit for your company. PEOs have access to professional recruitment tools (and solutions) that will give you an edge in the hiring process.

…and train them, too.

Many small businesses lack a standard procedure for getting new hires up-to-speed; training programs often consist of the newbie just being told to “shadow” a more experienced employee (who’s essentially forced to come up with a script on the fly). An organized, consist training program is crucial for getting all employees on the same page, and a PEO can help you create and implement one that works for your company.

All PEOs are slightly different, which means that there’s something for everybody.

Part of negotiating your agreement with a PEO will involve deciding which of their services you’d like to utilize. For example, maybe you’re comfortable doing payroll, but you find yourself at a loss when it comes to training new employees. Perhaps you’re amazing at recruiting new talent, but you get a headache every time the subject of tax code compliance comes up. Regardless of where your strengths and weaknesses lie, a PEO will fill in the gaps.

A partnership with a PEO tends to produce measurable growth.

According to the National Association of Professional Employer Organizations, “Small businesses that use ​PEOs grow 7-9 percent faster, have 10-14 percent lower employee turnover, and are 50 percent less likely to go out of business.” We’ll let those numbers speak for themselves!

While it’s true that PEO partnerships aren’t right for every small company, more and more business owners are starting to see the value in entering this kind of arrangement. PEOs can save your company money, shoulder some of your burden, and overall make the business more attractive to both new and existing employees. It’s definitely an option worth exploring in 2018!


Mark Sinatra is CEO of Staff One HR. Before joining Staff One HR, Mark co-founded Gordian Capital, a private investment company that focuses on making long-term investments in lower middle market companies. He has worked in the private equity, investment banking, consulting, and business process outsourcing industries for the following companies: Credit Suisse, Merrill Lynch, Andersen, RR Donnelley and The Parthenon Group. Twitter: @staffonehr.

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