Transitioning off of a PEO can be a massive project. In addition to the PEO pros and cons listed above, some companies find that they’re quickly outgrowing the model and end up transitioning elsewhere sooner than planned. Introducing a third party to your payroll and hiring processes means more people have access to company and employee sensitive information, increasing the risk for security breaches. With a PEO, you lose the ability to house your own data and analytics. When you need business insights, you don’t have time to wait for someone to send you data in an actionable format. If you find that you’re growing quickly, you might need to make the move sooner than you think! We find that once companies exceed 50 employees, it’s more cost-effective to take HR in-house. Once you reach that point, you’ll find that a PEO can be limited in areas such as talent management and employee engagement. With the outsourcing of risk and workforce management you also lose control over processes, quality of recruiting, and your company culture.Īt a certain point, HR goes from a nice-to-have to a must. PEO ConsĪlthough hiring a PEO can be a massive time-saver for your company, the all-inclusive partnership doesn’t come without its drawbacks. A PEO can help you gain economies of scale by having more options at lower costs than you could obtain yourself.īecause the client company reports its wages under the PEO's federal employer identification number (FEIN), employee liability shifts to the PEO. That’s why most PEOs have experts on staff to take on those responsibilities or guide you in the right direction.Įmployee benefits programs continue to serve as a differentiator for employers. It’s a non-stop battle to stay up to date with tax and compliance regulations. If your company has less than 50 employees and limited HR personnel, a PEO could be the right solution for you for the following reasons.įrom benefits administration to payroll processing, a PEO can offload a significant amount of administrative burden from you and your team. How do you determine if a PEO is the right solution for your organization? Continue on for a list of PEO pros and cons. PEOs can take on any variation of the following tasks: Clients enter into a “co-employment” relationship with the PEO, where the latter becomes their workforce’s employer-of-record for tax and compliance purposes.
What is a PEO?Ī PEO is a third-party HR and payroll outsourcing company that acts as a co-employer with your business. How do you decide what’s right for your company? Read on to learn more about how these partnerships work and review our list of PEO pros and cons.
However, seasoned HR professionals can attest that PEOs aren’t for everyone.
Reducing administrative burden and offering expertise, PEOs offer a full-service HR solution. In fact, the PEO industry’s 173,000 clients represent 15.3 percent of all employers with 10 to 99 employees.
#Namely inc professional
Hiring a Professional Employer Organization (PEO) has become a popular option for small businesses that need help with workforce management.
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