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10 signs your business needs a PEO


Have you considered outsourcing your business’s HR to a professional employer organization (PEO)? If not, maybe you should.

Is your HR to-do list growing so fast that it’s hindering your company’s growth and performance?

Have you gotten so bogged down in tactical and administrative human resource tasks that you have little time left for strategy and planning?

How will you ever create a vision for your company and achieve its mission if you’re chasing your tail all day because your business has become overwhelmed by its HR workload?

As a business leader, you’re responsible for ensuring that things get done right and on time, but it’s important to recognize when you need to delegate duties or improve processes so you can focus on your core business.

If any of the following 10 warning signs sound familiar, it may be time to consider hiring a PEO.

1. Your management style has become 95 percent reactive

“We sent duplicate invoices? How did this happen?” Have you uttered these words (or something similar) lately? If clients or vendors regularly point out mistakes you weren’t aware of, you probably have too much on your plate to keep up with how well your employees or processes are working. That leaves you to put out fires that may have been prevented with a little proactive planning.

It’s not uncommon for small businesses to fall short when managing employees, but it’s usually not due to a lack of consideration. The reality is, most business leaders often don’t have the time or skillset to investigate issues that come up, much less sort out an effective remedy. This can cause problems to escalate and have a negative impact on customer satisfaction and employee morale.

Some things may seem like small stuff, but in a day-to-day work environment – small stuff matters. Keeping tabs on employee performance and process efficiency requires frequent monitoring and follow-ups.

2. Surprise headaches pop up from incomplete employee paperwork

Think about the last time you onboarded a new hire. Did she complete all of the proper paperwork or, was her I-9 or W-4 only partially filled out? Did anyone follow up to make sure all documents were filed properly? If not, you may not know there’s an issue until you notice a visa violation by Immigration and Customs Enforcement or there’s a payroll mix-up with the IRS.

3. Competing companies are wooing your employees with five-star benefit packages

When you’re wearing too many hats, another thing that may escape your attention is your awareness of how your benefits package compares to what other employers are offering. Do you know how your benefits stack up against what your competitors are able to provide to your current employees or future job candidates? In other words, can your benefits package compete with the “big guys?”

4. A new employee misses out on benefits enrollment

True, it is ultimately up to each employee to complete their benefits enrollment, but let’s face it, new hires have a lot to keep up with when they first start a job. If they get sidetracked and forget to enroll by the required date, it could cause them and their dependents to miss out on health insurance until open enrollment rolls around. Also, quite frequently, employees don’t understand their options for benefits, and this may not be your greatest strength either. Have you ever thought that it would be great to have someone who had that knowledge and could take the time to explain?

5. You realize the impact of a poor performer only after they take medical leave

Let’s say you have an employee who has worked for you for about a year. He’s not performing well, but you haven’t had a chance to address his performance because you’ve been juggling other priorities. Then, that employee has a serious health issue come up and he goes on medical leave. He’s on medical leave for a month and you suddenly notice something: The department is doing much better without him. It occurs to you that you’d prefer that he not return to work, but that’s rarely a feasible option under such laws as FMLA and ADA.

When you’re overwhelmed with the day-to-day tasks of running a business, employee performance concerns may be overlooked and others may spend time and effort compensating for an underperforming team member. As a result, the employees compensating for the underperformer may burn out, or the entire team may not perform to its full potential – or both.

6. Your company has been fined or penalized for compliance violations

Keeping up with HR-related government compliance can be another tough spot for small business owners and it’s not just about payroll anymore. As employment law evolves, there are always new regulations to keep up with, as well as updates to the familiar ones. Staying on top of those gets especially difficult when you have people working in multiple states.

For instance, bringing on new employees in other states often requires state-specific notifications or application of state-specific policies. Missing one of those can leave your business open to fines or a lawsuit in the event an employee ends up filing a complaint. These tricky areas (and other HR-related government compliance issues) require a lot of attention. Most small businesses simply don’t have the bandwidth or in-house expertise to dedicate to it.

