Media coverage of professional employer organizations has been extensive during the past few years. The media has reported that the exponential growth of professional employer services is “demand driven” by small to medium sized businesses.
HUMAN RESOURCES EXPERTISE
“You can expect a PEO to act as a sort of satellite office of your company, performing and managing HR functions for the employees it hires on your behalf, including staffing, employee relations, payroll and benefits; Along with taking those duties off your shoulders, PEOs have the added benefit of making your company part of a larger group that includes all the companies it serves. This strength-in-numbers approach benefits you when the PEO negotiates services like benefit plans and health insurance. In that pool, bigger fish get better rates.”
“Strengthening Your Core”, Franchise Times, July 2007
“Thousands of businesses have turned to professional employer organizations (PEOs) for relief. A typical PEO takes over the time-consuming task of HR management, freeing companies to refocus resources on their core discipline. Besides handling a company’s payroll processing, full-service PEOs often provide small and medium-sized businesses with access to big-company benefits they could not offer on their own.”
“Small Businesses Confront HR Woes with the Help of PEOs”, American Payroll, July 7, 2007
“In a PEO, or professional employer organization, arrangement, a business places all or most of its workforce onto the payroll of an outsourcing firm, which assumes responsibility for payroll, benefits and other human resource functions. The outsourcer virtually becomes the human resources department for its client. Legally, it serves as the co-employer.”
“Question about outsourcing”, Credit Union Management, June 2007
“PEOs promise to take all the burdens of HR off your shoulders. They’ll write job descriptions, make sure you comply with labor laws, do payroll, hire and fire, and even allow your employees to share in benefit programs usually available only to big employers.”
“The Bigger Picture: No More HR Headaches?”, Physicians Practice, June 2007
“Many PEOs now behave much like consultants, helping clients tap into the latest health benefits and comply with complex labor regulations related to discrimination and workplace safety. PEOs are becoming one-stop shops for business owners eager to outsource all their HR functions and focus instead on their core business.” PEOs make the most sense for business owners who can’t afford a dedicated human resources staff and don’t have the time to handle day-to-day HR issues themselves.”
“Fed Up with HR?” Inc. Magazine, May 2006
“Think of a PEO as an off-site personnel department. For an annual fee, often 2% to 7% of the dollar value of annual payroll, a PEO manages everything from recruiting and hiring to managing health benefits. They’re a boon to small businesses, many of which don’t need and can’t afford a full-time human resources department.”
“Finding first aid for small companies’ health costs”, USA Today, April 19, 2006
“Nationwide, thousands of companies are finding that outsourcing their human resources function to a full-service, professional employer organization (PEO) is the solution to their HR needs. This strategic management option allows a company to remain focused on its core competencies, helping enable them to further develop and meet their business goals and objectives.”
“What Is a Professional Employer Organization,” BIZ AZ, February 1, 2006
“Lori Booker says her public relations firm’s profits rose 25 percent after she hired a company to handle the business’ human resources needs. The reason: she had been devoting so much of her time to employee issues before she turned elsewhere for help. About 10 years ago, after spending an entire day interviewing workers’ compensation insurance providers, Booker said she’d had enough. She signed up with a professional employer organization that is now her HR operation.”
“Outsourcing: Matter of Course for Small Biz,” Washington Post, January 26, 2006
“It’s not news to any small business owner that a true HR department is a luxury. That’s why companies routinely outsource a host of functions to a variety of providers-a payroll company here, an insurance carrier there. But managing those relationships takes time. That’s where PEOs come in.”
“A Fresh Look at Professional Employer Organizations,” Small Business Review, January 23, 2006
“Business owners often say their employees are their most valuable asset. With employees come all the necessary tasks of managing payroll, taxes and benefits that are part of doing business. But there is an approach to human resource management that can help lighten those ongoing responsibilities. Professional employer organizations are businesses that act as co-employers and take care of a company’s personnel responsibilities. When a business contracts with a PEO, the PEO assumes responsibility for its employees, providing services ranging from risk management to human resources compliance, payroll to employee taxes.”
