Professional employer organizations (PEOs) are a lot like ice cream: they come in a variety of flavors. Some offer a minimal number of services that focus mainly on payroll and benefits administration. Others combine payroll and benefits with a few HR functions thrown in. Still others are full-service providers that handle virtually everything related to HR.
Is it worth signing up with a full-service provider? There is no black-and-white answer. It depends on a company’s needs and budget. This much can be said, however: companies get some key things from full-service providers they will not get from PEO companies with limited-service menus. Here are just three of the many possibilities:
1. Recruiting, Hiring, and Retention Support
Despite the fact that a PEO is a co-employer, a company that only offers payroll and benefits services doesn’t get involved in recruiting, hiring, and employee retention. A full-service provider does. That is huge, especially at a time when companies are competing fiercely for the most talented workers in their respective industries.
Imagine working with a PEO company with top-notch experts who handle all of your recruiting for you. Imagine those experts handling hiring and onboarding. The icing on the cake is that they work with your management team on ways to improve retention rates. You get all of this without having to hire your own expert recruiting staff.
2. Greater Access to Benefits
Payroll and benefits are the two mainstays of PEO services. Where benefits are concerned, all PEOs do not offer the same things. And in fact, benefits are often the dividing line between what a company considers good and bad PEO providers.
The advantage of going with a full-service provider is getting access to a wider range of benefits. You get more options, meaning that your chances of coming up with a benefits package well suited to your workforce are higher. Take BenefitMall based in Dallas, TX. BenefitMall offers PEO services, but they are also a general agency supporting employee benefits. They have access to more than 100 carriers and all of the benefits products those carriers offer.
3. Compliance Support
For many companies, the tipping point is compliance. HR, payroll, benefits, and labor practices are all becoming more complicated by the year. As such, compliance is gradually getting harder. Companies are finding they need to hire experts in order to stay one step ahead of federal and state laws. Those experts can get expensive.
PEO companies may or may not offer compliance support depending on their scope of services. However, compliance support is part of the package for a full-service provider. Companies get access to all the expertise and support they need to comply with everything from tax reporting to labor laws.
Full compliance support can mean the difference between getting it right and running afoul of the law. Any employer who has found itself on the wrong end of regulators knows just how bad things can be when compliance isn’t maintained. So as long as a company is going to contract with a PEO anyway, why would compliance support be left out of the contract?
The best way we can close up this post is to say that PEO services really are a shining example of the old adage that says you get what you pay for. Some PEO companies do charge lower rates than others, but that also means they do not tend to offer as many services as those others. A full-service PEO company will charge higher rates. But you tend to get a lot more for your money.