Pros and Cons of a Professional Employer Organization

A PEO or a professional employer organization is one of the best HR solutions for most small businesses. PEOs use the co-employment method that allows small businesses to get better benefits, including risk management support, workmen’s compensation coverage, and health and dental insurance. Small companies can leverage the expertise and knowledge of PEOs to build HR practices and policies and offer extensive development and training to their employees.  

Although PEOs have similar work processes, there are different factors you must consider when comparing features, prices, and providers. Let’s find out the pros and cons of such services.

Pros of PEO services: 

• Less administrative work: when you partner with a professional employer organization, all the heavy administrative tasks will be easier to manage. It will give you more time for the day-to-day work of your business.

• Better benefits: The models used by PEOs offer the best opportunity to opt for benefits that are only available to bigger companies. Besides, your employees will have better access to healthcare plans at a low cost.

• Legal compliance: PEOs are trained professionals and their job is to ensure that your business complies with the federal and state regulations. This consists of risk compliance, worker safety compliance, HR law changes, and tax structure factors.

• Talent acquisition: With the help of stronger HR policies, you can get top talent in your company. If you need assistance in onboarding, termination, or hiring employees, a professional employer organization can help. They will also offer other resources like posting job vacancies and handling the interview process.

• Legal safety: Usually, PEOs offer employment liability and civil defense. This is because if a former employee sues your organization for wrongful termination or discrimination.

Cons of PEO services: 

• Surrendering responsibilities: PEOs are considered the co-employers of a company. This means you have to leave some departments in their hands. If you are a small business, then partnering with a PEO will have to be an adjustment.

• Changes in health insurance: while your employees get access to health benefits, your company will be at the mercy of the PEO service. Based on the state you are in, insurance providers can change the health benefits just by talking to the PEO officer. It can harm the employee benefits and the company coverage.

• Setup and transition: when you appoint a PEO in your company, some of the operations will change in your organization. It may take time for you and your employees to adjust to new processes and methods.

• Impersonal: Companies hope that after hiring a PEO the team will offer personalized services and attention to the company and its employees. This may look great in theory, but many companies that are in PEO service are larger organizations that offer services for small agencies. Your employees may feel lost while working with the newly built system and operations. Thus, you need to keep in mind that you can cancel the service with proper notice.

Find the peo pros and cons in this article and choose the best services near you. However, before signing any contract, make sure to read the documents and discuss the operation thoroughly with the PEO.