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A PEO stands for “professional employer organization.” They help small and medium-sized companies hire qualified staff without high recruitment fees. Instead, the company pays a monthly salary to the PEO to handle all of the administrative tasks, such as hiring and firing, payroll processing, benefits administration, and employee relations.
PEOs are typically used by businesses that require specific skills or experience but aren’t large enough to afford full-time HR departments. Smaller companies usually have too few people to offer competitive wages and benefits packages that larger companies would be able to offer.
How Do I Choose the Right Type of PEO?
You should look for a professional employer organization that has been around for several years and has a good reputation. Ask friends, family members, or co-workers who they recommend and see what feedback they have for the organization. You may also want to check online reviews and forums to see if anyone else has had negative experiences.
Next, you must decide whether you’d partner with a recruiting agency or a staffing firm. A staffing firm offers employees from their network, while a recruiting agency will find candidates for you.
Both models have pros and cons depending on your situation; however, the recruiting agency often has lower overhead expenses since they don’t employ workers. If you prefer to work with a recruiting agency, you’ll probably need to spend more money to build a referral base. Check out our guide here to learn more about both types of services.
What Are Some Key Features and Benefits of Using a PEO?
The most significant advantage of using a PEO is that it’s easier than setting up your in-house HR department. You won’t have to worry about training new hires or managing benefit plans and payroll.
With a PEO, you only have to focus on growing your business and leaving the rest to professionals. Another big perk is that PEOs generally offer a wide range of benefits, including health insurance (depending on how much you spend), paid vacation days, life insurance, and even legal advice.
The downside is that most PEOÂ services will charge a monthly subscription based on the size of your company. Therefore, opt for the smallest package if you want to keep things simple. The average cost ranges from $600-$2,000 per month.
If you have multiple locations or plan on adding employees later down the line, you might want to consider a higher-level package. It could save you hundreds of dollars over the long term.
A PEO can be a great solution if you’re worried about finding quality employees. Since the PEO handles everything related to employment, they have access to many different job boards so you can make sure you’re getting the best talent.
In addition, the company does background checks, drug tests, and reference checks and conducts interviews. This means you can rest easy knowing you’ll get the best person possible.
Steps to Take Before Signing Any Contracts
First, read through the contract carefully. Make sure there isn’t anything hidden in the fine print. Also, ask questions if something doesn’t seem right. For example, if you notice a pricing discrepancy, let them know before you sign.
Once you’ve reviewed the contract, schedule an appointment with the PEO representative. During this time, they should answer all of your questions and walk you through the entire process.
Many PEO companies provide free consultation sessions to help you determine which option works best for your needs. Afterward, you can choose the one that fits your budget. However, just because a service provider seems like a good fit doesn’t mean you have to go with them immediately.
There are plenty of other factors to consider, such as employee onboarding costs, employee turnover rates, and the amount of training required. Weigh each factor against the others and select the PEO that makes the most sense for your business.
The Right PEO Company for You
As you evaluate the various options, remember that the goal is to hire someone who will work well within your team. Your PEO shouldn’t be someone who will do everything for you. Instead, look for someone who will train your team and give you tips and tricks. The ideal candidate would teach you how to run a successful business while providing support.
Author’s Biography:
Kerry L. Tucker
Early in his journalism career, Kerry L. Tucker had a revelation: there were not enough experts reporting on law issues. Legal matters are part of daily life. Yet, there seems to be a general aversion towards them. One of the main reasons for this is that the convoluted legal language is difficult for many people to follow. Therefore, he decided to change how the law is perceived by the public. Throughout his career, he met with many people who shared their personal stories with him. Some of these hit him harder. One of the cases that stayed with him and influenced his future career development was a car accident case involving a child. From then on, he decided to zero in on car accident lawsuits.
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