“PEO Spells Relief,” Jacksonville Business Journal, December 30, 2005
“For many businesspeople there simply isn’t enough time in the day to build a company and run a human-resources operation that touches all the regulatory bases while fulfilling employees’ needs. A growing number of small firms are solving the problem by outsourcing the HR function to professional employer organizations (PEOs).”
“Professional Employer Organizations Can Free You to Run Your Business,” Business News New Jersey, December 19, 2005
“A PEO serves as an outsourced human resources department for small and medium-sized businesses, assuming or sharing many of the responsibilities associated with being an employer, including administrative paperwork, HR responsibilities and employer liability management. Many full-service PEOs also offer depth of experience, sophisticated service and a comprehensive array of employee benefits that many small companies could not otherwise afford.”
“Rely on a PEO for Benefits and More,” Boston Herald, August 1, 2005.
“Professional employer organizations are morphing. Back when PEOS were started as a way to help companies cope with rising costs for workers’ compensation coverage, they also offered potential clients additional human resources services, such as payroll processing and benefits management. Now those same clients are increasingly looking to PEOs for more sophisticated services, such as employee screening, safety audits, lawsuit protection and nontraditional health care coverage such as vision and dental plans.”
“A PEO by a Different Acronym,” Tampa Bay Business Journal, March 28, 2005.
“If you want to hand off all of your human resources hassles” not just health insurance” you might consider a professional employer organization, or PEO. Such organizations serve as outsourced human resources departments. For a monthly administrative fee, usually about 1.5% to 3% of your gross payroll, the PEO handles it all” insurance, benefits, payroll, workers’ compensation, and other HR related services.”
“Cut Your Health Care Costs Now,” Inc., April 2005.
“Businesses today need help managing increasingly complex employee related matters, such as workers’ comp claims, health benefits, payroll, payroll tax compliance, and unemployment insurance claims. PEOs have stepped in to offer employers an avenue to cost-effectively outsource the management of these responsibilities. This allows the employer to concentrate on the operational and revenue-producing side of its business.”
“Special Report,” Workers’ Compensation Report, May 24, 2005.
IMPROVED REGULATORY COMPLIANCE
“The PEO model took root in the 1980s as employers began to find a heavier burden from the complex legal and regulatory environment.”
“Merit Resources expands to Q-C”, Quad City Business Journal, July 17, 2007
“PEOs can step in to rescue bewildered business owners from red tape purgatory, helping to reduce their exposure to fines and other penalties, which is no small task.”
“Small Businesses Confront HR Woes with the Help of PEOs”, American Payroll, July 7, 2007
“Professional employer organizations have crept up in the past two decades in response to a significant increase in employment-related regulations at the federal, state and local levels. As these regulations have taken on important, PEOs have gained in popularity.”
“Professional Employer Organizations Can Help Local Firms,” Las Vegas Business Press, March 13, 2006
“Small to midsize companies that hire PEOs reap additional benefits. They’re able to offer their employees a broader array of life insurance, health insurance and 401(k) packages. Legal risk and liability surrounding HR compliance fall to the PEO, and not to the company doing the outsourcing.”
“PEOs Help Small Businesses Manage Payroll, HR Functions,” Austin Business Journal, February 17, 2006
“With growing concerns about workplace lawsuits and increasingly complicated government regulations, more and more small businesses are turning to outside companies to manage their human resources issues. Companies known as professional employer organizations now offer such services as managing a client’s payroll, health benefits and workers’ compensation matters. Since the majority of small businesses do not have full-time human resources staff, they can use PEOs for not only the paperwork involved in human resource matters, but also to get advice on how to properly hire and fire people, conduct job performance reviews and process unemployment insurance claims.”
