Human resource and administrative tasks require a lot of time and financial resources, both of which smaller businesses do not have in abundance. Small and mid-sized businesses are always looking for ways to reduce costs, including HR costs, so they can invest this money in other areas in their businesses. This need makes it difficult for small businesses that cannot afford to hire an in-house HR manager to manage human resource and administration tasks which are often left to someone who does not have adequate experience. The good news is that businesses can hire professional employer organizations (PEOs) to handle their HR tasks for them.
Professional Employer Organization (PEO): An Overview
Before we look at how a PEO can help your business save money, we have to know what they are. A PEO allows businesses to outsource their administrative and human resource management functions to them. By doing so, the PEO can handle things like payroll, employee benefits, certain administrative tasks and compliance. You can find a more in-depth guide to answer the question of ‘what is a PEO’ at G&A Partners. But, how can a PEO save your business money?
Helping with Recruitment
Recruitment can be very expensive, especially for businesses that want to hire a lot of people across a large geographical area at once. The best PEO companies will handle this recruitment process which includes the actual interviews and onboarding process. Although the business doing the hiring will always be in control of the final hiring decision, a PEO can save them significant amounts of money and time.
Improving Employee Productivity and Reducing Turnover
Engaged and satisfied employees are a lot less likely to switch employers. These employees are also more productive. As more businesses realize this, they are hiring PEOs to help them improve productivity and reduce employee turnover.
PEOs can help improve productivity by creating new performance metrics and appraisals, designing rewards systems for productive employees, helping train and develop employees and supporting efforts to improve employee productivity.
By doing so, they help save businesses a lot of time and money since they do not have to be in recruitment mode all the time to replace employees who have left.
Dealing with Compliance Issues
Although a business might be in compliance with all rules and regulations today, new rules are always being added that can make the business not be in compliance anymore. This means a business might not even know that it stands to face serious consequences in terms of lawsuits, fines, and business closure if they are found not to be in compliance.
Hiring a PEO assures businesses that HR professionals are always standing by to help them be in compliance with all laws, rules, and regulations as they are enacted. By helping the businesses they work for remain compliant and avoid the consequences of not doing so, PEOs can help save businesses a lot of money.
Understanding what a PEO is and trying to find out how it can benefit your business is one of the best things you could do as a business owner. A PEO is especially helpful for businesses that do not have the resources to hire an HR manager and provide benefits that businesses can appreciate.