By Lonny Ostrander
Joining forces with a professional employer organization (PEO) might be one of the smartest business moves you’ll ever make. Proof? A recent study found that businesses that are part of a PEO are 50 percent less likely to fail and likely to experience employee turnover that’s 10 to 14 percentage points lower than that of comparable companies.
There are numerous benefits of contracting with a PEO. Here are four you might not have known:
1. One-Source Management
Managing employees can consume a large proportion of business owners’ time and energy — problematic when there are many more important tasks demanding their attention. A PEO offers one-source management of various HR functions, such as payroll, employee benefits, compliance, and employee training and development, resulting in a reduction both of the time needed for HR administration and the number of outside vendors businesses need to engage to run their HR program.
2. Better Employee Benefits
PEOs are generally better positioned than small businesses to negotiate favorable insurance rates and benefits for members. By joining a PEO, small businesses may be able to offer benefits they otherwise wouldn’t have access to, such as medical, dental, visions care, life, 401(k), disability, and workers’ compensation insurance — making for a more attractive recruitment package for talent. Being able to offer robust benefits may also help improve retention rates, since employees are typically reluctant to abandon quality coverage.
3. Reduced Risk of Regulatory Non-Compliance
When it comes to employee-related regulatory compliance, ignorance is no defense; even an inadvertent and seemingly minor mistake may result in heavy fines. Compliance experts in a PEO can help ensure that your HR policies adhere to state and federal regulations — including the ADA, OSHA, EEOC, FMLA, FSLA, and the Affordable Care Act — giving you peace of mind that your risk of incur penalties for non-compliance is greatly reduced.
4. Up-to-Date Employee Manuals
A comprehensive and up-to-date employee manual is an essential part of an HR program, but compiling a manual takes time and expertise. For PEO clients, the PEO will assume this function, making sure that your employee handbook covers all important policies and procedures, while also remaining current with state and federal regulations.
As the New Year gets underway, now is a great time to explore whether contracting with a PEO is a good fit for your small business.