Most business owners want to maintain control over every aspect of their business. But while their intentions are good, they could actually be hindering their company’s growth. According to the U.S. Small Business Administration, owners of small companies spend as much as 25 percent of their time dealing with employee-related issues. This is time and money that would be better spent tending to the moneymaking functions of the business.
In order to better allocate time and resources, many small businesses are choosing to turn over employee-related tasks to a professional employer organization (PEO). A PEO will take the majority of human resources responsibilities off your hands which creates improved efficiencies and streamlines HR functions by:
1. Handling the paperwork
According to Houston-based Insperity, the average small business handles roughly 39 New York City phone books worth of paperwork per year. From payroll to personnel, day after day the stacks and stacks of paperwork soak up valuable time and resources. As a client of a Professional Employer Organization, you’re relieved of a large majority of the paper pushing, so that you can put that time and money toward core business activities.
2. Providing professional HR advice
The individuals that are employed by a PEO are human resource specialists who know the ins and outs of the industry. When you enter into a relationship with a PEO, these HR specialists become part of your team; they are at your disposal should you need to pick their brains about any HR issues that arise in your workplace.
3. Offering comprehensive and affordable employee benefits
Small businesses generate less revenue for benefit providers, such as health insurance and retirement services. Because of this, smaller companies have less leverage when it comes to negotiating health care premiums and rates with benefit providers. As a PEO client, your employees become the employees of the PEO and its other clients. As one large unit, PEOs have more buying power with benefit providers and are able to offer your business complete and reasonably-priced employee health care and benefits coverage.
4. Attracting top talent
Higher caliber candidates, who have the ability to be choosy, look to settle down in a business that will give them the most for their time and service. Top-notch job-seekers often value a company’s benefit packages as much as the potential salary. The employment benefits that your company provides as a PEO client, add a silver lining to any job opening within your company. It can boost your curb-appeal and make you one of the more sought-after businesses.
5. Keeping an eye on the government
State and federal regulators are always changing their minds about the rules of doing business. In order to stay out of trouble with the law you need to always stay current on what regulations apply to your business and what steps you need to take to stay compliant. A Professional Employer Organization will look out for your business and make sure it’s in line with both state and federal regulations at all times. And if something should be out of whack, your PEO will give you the guidance you need to get things back on course.
6. Limiting liability
What’s one of your worst nightmares? A lawsuit. As a PEO client, you’re no longer solely responsible for employee-related legal issues. The PEO will help you take all the right precautions to avoid mistakes or dangers in the workplace. It will help you set up workplace training, safety procedures and policies that will limit any hazardous or unlawful situations. And as a client, your business is covered by the PEO’s workers compensation insurance or liability insurance if a foul up should occur.
While some small business owners are wary of handing over or sharing control, a good professional employer organization will make it a point to continually communicate with the business owner and involve them in all decisions that affect the business. The key to successfully outsourcing your human resources is to do your research and find the right PEO for your company.
7. Allowing you to focus on the business of doing business
Small business competition is fierce. In order to succeed, you need to be able to focus on the foundation of your business—your products or services. By passing off employee related duties to a PEO you can dedicate more of your time and resources to the heart of your business.
Now that you have a better understanding of the advantages a PEO has to offer, how do you choose the right one for your business?
Download our free e-book, A Buyer’s Checklist: How to Compare Professional Employer Organizations.