How a PEO Provides Growth Opportunities for Small Business

This one is for the small business owner. If you are not a small business owner yourself, pass this article along to one you know. They’ll thank you for it—I promise!

Many small (or even mid-sized) business owners wear multiple hats. It’s simply the nature of the beast when starting up your own company. You are the one with the vision and ideas—the leader. But you’re also the finance team, IT, marketing, sales, and HR. As you grow, you hire individuals to take over these areas.

As you move away from microbusiness (1-9 employees) status and begin to grow, you need a strong HR infrastructure. It’s essential to attract and retain employees and remain compliant with the ever-increasing landscape of employment laws. However, not all small businesses can afford all the bells and whistles of a full-service HR team.


How can you implement an affordable Fortune 500-style infrastructure that will grow with your business?

This is where a partnership with a PEO will make a significant impact. PEO stands for Professional Employer Organization, which is a fancy term for an HR outsourcing partner. While every PEO differs, they generally all provide:

  • Payroll processing and tax compliance
  • Access to large group employee benefits
  • Benefits administration, billing, and claims assistance
  • EPLI insurance and shared liability
  • Workers’ compensation insurance
  • Risk and safety programs to control workers’ compensation claims
  • Unemployment insurance claims assistance
  • Employee handbooks and guidance with company policies

A business enters into a ‘co-employment agreement’ with a PEO to share liability and employment responsibilities. Small businesses find this solution much more affordable than hiring a full-time in-house team. More importantly, it frees up a lot of your time so that you can focus on growing your business. According to the National Association of Professional Employer Organizations (NAPEO), small companies that work with PEOs grow between 7% to 9% faster, have 10% to 14% less turnover, and are 50% less likely to go out of business. Consequently, hundreds of thousands of small businesses have partnered with PEOs.

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Here are 5 ways that a PEO partnership helps grow your business.

1) Access to experienced HR professionals

When you work with a PEO, you’ll have access to an entire team of HR experts. Some small companies may employ one HR generalist or even an administrative assistant to handle all HR administration. Generally, this person knows a bit about many different HR topics. Instead, a PEO will provide a team of professionals, each versed in various facets of HR. This includes a designated payroll specialist, benefits administrator, risk and safety experts, employment law compliance counsel, and more. You’ll find this business model makes HR affordable as you share these experts with other small businesses. Your team of professionals or time spent on your business can increase as your needs grow.


2) HR process improvement

A report by TalentLyft revealed that 63% of candidates would reject a job offer if they had a bad experience with the recruitment process. Another survey by CareerBuilder and Silkroad Technology showed that 1 in 10 new employees left because of a poor onboarding experience. So, building effective processes is very important for attracting and retaining talent. Luckily, a PEO is able to leverage experience working with other small businesses to provide you with best practices and guidance with processes.

Additionally, PEOs offer robust technology platforms not typically available to small businesses. It’s easy to retain information and remain compliant with information systems that take you through the entire employment lifecycle, from recruiting through retirement. Also, it gives a professional and high-tech feel to your HR infrastructure.


3) Maintain compliance

As a business owner, you’re subject to many federal and state employment laws. Furthermore, they’re constantly changing! Keeping up-to-date with these laws is an arduous task but necessary to avoid lawsuits and financial penalties. By partnering with a PEO, you’ll have experts monitoring employment laws for you. They will also advise on adherence to legislation/guidance on payroll, benefits, Equal Employment Opportunity, workers’ compensation, and much more. This enables your business to stay compliant and avoid costly penalties.


4) More attractive benefits

Offering substantial benefits packages is crucial for attracting and retaining talent while you grow. Often robust benefits packages are affordable only to larger organizations, making it difficult for smaller ones to compete for the best talent. But PEOs level the playing field. Since PEOs co-employ hundreds of thousands of employees, they have greater bargaining power. Likewise, they have access to a range of high-quality, affordable benefits. You may choose to offer benefits such as:

  • Health insurance
  • Dental care
  • Vision care
  • Life insurance
  • Long- and short-term disability insurance
  • Employee Assistance Program (EAP)
  • Retirement plans
  • Flexible Spending Accounts (FSA)
  • Pet insurance
  • Voluntary (employee paid) benefits

By providing Fortune 500-style benefits, your company can compete effectively with more prominent competitors for talent.


5) Improved employee engagement

PEOs also provide other HR services, such as management training and guidance, employee training and development, assistance with engagement surveys, and much more. When you allow a PEO to help in these areas, you can benchmark and enhance your employee engagement. Increased engagement leads to reduced turnover, which ultimately impacts the bottom line.

Ultimately, your main goal is to grow. You need a strong talent pool, efficient HR processes, and affordable HR solutions to do it. Many small businesses have found that partnering with a PEO answers these challenges. Take your business to the next level with an HR outsourcing partner.

Tandem HR, a PEO headquartered in the Chicago area, has been helping small businesses grow since 1998. Their high-touch business model means a true partnership. Check out what our clients have to say!