Navigating the complexities of human resources can be daunting, especially for small businesses with limited resources. From payroll processing to benefits administration and compliance with employment laws, managing HR functions internally often becomes overwhelming. That’s why a professional employer organization (PEO) provides comprehensive services for businesses that need help. By partnering with a PEO, businesses can access expert HR support, streamline operations, and focus on their core activities, saving time and money in the long run.
There are several misconceptions about what it means to partner with a PEO. Fortunately, we’re here to help answer your questions. We’ve debunked a few common myths about partnering with a PEO.
Myth: PEOs Take Over Control Of Your Business
Fact: A PEO doesn’t take over your company; it’s a partnership.
No one wants to lose control of their business. Contrary to popular belief, hiring a PEO won’t result in a takeover; instead, PEOs partner with companies to provide expert guidance and support, enabling more informed business decisions that can save time and money.
The confusion often arises from the co-employment model that PEOs use. While it may sound like your staff is now part of the PEO’s company, this model allows PEOs to take on HR responsibilities and liabilities without interfering with your business operations. This means that while the PEO handles tasks such as payroll, benefits administration, and compliance, you maintain complete control over your day-to-day operations and decision-making processes.
In addition, partnering with a PEO enhances your business’s buying power. By pooling employees from multiple companies, PEOs can negotiate better rates on benefits packages. This allows you to offer your team benefits comparable to those of a Fortune 500 company, making your business more attractive to top talent and helping with employee retention.
Myth: PEOs Decide Who To Hire And Fire
Fact: You retain complete control over your staffing choices.
When partnering with a PEO, you control your staffing decisions. PEOs are there to streamline and support the hiring process, but the final decision always rests with you.
PEOs can significantly enhance the efficiency of your hiring process by screening applicants and presenting only the most qualified candidates. This saves you time and ensures access to a top-tier talent pool when hiring. However, the ultimate choice of who to bring on board remains entirely in your hands, preserving your control over the composition of your team.
In addition, PEOs provide comprehensive employee management systems that offer valuable tools for tracking employee progress and documenting incidents such as poor performance or inappropriate behavior. These systems enable you to monitor performance effectively and maintain detailed records. Should you need to make the difficult decision to terminate an employee, having thorough documentation helps safeguard your business against potential legal challenges.
Myth: Small Businesses Can’t Benefit From PEOs
Fact: PEOs are especially helpful for small businesses.
You don’t need to run a large corporation to take advantage of a PEO's services. Small businesses face many challenges regarding HR functions, much like their larger counterparts. A small company might have one person wearing many hats, making managing payroll, navigating compliance issues, and handling employee benefits overwhelming and time-consuming. These tasks often lead to late hours, costly inefficiencies, and the potential for errors that can have significant financial and legal repercussions.
A PEO can alleviate these burdens by providing specialized expertise and support in managing HR functions. By partnering with a PEO, you can gain access to a team of HR professionals who are well-versed in the complexities of HR and regulatory compliance without having to hire a full-time HR professional. This ensures accuracy and efficiency and frees up valuable time for you and your managers to focus on core business initiatives.
Myth: PEOs Are Too Expensive
Fact: PEOs are an intelligent investment
Investing in a PEO is a strategic decision for businesses of all sizes. While PEOs typically charge a fee per employee per month, the significant saving in HR functions and overall operational efficiency typically offsets the cost.
PEOs bring expertise to your business, streamlining HR and identifying and resolving costly issues before they escalate. Their proactive approach to HR management ensures that common pitfalls and compliance risks are addressed, preventing the "inevitable HR issues" that can disrupt business operations and lead to financial penalties.
Myth: PEOs Damage Company Culture
Fact: PEOs can enhance your company culture
Like most organizations, you take great pride in your workplace’s culture. Culture is carefully built and requires considerable effort to maintain, so understandably, you want to protect it. Contrary to concerns that partnering with a PEO might harm your company culture, PEOs can enhance it.
PEOs provide access to top-tier benefits and a wider pool of resources, which can significantly contribute to a positive work environment. This leads to higher employee satisfaction and morale, which are critical components of a strong company culture.
Additionally, PEOs offer onboarding and training and development support, which can further reinforce your company’s values and goals. By providing opportunities for professional growth and development, PEOs help employees feel more engaged and invested in the company’s success.
This enhances individual performance and fosters a collaborative and motivated workforce.
PEOs also help create and maintain comprehensive employee management systems, including performance tracking, feedback mechanisms, and conflict resolution processes. These systems help ensure that your company culture remains positive and productive by addressing issues promptly and effectively. A PEO partnership enables you to maintain the essence of your culture while benefiting from the additional support and resources that a PEO provides.
Partner With GMS
PEOs like GMS offer a range of benefits while saving you time and money in the long term. Over the past 25+ years, GMS has helped over 3,500 companies manage their HR functions. As HR experts, we take on the administrative burdens that companies don’t have the time or expertise to manage effectively, including:
Contact us today to talk to one of our experts about how a PEO can help our company improve its HR functions.