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How HR Outsourcing With A PEO Can Lead To Big Soft Cost Savings

How HR Outsourcing With A PEO Can Lead To Big Soft Cost Savings

Human resources (HR) management is a crucial aspect of running a successful business. However, it can be a complex and time-consuming task that can take away from the core business activities. This is where HR outsourcing can come in handy, especially when done through a professional employer organization (PEO). Partnering with a PEO cuts obvious hard costs and also has significant soft cost savings. Continue reading to discover how HR outsourcing with a PEO can lead to significant soft cost savings.

Understanding The Hard Cost Of HR Outsourcing Savings

If you’re a business owner, you’re probably all too familiar with the challenges and costs associated with managing HR in-house. From recruiting and onboarding to benefits administration and compliance, HR tasks can be complex, time-consuming, and expensive. However, outsourcing HR to a PEO can help businesses save on hard costs, including the following:

  • Administrative expenses 
  • Employee benefits 
  • Payroll errors 
  • Implementing HR technology to automate processes and streamline systems 
  • Workers' compensation insurance 

A recent study showed that businesses that partner with a PEO can save an average of $1,775 per employee per year on these hard costs alone. That’s a significant amount of money that can be reinvested in the business. These savings are just scratching the surface of the potential hard cost savings that come with HR outsourcing through a PEO.

What Are Soft Cost Savings And Why Are They Important

While hard cost savings are more tangible and easier to measure, soft cost savings can significantly impact a business’s bottom line over time. Soft cost savings refer to the indirect and intangible benefits businesses can achieve by outsourcing HR to a PEO. These benefits may not be immediately apparent but can add up to significant savings in the long run.

Examples of soft cost savings include the following:

Improved employee retention

Employee turnover can be a significant headache for businesses, and it’s not just the direct costs of recruiting and training new hires that can hurt your bottom line. High turnover rates can also lead to decreased productivity, lower morale among remaining employees, and a tarnished employer brand. This is where partnering with a PEO can help. PEOs provide businesses with access to various HR services and resources that can improve employee retention.

A PEO can help businesses offer more competitive benefits packages, including health insurance, retirement plans, and other perks that make employees feel valued and supported. In addition, they provide training and development programs that help employees grow and advance within the company, reducing the likelihood that they’ll look for opportunities elsewhere. When you can improve retention, businesses can reduce the costs and headaches associated with high turnover rates and create a more stable and productive workforce.

Enhanced HR compliance

Staying on top of HR compliance can be a daunting task for businesses, especially those operating in multiple states or having a geographically dispersed workforce. However, failing to comply with HR regulations and laws can result in costly fines, penalties, and even legal action. PEOs have a deep understanding of HR compliance issues that can help businesses navigate the complex regulatory landscape.

Should you choose to partner with a PEO, you’re provided with guidance on everything from wage and hour laws to workplace safety regulations. PEOs can also help businesses implement policies and procedures that ensure compliance. You can rest assured that their HR practices align with the latest regulations, reducing the risk of costly fines and legal issues. This saves businesses money and frees up time and resources that can be redirected toward core business activities.

Improved employee satisfaction and engagement 

Employee satisfaction and engagement are crucial for businesses looking to attract and retain top talent. Happy and engaged employees are more likely to be productive, creative, and committed to the company’s success. Fortunately, a PEO provides businesses with access to a range of HR services and resources that can improve employee satisfaction and engagement. They can help businesses create a positive workplace culture by providing the following:

  • Training and development opportunities 
  • Employee recognition programs 
  • Wellness initiatives 

In addition, a PEO can help businesses offer more competitive compensation and benefits packages, including health insurance and retirement plans. Improving employee satisfaction and engagement allows businesses to create a more productive and motivated workforce, leading to improved business outcomes such as increased revenue and profitability.

Comprehensive recruiting and onboarding practices

Recruiting and onboarding are critical stages in the employee lifecycle and getting them right is essential for businesses looking to attract and retain top talent. However, these processes can be time-consuming, complex, and costly for businesses to manage in-house. This is where a PEO can help. PEOs provide businesses with comprehensive recruiting and onboarding practices that are designed to attract and retain top talent. They help businesses with the following practices:

  • Create job descriptions 
  • Screen candidates 
  • Conduct interviews
  • Negotiate job offers
  • Implement training programs 

PEOs help businesses onboard new hires, including handling all necessary paperwork, setting up payroll and benefits, and providing training and development opportunities. By outsourcing recruiting and onboarding to a PEO, businesses can free up time and resources that can be redirected toward core business activities. This not only saves businesses money but also ensures that they’re able to attract and retain the best talent in the market, giving them a competitive advantage in their industry.


As a small business owner, you already juggle various tasks. Therefore, it’s crucial to ask yourself if you truly have the energy and inclination to engage in the day-to-day work of overseeing HR. Do you have the extra energy to handle the following tasks?

  • Recruit and train new employees
  • Administer payroll and benefits 
  • Document policies 
  • Develop employee handbooks
  • Track employee PTO
  • Write job descriptions 
  • Engage with potential job candidates 
  • Keep up with employment laws 
  • Research and compare benefits plans 

The list could go on and on. If you’re honest with yourself, the answer would be no, which is perfectly normal. There’s simply not enough time in the day for you to manage all of these tasks on your own.

GMS Has The Solutions You Need

Imagine the relief of not having to worry about the countless responsibilities of HR management and instead entrusting these tasks to knowledgeable experts. This can be a massive weight lifted off your shoulders, allowing you to focus on the aspects of your business that you’re passionate about and that generate value.

Stacey Larotonda, GMS' Vice President of Client Services, expressed, "Think about your time spent on HR-related tasks such as recruiting, turnover, and onboarding a new employee. If you could relate that time to dollars, what would it be? Could you spend it doing something else, such as growing your business or implementing a new service? GMS helps take over HR functions that save you time which equates to money."

Partnering with a PEO allows businesses to achieve both hard and soft cost savings, making it a smart and strategic decision for any business looking to grow and succeed. Contact us today to learn more.

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