“More Small Firms Outsourcing Human Resource Work,” Daily Reporter, January 3, 2006
ENHANCED EMPLOYEE BENEFITS
“A PEO offers many perks for small employers who are otherwise unable to leverage their employee base to obtain good benefits and low costs. In theory, a PEO assumes the responsibility of paying employees, providing benefits, and depositing and filing employee and employer taxes. Employees are legally employed by the PEO, which enables the company to negotiate lower premiums for health insurance and better unemployment rates. In effect, the company virtually out-sources its workforce. Advantages to using a PEO are that the company no longer has a direct tax liability for the employees, a small company can avoid having to hire experts to run the human resource and/or payroll departments, and employees can receive more competitive benefits. While the company is responsible for hiring, firing, and performance management, the vendor (PEO) manages the related employee processes.”
“Exploring Outsourcing Options”, American Payroll, July 7, 2007
“Not only will the PEO service help to reduce overhead costs that would otherwise have to be accommodated in house by the employer, but it will also allow employees to benefit from being in a much larger group in bargaining for employee benefits such as health care and life insurance. Thus, there are benefits for not only the employer, and the PEO, but also for employees.”
“Renting” Employees in Hawaii Just Got Easier and Cheaper”, Hawaii Reporter, July 16, 2007
“PEOs are most useful to companies that rely on competitive benefits to recruit and retain workers. They can also help entrepreneurs with lots of regulatory or compliance issues and scant time or expertise to deal with them. Because most PEOs negotiate insurance rates for all their client companies as a group, they can also help keep premiums low.”
“Hands-Free HR”, Business Week’s SmallBiz, June 25, 2007 “
Professional Employer Organizations are expanding the availability of Health Savings Accounts (HSAs) to Americans. Cutting-edge PEOs have enabled hundreds of small businesses to offer their employees the consumer-driven health care plan.”
The Interbiznet Bugler, February 7, 2006
“In today’s competitive marketplace, it is often rough going for small businesses that are determined to provide premium benefits packages that will attract and retain top-notch employees, because they are at risk of chaining their profit-and-loss statement to an anchor. Faced with the challenges of providing premium benefits, and keeping up with the growing number of government regulations and mounting paperwork, more small and medium-sized companies are turning to professional employer organizations to manage their human resources functions.”
“PEOs Offer Big-Company Benefits to Small Businesses,” Employee Benefit Plan Review, February 1, 2006
“Small businesses wanting more help establishing and administering a Section 125 plan might wish to consider consulting a professional employer organization (PEO).”
“Why Every Business Needs a Cafeteria Plan, That It,” Accountingweb.com, December 6, 2005
“Like purchasing pools, PEOs aggregate a large number of clients and their employees into a single group, and as a result often command far more favorable health insurance rates than individual companies.”
“Cut Your Health Care Costs Now,” Inc., April 2004.
TIME SAVINGS
“If you spend most of your time growing your bottom line, do you really have the time to administer your complex and ever-changing benefit plan? That’s what out-sourcing is all about. A PEO can provide a comprehensive solution for all companies. When it comes down to the bottom line, figure out where your time and dollars are best spent” on people or processes.
“Outsourcing Your HR,” Iowa Commerce, August/September, 2004.
“There are two major advantages to this new relationship (with a PEO). First, law firm partners no longer have to squeeze in time for administrative burdens that take them away from billable matters. Second, the firm can now offer a better or more cost-effective benefits package.
“The Quest for Better Benefits,” Small Firm Business, Fall 2004.
INCREASED EMPLOYEE RETENTION
“To become an employer of choice and develop a comprehensive employee retention program, small and medium-sized companies across the country have turned to PEOs. Essentially, PEOs offer their clients and work-site employees the services of a human resources department within a large corporation. Few small businesses can afford a full-time staff that handles responsibilities such as payroll processing, benefits management, human resources, and risk management. PEOs provide HR advice to their clients, including employee retention strategies that leave them better equipped to compete for talented employees.”
“The True Costs of Employee Turnover: Making a Case for PEOs,” Commerce, April 2003.
