When you first launch your business, you undoubtedly wear many hats. At a certain point though, it will become clear that you are one person and you can’t handle everything on your own, especially when you begin hiring employees. While you might consider hiring an HR professional to take care of the details of managing employees, most small businesses don’t need a full-time HR person on staff.
That’s where a PEO comes in. What is a PEO? Short for professional employer organization, a PEO is a partner to your company. Essentially a “co-employer” of your employees, a PEO handles human resources tasks for you, leaving your time free to manage all of the other things you need to do to keep your company running.
When you contract with a PEO, you’re still the employer and determine the responsibilities and daily tasks for your employees, while the PEO works with you to develop and enforce policies, and takes care of the nitty-gritty details of making sure everyone gets paid, benefits are managed appropriately, and everything is documented and managed within the scope of applicable laws.
Usually, there are some very obvious signs that your company is ready for a PEO. If any of these sound familiar, it’s worth looking into your options to keep your company moving forward.
1. You Are Spending Too Much Time Handling HR
Managing human resources takes a great deal of time and involves a lot of paperwork. You need to stay abreast of employment law, take care of benefits questions and everything else that goes along with providing benefits, not to mention run background checks, establish policies, and deal with employee problems along the way.
All of these tasks take time away from other important things that need to get done — things that actually bring in a profit. If you are spending a great deal of time on tasks that aren’t related to actually growing your business or bringing in an income, it’s time to look at outsourcing your HR functions.
2. Compliance Is a Concern
Employment law is complex and always changing, and the more employees you hire, the complicated compliance becomes. In addition, in certain industries and job categories, compliance is a major issue, and failing to adhere to the regulations can land your business in hot water. Working with a PEO can help keep your business in line with the rules, preventing costly violations.
3. You Aren’t Attracting Top Talent
Workers have certain expectations from their employers these days — most importantly, they want benefits. However, as a small business, you may not be in a position to offer a competitive benefits package, and therefore lose out on the opportunity to hire top talent.
A PEO is often able to leverage the collective buying power of all of their clients to negotiate attractive benefits packages, including insurance and retirement accounts, giving small businesses the ability to offer better benefits to their employees — and compete with larger employers who have the resources to offer these benefits.
4. You Need to Reduce Costs
Keeping costs in check is important to any business, and a PEO can help with that effort. While on the surface, paying a PEO to manage your HR is another business expense, in the long run it can save you money. Instead of spending time and money managing your own payroll, benefits administration, and employee management, someone else is handling it – and handling it correctly and in a timely manner.
You don’t have to worry about missing deadlines or facing costly legal liabilities from not following the law. And as mentioned previously, when you can leverage the collective buying power of multiple organizations, you can save money on benefits for your employees while focusing on income-generating activities.
5. You Are Poised for Rapid Growth
Finally, while your small business might not be where you want it to be yet, if you are on the cusp of major expansion, it may be time to start thinking about how you are going to continue to manage the company in its new form.
Getting a PEO in place now and having the systems and tools you need to manage rapid growth — and being able to scale your HR functions easily as you grow — can save a lot of time and growing pains, and help you reach your goals more quickly.
As a small business, you are probably already outsourcing a number of important functions. As you grow, don’t be afraid to get help with human resources as well — it could be the very thing that takes your business where you want it to go.