HR and PEOs: Partners, Not Rivals
By Chris PetersonFirst published Updated
The short answer
A PEO is a partner to your HR team, not a rival. It takes on transactional work like benefits administration, payroll, unemployment and workers' comp processing, so your HR people can focus on staffing plans, hiring and keeping good people, succession and company culture.
When HR first entered the business world, its main job was making sure people got hired and paid. Today HR is also benefits administrator, compliance officer, counselor, trainer, spokesperson, welcome committee, event planner, and owner of anything that doesn't fit another department.
Many HR departments get stuck in transactional work like payroll and benefits when their expertise would be better spent on culture, workforce strategy and the processes that meet company goals. One- or two-person HR departments feel this most.
That's where a professional employer organization (PEO) comes in. Some HR professionals see a PEO as a rival, but the opposite is true. A PEO takes time-consuming work off HR's desk: benefits, compensation and payroll administration, workers' comp and employment taxes. And a third party brings useful objectivity to sensitive areas like employee negotiations, harassment allegations and workers' comp claims.
What can a PEO take off your HR team's plate?
- Benefits management
- Recruiting and hiring support
- Payroll administration
- Unemployment management
- Workers' compensation processing
- Compliance assistance
- Drug testing programs
- Family and Medical Leave Act administration
What can HR focus on instead?
With the PEO's economies of scale behind them, which can mean more benefits at lower cost, HR professionals are free to focus on:
- Forecasting staffing needs
- Recruiting and keeping top talent
- Succession planning
- Building a culture that engages employees
A PEO takes on the burden of employment law, compliance and never-ending paperwork, and your HR team gets to do the strategic work it was hired for.