PEOs: What You Need to Know

If you’re a small business owner who is just now learning about professional employer organizations (PEOs), you’ve taken the first step toward providing your company with more efficient and unique practices of handling your most precious assets, your employees…all done without breaking the bank.

But what exactly is a PEO and what do they do?

Professional Employer Organizations (PEOs)

The PEO industry has been around for 30+ years. PEOs operate in every state and provide services to more than 2.5 million people. There are more than 700 PEOs nationwide. During your research, you may have heard PEO services referred to as co-employment, business process outsourcing, or HR outsourcing. However, PEOs can best be summed up with this definition from NAPEO (National Association of Professional Employer Organizations):

“PEOs enable clients to cost-effectively outsource the management of human resources, employee benefits, payroll and workers’ compensation.”

PEO Definition: What PEOs Can and Can’t Do For You

PEOs

  • Handle comprehensive HR services for you, including payroll processing, HR compliance, risk management, and employee benefits
  • Help reduce liability for payment of wages, payroll taxes, and state unemployment taxes
  •  Assist with employee recruitment
  •  Make your business more attractive to current and potential employees
  • Save you time so you can focus on the growth of your business

PEOs do NOT

  • Take control of your business
  • Supply labor to worksites
  • Make hiring and firing decisions for you
Chart showing 9% growth. Learn the PEO definition today.
Small businesses who use a PEO have 9% greater growth than other small businesses

Outsourcing Your HR ≠ Losing Control of Your Business

If you’re concerned that working with a PEO means you’re going to lose control of your company, you’re not alone.

The reality is that you will never lose control of your business when you hire a PEO. In fact, a PEO will help YOU make more informed HR decisions that will make your business stronger.

chart showing avg retention rate
Average Retention Rate of PEO clients: 89%

Do PEOs Work in My Industry?

Yes. PEOs work with companies in all industries ranging from accounting firms to high-tech companies and small manufacturers. Many different types of professionals benefit from PEO services, including:

  • Services
  • Construction
  • Transportation & Utilities
  • Retail
  • Manufacturing
  • Wholesale
  • Agriculture / Forestry / Fishing
  • Other (public administration, finance, insurance, real estate, and mining markets)
pie chart showing industries served
Industries Served

 

Average Growth Chart Source:"Professional Employer Organizations: Fueling Small Business Growth," by Laurie Bassi & Dan McMurrer, McBassi & Company, September 2013
Average Retention Rate Chart Source: NAPEO


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