What is a Professional Employer Organization (PEO)?
When a company is starting out with a few employees, the tasks of payroll, benefits administration and compliance can be quite daunting with limited in-house resources.
Many small employers choose the help of a Professional Employer Organization (PEO) to take on HR administration responsibilities to concentrate on growing the business.
A PEO helps a small employer quickly become fully compliant by taking over all responsibilities involved in setting up payroll and paying employees, including tax and compliance requirements.
A PEO also takes on the implementation and administration of a company’s employee benefits, including health, disability, and 401(k).
In addition, a PEO provides the HRIS system that a company uses for payroll, benefits, and compliance.
Are you considering Leaving Your PEO?
Has your company been using a PEO for some time, but is now growing and hiring additional staff, and you’re finding that the one-size fits-all PEO approach is no longer efficient? As your company scales, it begins to desire more control and a custom approach.
For example, your organization may desire to improve your benefits offering and add a robust family planning coverage but discover that it is not offered by your PEO. Another example is that your organization may find that you need to implement additional systems outside of payroll and benefits to automate business processes and workflows. Or, your company may find that it needs to implement an applicant tracking system (ATS) to streamline recruiting, or a performance management system to maintain employee performance planning and goals setting.
However, several HR technologies can become difficult to manage and your organization may find it is limited in integrating these systems with your PEO HRIS system and even if they can integrate, only certain data elements can flow between the systems.
Top 6 Reasons Companies choose to leave their PEO arrangement is to gain more control and a desire for:
1. Automation of New Employee Onboarding
2. Need for Robust Employee Benefits Plan Design
3. Choice in Choosing Employee Benefits Providers
4. Misalignment on Expectations with PEO Arrangement
5. HRIS System Choice, Integration Capabilities, and Workflow Configuration
6. Robust Employee Data Reporting
Now that you’ve determined that your company has outgrown its PEO, what are your options for more flexibility and a system that will scale as your business grows?
Read Part 2 of “Is Your Company Outrowing Its PEO?”
HCM Tech Advisory has the expertise and experience to guide you in all aspects of your PEO transition. To learn more and for a complimentary consulting review, contact us at info@hcmtechadvisory.com.
