The process of ensuring that a business operates smoothly and maintains profits can often be challenging. However, a company, regardless of its size or industry, should also keep another objective in mind: the efficient management of its payroll and human resources-related processes. Fortunately, many companies — especially small and mid-sized businesses — can accomplish this by working with a Professional Employer Organization (PEO). According to the National Association of PEOs (NAPEO), these organizations offer services to 175,000 small and mid-sized companies in the United States. According to the NAPEO, The number of worksite employees (WSEs) employed in the PEO industry grew at a compounded annual rate of 8.3% from 2008 to 2017.
How Can A PEO Help My Company?
As a third-party HR outsourcing firm, a PEO can help your business by providing human resources guidance and taking on duties such as employee benefits and retirement management. This can allow your organization to devote more time and resources to its primary operations. A PEO can also offer your company greater financial and legal protections.
The Role Of A PEO
The role of a PEO is to allow a business to focus on what matters and what they know—growing their business. By taking over many of the administrative duties in the HR department, businesses can shift their attention elsewhere. A PEO generally has four main responsibilities: managing employee benefits, improving retention, assisting with payroll duties and minimizing risks. Here is a close look at these four duties.
Manage Employee Benefits
One of PEO’s primary duties involves handling the administration of employee benefits such as health insurance and 401k and retirement plans. Given the fact that PEOs typically manage several companies, they possess a larger pool of employees and benefits options than a business would if it was seeking health insurance on its own. Consequently, PEOs can negotiate lower group insurance costs and rates for other types of insurance (e.g. workers’ compensation insurance).
Improve Employee Retention
A 2016 report conducted by the Society for Human Resource Management (SHRM) revealed that, on average, it costs employers $4,129 and 42 days to fill an open position. A PEO can help your company significantly reduce the costs of dealing with turnover. According to a September 2017 study by the NAPEO, employees of PEO clients said they were 8% more likely to remain with their current employer until retirement than employees who did not work for PEO clients. A PEO can utilize its outside perspective to analyze what employees value most in a company (i.e. needs and interests) and thereby help give them incentives to stay with their employer.
Assist In Payroll Duties
PEOs provide payroll processing services, which can potentially help end manual administrative processes that may negatively impact the productivity levels of your company’s HR executives. A PEO can also help your company withhold and pay payroll taxes and assist new employees with the process of completing employment forms and other similar documents. It’s important to remember, however, that PEOs do not typically handle tasks such as preparing employees’ hours; they merely process this information.
Mitigate Risks
A PEO can efficiently help your business minimize the risks tied to tasks and processes such as Equal Employment Opportunity (EEO) reporting and claim resolution, I-9 requirements, and reporting and depositing taxes with state and federal governments. Additionally, most PEOs are knowledgeable about state and federal regulations for businesses and can therefore help your company remain in compliance with these laws. If you own an organization where employee injuries are common, (e.g. a construction firm) a PEO can provide loss prevention specialists who can evaluate your safety practices and thus work to mitigate the risk of injuries.
Work With A Knowledgeable PEO Consultants
Reach out to the professionals at New City Insurance in San Diego for more information on PEOs and their benefits. Since our founding in 2008, we have been dedicated to providing clients with top-quality insurance solutions while reshaping the industry as we know it. We also have the objective of positioning our clients as industry leaders.
At New City, we understand that as companies grow, the responsibilities of their HR departments often increase. Fortunately, a PEO can help your company by making its HR and payroll-related processes more efficient while improving employee retention and maintaining your business’s competitive edge. A PEO can streamline these processes and others, such as employee benefits administration.
Additionally, a PEO can help your company remain compliant with state and federal regulations and mitigate risks associated with workers’ compensation and wrongful employment. Call New City Insurance today at (888) 210-2759 or contact us online to request a consultation with a member of our team.