PEO myths

5 common PEO myths debunked

There was once a moment, in a much calmer time, when you framed a dollar bill from your first business transaction and hung it proudly on your office wall. It was a simple moment, but an important one – it signified your arrival.

That was a different era. Since then, you buzzed ahead (literally, there was a lot of coffee involved) and grew your business against all odds – doubling, tripling, quadrupling your staff.

As your business and profits grew, even the tiny moments of celebration became a thing of the past because you simply no longer had the time. And the ongoing administrative tasks necessary to retain the brilliant team you developed left no opportunity for strategic growth planning.

Then something happened. A glimmer of hope flickered as you were reminded of this curious thing called a professional employer organization (PEO) – and maybe, just maybe, it’s exactly what you need if you ever want to have another serene moment again.

Now, what’s difficult to discern is the difference between what a PEO might be able to do for you and the mythical tales that are fogging your mind. Let’s take a moment to sift through the myths and find the truth so you can see if it’s the right fit for you.

Myth 1: I’ll lose control of my business

When you have a specific vision for your company and work hard to develop it into reality, you might be fearful that entering into a co-employment scenario with a PEO means you have to give up some of your control.

Rest assured that a PEO is the employer for certain employer purposes (e.g., payment of wages) – allowing you to be freed up to focus more intently on your revenue-generating projects. You remain a co-employer with the PEO and continue to control and run your core business. As a co-employer, a PEO works right alongside your business. It shares or absorbs many of your employer-related obligations.

While you’re busy taking care of your day-to-day operations, your PEO takes care of many of your HR administrative duties, compliance burdens and other HR tasks that might otherwise be pulling you away from what you do best. With a PEO, you won’t be up late taking care of payroll or researching new payroll legislation – you’ll be resting soundly while its team of HR specialists gets the job done.

Myth 2: I’ll have to let go my HR manager or team

From my experience, HR professionals will find that they have more time to work on strategic projects when they leave the administrative responsibilities up to their PEO.

Not a lot of senior HR professionals enjoy administrative tasks, such as developing an employee handbook or writing job descriptions – they would rather be developing an HR program that supports their company’s goals. However, if they’re too busy with administrative tasks, they don’t have the time to pursue strategic projects.

With a PEO and your HR manager/team working hand-in-hand, there is time for both administrative and compliance tasks, along with those strategic projects, that might otherwise sit on the backburner. For instance, your HR department will now have time to finally tackle that performance management initiative that identifies appropriate training opportunities for your employees.

Additionally, when you work with a PEO, you gain access to a team of HR professionals who work with a number of industries and can bring best practices from those industries to the table.

Your HR specialists are also available when your internal team is not. For example, if your HR director is out, you still have the team of HR professionals who can make sure you have the best and most up-to-date information when an issue arises.

Myth 3: My staff will be considered temporary

This “temporary employee” myth – that employees are employed only by the PEO – is likely rooted in the common misperception that a PEO is the same as a temporary staffing company.

This is simply not the case. In a co-employment scenario with a PEO, your company continues to employ your employees along with the PEO. The PEO does not become the sole employer which then assigns the employees to the company, but rather a co-employer with the company.

Myth 4: I will lose the power to decide who gets hired and fired

When it comes to hiring and firing, your company still maintains the right to make those decisions. However, managers will breathe a sigh of relief when they know they’re doing things the right way with the assistance of your PEO’s HR specialists.

For example, when you work with a PEO, your supervisors will be trained to follow through with progressive discipline, if necessary. They’ll learn how to counsel employees and document discussions. This way you can make sure everything is handled and documented properly, in the event of an employment claim.

With recruitment assistance from your PEO, you can find a candidate with not only the right skills, but also someone who fits in with your organizational culture. A good PEO’s recruiting team will take the time to get to know your organization. From there, they can help you decide what kind of skills and personality your new employee needs to be successful. When the time comes to narrow down your list of candidates, you’ll be able to focus on qualified candidates, rather than sifting through bad ones.

Myth 5: My employees won’t embrace the change

In my years of experience, I have never heard of employees leaving because their company enters a relationship with a PEO. In fact, the opposite is likely true. With a PEO, your employees gain access to benefits that rival that of a Fortune 500 company – including health insurance, retirement and other benefit plans – despite the size of your business.

PEOs don’t get involved with the day-to-day operations of a company. In other words, PEOs aren’t in the business of changing the culture of a company. The opposite is actually true – a PEO is there to enhance the culture of an organization and create a more engaged and productive workplace.

Want to learn more about how a PEO can help take your business to the next level? Download our free e-book, HR Outsourcing: A Step-by-Step Guide to Professional Employer Organizations (PEOs).

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4 responses to “5 common PEO myths debunked


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Insperity Blog

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Insperity Blog

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