Pros and Cons of Professional Employer Organizations PEOs Why a Virtual PEO May be the Better Option emerson consulting group, inc


At a fundamental level, PEOs help businesses simplify their payroll and HR operations by taking on the bulk of those administrative tasks. The process of switching back to a traditional payroll solution from a PEO may require businesses to re-establish their EINs and may cause tax penalties. Businesses can improve employee retention through PEO’s benefits packages and stronger HR support. Professional employment organizations are designed to be used by small and mid-sized businesses. A Global PEO helps you save this money and invest in core business needs. Providing a well-researched report on how much you should pay to a remote employee in a specific country, a Global PEO equips you with the knowledge and keeps the expenses low.

However, it is important to recognize both the and cons of a PEO. Keep reading to see if partnering with a PEO is right for your company. With a PEO partnership, businesses gain access to HR software which acts as a single source of payroll, HR, onboarding, and similar functions.

Workers’ compensation assistance

If an The Pros And Cons Of Retaining A Peo files an internal complaint, PEOs are usually well-suited to handle the internal investigation. Their objectivity and expertise may help ensure that any inquiry conducted is both appropriate and lawful. You can’t expect to be an expert on everything, but with a PEO’s dedicated team of HR experts in your corner, you’ll be better prepared for whatever comes your way. From compliance to employee relations to a pandemic, a PEO can help you make important and difficult employment-related decisions.

Generally the PEO should be better since it is a larger group, however when we converted our costs did increase and heath care is one of the largest expenses. As mentioned above you need adequate resources in HR and accounting to deal with this, however you can mitigate some of this by using the ADPs and benefit providers who are willing to give extra services. So the benefit of less time in the processing of this paperwork is not always a benefit with a PEO. It should also be noted that a company has to be approved to the join the PEO and this does not always happen. ADP Total Source, for example, has a significant underwriting process a company must go through and the majority of companies do not get selected. Although there are some risks of working with a PEO, you can avoid them by taking standard precautions.


Other than this, a PEO can also take care of insurances and health benefits for your remote employees and contractors. From a pros perspective, you have control and can negotiate with benefit vendors and customize packages. Annual increases are only based on your group and again this can be good or bad based on the overall health of your group.

For example, Page said, her PEO experienced high turnover recently. After working with one HR specialist for three years, she’s now having to build a new relationship from scratch. She’s also had to navigate several changes in payroll and training specialists. Such a lack of continuity, she said, “is a little disappointing.” By keeping on top of such details, PEOs also help DOOs be more productive, practitioners say.

Helps your company forecast the finances in time

Some PEOs offer payroll processing services, which can help eliminate manual administrative processes that can prevent HR professionals from being more productive. Meaning, you still have to prepare the hours and payroll to send to the PEO for processing. Joshua Stowers is a and Business News Daily writer who knows firsthand the ups and downs of running a small business.

Offering better benefits to your employees gives them what they want. This makes them more loyal, more engaged, and more productive in their work. Ask your prospective PEO if you will have a dedicated HR service representative for admin and another for your employees. As a result, customer service can feel slow or impersonal, and often a business doesn’t have a dedicated support person, but rather must communicate with whichever representative is available. I’ve been working with both Clayton and Brendan for well over a year.

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