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How PEOs empower midsize businesses to rise above today’s workforce challenges


Today’s business landscape has seen and continues to see transformations that create new workforce challenges for business owners. And leaders of growing organizations are in a unique position to face these hurdles.

In this blog we’ll cover:

  • What are the challenges of midsize businesses?
  • What is a PEO and how can it help solve these workplace hurdles?

What are today’s midsize business challenges?

Midsize businesses face many of the same workforce challenges that larger organizations encounter, because they have similar requirements and complexities as their larger counterparts. These challenges include how to:

Compounding these common challenges is the radical changes in the workplace as of recent years, which are felt by businesses of all sizes. Not only have some organizations completely adapted their operating models and adopt remote work policies, but employees’ priorities, goals and expectations have evolved. As a result, some organizations are experiencing skills and labor shortages related to:

  • Competition in the marketplace
  • Higher-than-expected voluntary turnover
  • Early retirement
  • Overall absenteeism

As a result, businesses are heavily focusing on the employee experience and retention.

In light of an uncertain economy, this leads businesses to question how they will overcome these midsize business challenges without disrupting operations and still containing costs.

  • Should they add headcount to their in-house human resources (HR) team?
  • Or, should they supplement their current staff by outsourcing some HR responsibilities?

One solution is a professional employer organization (PEO), an HR outsourcing option that performs the most comprehensive set of HR functions.

Of course, one of the big misconceptions about PEOs is that it’s a more appropriate solution for smaller businesses that commonly lack dedicated HR personnel. Here, we’ll discuss why PEOs are a helpful partner to conquer midsize businesses – even those with well-developed HR departments – in successfully handling the workforce challenges that organizations face today.

First, what is a PEO?

A professional employer organization, or PEO, is an HR outsourcing option for organizations to help assume the most time-consuming HR task and employer liabilities, such as payroll and benefits. What makes a PEO relationship unique is the contractual allocation and sharing of employer responsibilities. In this agreement, the PEO is a co-employer– meaning that employees of the business become employees of the PEO.

While the business retains control over day-to-day operations, the PEO engages with employees on HR issues and ensures compliance with employment requirements.

5 ways PEOs help solve midsize businesses challenges

“There are many benefits of the PEO relationship. First, PEO services offer capabilities that are often only available to very large companies to organizations in the small and midsize markets.”

Professional employer organization services come to the rescue of midsize businesses, IDC

IDC published a thought-provoking Spotlight revealing how PEOs empower midsize organizations to conquer today’s workforce challenges. Here are five of the major ways PEOs support growing businesses in overcoming today’s midsize business challenges.

 1. Access to Fortune 500-level benefits

When joining a PEO, companies can can access to PEO-sponsored benefit plans. The comprehensive yet cost-effective benefits typically available include:

  • Health, dental and vision insurance plans
  • Life and personal accident insurance
  • Short- and long-term disability insurance
  • 401(k) retirement plans

PEOs can obtain the same first-class benefits plans as much larger companies while containing benefits costs, improving the predictability of benefits and maintaining diversity in plan options and features

PEOs handle everything from vendor selection to negotiation, enrollment and ensuring compliance across all locations where the business operates or has employees.

 2. Risk management

Compliance becomes much more complicated as businesses grow in size and expand into other municipalities and states. With a PEO, employers can cast off the burden of ensuring compliance with all applicable employment-related regulations and legislation at the federal, state and local level.

Instead, they can rely on PEOs to maintain knowledge on the evolving legal landscape while:

3. Scalable, ready-to-go HR infrastructure

A PEO’s HR infrastructure incorporates proven processes and policies that can be deployed in any location immediately, along with a knowledgeable team comprising professionals who specialize in niche areas of HR that may not already be represented on the business’s HR team. As business needs evolve, these services can expand or contract.

4. HR technology

Some PEOs offer a single, end-to-end human capital management (HCM) platform, which means that businesses can leverage integrated HR technology to:

  • Simplify and automate cumbersome HR processes and tasks
  • Centralize employee information
  • Create a hassle-free employee experience that empowers self-service 24/7
  • Enable in-depth analysis of workforce data, which can inform future decision-making and strategy

Or, PEOs can assist organizations in selecting the optimal HR technology for their business.

5. Talent management

PEOs deliver personalized guidance and tools to help businesses:

  • Build a desirable company culture
  • Recruit more effectively
  • Train and develop employees
  • Drive productivity and high-quality performance
  • Offer competitive compensation

All of these things influence the workplace environment and employee experience, which impact satisfaction, morale and retention.

Summing it all up

The aftermath of the global pandemic and the current economic climate have created unique challenges for midsize businesses. Among these are the ability to recruit, engage and retain employees amid a competitive marketplace with high turnover. PEOs can help midsize businesses find and attract the right talent and increase employee satisfaction and engagement to reduce turnover. PEOs do this through better benefits procurement and administration, talent management that covers the entire employee lifecycle, proven and scalable HR infrastructure, access to advanced technology and savvy risk management.

To learn more about the benefits that PEOs offer for midsize businesses, download Professional employer organization services come to the rescue of midsize businesses.