Unexpected Benefits of Partnering with a PEO
By Chris PetersonFirst published Updated
The short answer
Cost is the usual reason to look at a PEO, but the less obvious benefits often matter as much: help keeping up with employment law, stronger benefits that win and keep good people, and an HR team freed from paperwork to work on talent and growth.
Professional employer organizations work with companies that want to outsource their HR. Cost is usually what starts the conversation, but a PEO brings other, less expected benefits too.
Does a PEO still save money?
Often, though it depends on your company. We cover the expense side in The Top 5 Ways a PEO Reduces Your Expenses. Pooling many companies into one large group can also help steady your health insurance renewals. No one can promise savings before your group is underwritten, so compare full quotes.
Can a PEO help with ACA compliance?
It can take much of that work off your plate. Staying current with employment law is a PEO's full-time job, not an afterthought squeezed into a busy day. Under the Affordable Care Act, a company with 50 or more full-time employees, counting full-time equivalents, is an “applicable large employer” (IRS), and that status is measured at your company, not across the whole PEO. A PEO helps you track where you stand.
Can a PEO help you land stronger candidates?
Hiring is hard. Finding someone you want is hard enough; then they have to say yes. A PEO can offer stronger benefits packages, and for the most in-demand candidates, that can be what seals the deal.
Does a PEO help with turnover?
The same benefits help keep your best people in their seats. That builds skill and productivity over time and cuts the cost of rehiring and retraining.
Can HR become a strategic part of the business?
Once routine HR tasks are outsourced, your HR people can focus on bigger things: developing talent, measuring productivity and performance, and new ways to get the most from your people, instead of processing payroll and managing benefits.
What does that mean for growth?
A more strategic HR function leads to a stronger, better trained staff, better ideas and faster execution. The value of a PEO reaches well beyond the expense line it's known for.