How to Choose the Right PEO?

Organizations need to be as cost-effective as possible in today’s highly competitive market. This is the main reason why companies are outsourcing their employment-related functions to a PEO. The term “PEO” is an acronym for professional employer organization. The reason for their existence and their unique selling point is they manage a variety of functions for small and medium-sized businesses. They manage functions such as payroll, employee benefits, worker’s compensation, and employer tax compliance. Their services have steadily expanded to include many other optional services including talent acquirement, performance management and employee/staff training.

A PEO brings great value to companies. They offer a wide range of human capital strategy services, improved employment practices, compliance, and risk management to reduce employer related liability. They also play a major role in improving productivity and profitability. They have access to comprehensive employee benefit packages. This helps small companies to be more competitive in a tight labor market. In a nutshell, a PEO can manage your organization’s HR functions more efficiently allowing you to stay focused on your core business.

Picking the right PEO to partner with is a critical decision for your organization. There are many PEO companies in the market but you need to partner with a reliable player in the PEO industry.

Here are a few tips on picking the right PEO:

Search for a reliable and experienced PEO

You should search a PEO that has years of experience in the industry. Check their history and credentials before any documents are signed. Make sure the service provider you pick can serve in all geographical regions where you have employees. PEOs can offer services in all states and some even offer services globally.

Search for a PEO with an efficient system in place

The PEO you pick should have an efficient system coupled with professional service. You should have direct access to their team who can answer any questions you employees pose. Find out whether they have a latest technology in place allowing managers to keep track of productivity and efficiency. The best way to find out more about the efficiency of a PEO is to find out what their customers have to say about them.

Understand pricing structure of PEOs properly

Generally, PEOs charge customers two ways. First, a break model in which they charge according the number of services they provide. They charge you category-wise. You will be shown how much you are charged for each category, for example, worker’s compensation, service charges, etc. Second, the pricing model can be blended where all the charges are grouped together. Make sure the pricing structure is transparent so that it is easy for you to understand.

Your PEO should meet all state regulatory requirements

Guidelines vary from state to state so make sure your PEO is in compliance. If your employees are working from different locations in multiple states, your PEO should have the expertise to handle HR for all areas involved.

Find how much time it takes to transition

Before you partner with a PEO, ask about their setup process. How much time it will take to streamline everything? Paperwork etc… And what about the transition process? Hassle-free or not?

Visit websites of PEO companies

It is always recommended to do you diligence before partnering with a PEO to ensure you’ve picked an experienced service provider. Browse through 7-10+ of the PEO’s websites for credibility. Read reviews and testimonials. Don’t forget to call them personally to discuss your organization’s needs with them.

As a trusted partner, your PEO will help you minimize employee-related risks, relieve administrative burden, provide routine employee benefit services, payroll processing and high-level human capital consulting. They will help you in managing your employees whom you know are the most critical asset.

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