In my last Insight, I gave three examples of how Professional Employer Organization (PEO) Services offer investment protection for companies. There are many different choices when it comes to a PEO partnership.
What I think companies often lack, however, is the understanding of how PEOs work. That can be a big downfall for a company.
A major mistake employers make due to this lack of understanding is they don’t strategically align the right PEO with their organization.
Matching up the right PEO with the current phase of your business is very critical to a successful partnership.
For example, there are some PEOs that are very strong from a day-to-day, practical standpoint. So one PEO might be really good at payroll and another PEO might offer really good benefits.
There are many different PEOs and they all have strength in specific areas, but provide other services, as well.
If you’re going to strategically align your PEO with your company, you need to really determine what your company needs in order to be successful:
- Are you looking for a company to help with your payroll?
- Do you need good benefits for your employees?
- Are you looking for a PEO that’s effective overall?
How to Utilize PEO Services Effectively
Understand Your Internal Cost Structure—It really comes down to this. In order to choose the right PEO, you need to understand your company from an employee structure, an organizational structure and a cost-efficiency structure.
You also need to understand:
- Payroll costs
- How your tax structure works
- The costs of expanding your company into multiple states.
- Benefits costs
You also need an understanding of the efficiencies that can be created for your organization by utilizing PEO services.
By utilizing PEO services, you’re going to continually build career-pathing opportunities for employees and provide training and liability protection you may not get on your own.
Do Your Research—There are some great resources and Web sites out there, such as the National Association of Professional Employer Organizations.
You can also research some of the different PEOs out there, such as Insperity, and ADP.
Also, be sure to ask each PEO for client references. Nothing says better business than a client that’s satisfied with their PEO.
You may even want to look at other businesses that are similar to yours to determine if they are using a PEO service and, if they are, which one.
Only by getting to know each PEO (via their Web sites, in-person meetings, client references, etc) will you be able to effectively determine which PEO is the right fit for you based on how it aligns with your current business strategy.