7. Employees quit on short notice

If your managers aren’t engaged with employees, they may not always know what your staff needs to do their jobs well. They also may not be in tune with what makes your workforce feel happy and fulfilled. When this happens, eventually even the smartest, most motivated employee will become frustrated and shut down. That’s a recipe for discontentment, which can spread around the office and fuel turnover.

Keeping good employees satisfied requires competitive benefits and compensation, as well as consistent communication and the promise of a bright future at your company. Without these things, your workforce may not feel they have any reason to stay.

8. You discover gaping holes in your “paper trail”

Even in a digital age where paperless documentation is becoming more common, accurate record-keeping is vital to any business. However, as a company grows and there’s more to keep up with, proper documenting of employee-related issues often takes a back seat to customer-facing priorities. When this happens, managers may inadvertently overlook standard HR protocols, or they may not have systems in place or the experience needed for handling employee issues. It’s imperative that your leadership team has the time and focus needed to investigate problems, document incidents and counsel employees.

9. You’re too slammed to focus on the big picture

How do you plan for your company’s future if you don’t have a handle on every working part of your business? Likewise, if you can’t survey your data quickly and conveniently, will you truly be able to see where you’re spending the most money and time – and if it’s paying off? Why is your overtime payout way up over the past six months? Have you seen a large increase in employee-related expenses? Having your company’s data and analytics readily at your fingertips allows you to see patterns and identify issues that may indicate you need to hire more people.

10. Payroll is monopolizing your (or your staff’s) time

Think about the mountain of things to keep up with in the realm of payroll and compensation. Are you certain your payroll tax reporting is accurate? Do you know if your employees’ 401(k) deductions are being properly calculated and reported on time? An overburdened HR team may end up spending most of its time trying to stay on top of payroll – or worse, correcting errors that result from an inefficient process.

How a PEO can help

If you felt some of the warning signs above hit a little too close to home, don’t worry. Take a deep breath. You don’t have to navigate the complexities and uncertainties of running a business alone. A PEO can help you keep your business on track and work with you to create an HR strategy that aligns your processes with your goals.

Outsourcing your HR to a reputable PEO or CPEO (certified professional employer organization, as designated by the IRS*) can provide many advantages to your business:

  • Robust benefits: A PEO can help you provide your employees with access to competitive benefits that include medical, dental and vision insurance, 401(k) retirement plans and much more. A comprehensive benefits package can help you attract and retain top talent.
  • Administrative relief: Relief from the tedious tasks of payroll and tax filings is one of the top reasons small and medium-sized businesses outsource their HR. How much extra time would you have each week if you could scratch almost all of these tasks off your list? Are you looking to open offices in other states? PEOs that operate nationwide are already up to speed on payroll regulations in every state, so you don’t have to research the regulations and learn a new process to take on one or two employees in another state while your company is expanding.
  • Streamlined employee onboarding: Comprehensive, integrated HR technology allows you to easily provide compliant new hire paperwork as well as keep track of employee data in one convenient online platform.
  • Actionable workforce analytics: Do you know your annual employee turnover rate and how much is that attrition costing your business? Having access to this information anytime you need it empowers you to be more strategic in your decision-making.
  • Scalable solutions: A PEO can help you develop and implement an HR strategy for your company – at its current size and as it grows.
  • Guidance with HR-related government compliance: PEOs provide valuable advice on employment-related federal, state and local government regulations. Their specialists can also help you develop solutions for sticky situations that sometimes arise between employees. You can lean on their seasoned and impartial guidance to help determine the best path to help protect your business and satisfy the parties involved.

Want to find out more about how HR outsourcing with a PEO can help you streamline your HR operations and grow your business? Download our free e-book, HR Outsourcing: A Step-by-Step Guide to Professional Employer Organizations (PEOs).

*The IRS does not endorse any particular certified professional employer organization. For more information on certified professional employer organizations go to