Common Misconceptions About Partnering with a PEO

Common misconceptions about partnering with a professional employer organization (PEO) include the belief that it’s too expensive or that it’s just a “glorified payroll company.” Outsourcing your HR to a PEO actually provides a number of strategic advantages and cost savings opportunities not afforded by a typical payroll firm. A PEO partner helps small businesses succeed by combining their expertise in all things HR, including Employment Law Compliance, Employee Benefits, 401K administration, Workers’ Compensation, and Payroll, making life easier for everyone involved.

Let’s take a look at some common misconceptions about partnering with a PEO and the truth behind each line of thinking.

Myth 1: Businesses Leaders Lose Control of Staffing Decisions

A common misconception about partnering with a PEO is that you lose control over staffing decisions. In reality, you maintain 100% direction and control over your employees, including all decisions regarding hiring, firing, setting compensation, benefits and employee training.

Myth 2: A Competent Office Manager Can Handle HR, and It Won’t Cost You Extra

The truth is that your office manager is likely not trained in HR and therefore, shouldn’t handle all of your company’s human resource needs. 

There are certain tasks like filing reports or submitting payroll that a competent office manager can do, but when it comes to handling employee relations issues, hiring new employees, and managing all aspects of employee benefits and retirement plans, these duties usually require more expertise than what a typical office manager possesses.

A PEO can help you maintain compliance with federal and state laws, helping you mitigate employee-related liability while avoiding potential fines or even costly litigation stemming from compliance missteps.  

Myth 3: Employees Won’t Embrace the Change

This notion is a common misconception about partnering with a PEO. The truth is that employees will embrace the change if it means more time for them to focus on their work and less time wasted on administrative tasks or waiting on hold for long periods of time with national providers.

Many employees love working with a PEO because it gives them more control over their benefits and more flexibility in managing their benefits than they would have if they were working directly with an insurance company or broker. With their own self-service portal, employees can easily and quickly get pay and benefit information or make changes without having to rely on someone else to do it for them.

A PEO is also highly responsive. This means that employees can get the answers they need in just a few minutes, rather than waiting on-hold with a large payroll or insurance company, or having to wait and schedule time with an in-house HR representative. A PEO also advocates on behalf of your employees to minimize the hassle factor of having to navigate challenging HR or benefit issues they may face. 

Myth 4: Your Business Is Too Small for a PEO

Another myth about partnering with a PEO is that they’re only for large-scale businesses. This presumption is simply not true. Small businesses perhaps stand to gain the most benefit from partnering with a PEO, especially when it comes to administrative tasks like payroll and HR management. Small businesses can leverage the economies of scale offered by PEOs, including benefits offerings that were previously only afforded to larger companies.

It is true that some employers do not need the services of a PEO because they only have a handful of employees. However, there are many benefits that come from partnering with a PEO, regardless of whether you have one employee or 100 employees in your company.

In fact, one of the biggest benefits of a PEO is that it can scale with you as your business grows and changes.

Myth 5: PEOs Are Too Expensive

The biggest misconception about partnering with a PEO is that it’s too expensive. But the fact is that you can get all of the benefits of working with a PEO without paying any more than you would if you were managing your own HR in-house. 

Moreover, a PEO can save you thousands by eliminating potential fines and compliance missteps. You should also consider the productivity improvements you may see from a workforce that receives great benefits and training. Additionally, do you know how much time you spend doing exhaustive, unproductive paperwork and HR administration? Think of all the strategic, revenue-producing things you could be doing with that time instead.

Myth 6: A PEO Is Just a Glorified Payroll Company

A payroll company is only concerned with the day-to-day administration of your payroll. In contrast, a PEO will provide you with a wide range of services that can help grow your business.

In addition to offering payroll services, a PEO can help reduce overhead and HR technology costs, while giving your employees better support and tools to make their jobs easier. That has a direct impact on employee engagement and retention. So while payroll is certainly a critical element of a PEO’s offering, PEO’s go far beyond traditional payroll services to provide a full range of HR support, compliance, benefits administration, workers’ compensation and 401K administration. This means more time and more money to focus on business growth and getting the right talent you need to propel your business forward.

Myth 7: Working with a PEO Means a Loss of Control

It’s common for business owners to worry about a loss of control when they choose to outsource HR. But in reality, businesses can actually enjoy greater accountability, control, and flexibility when they outsource.

With contracts that can be as short as 30 days, an outsourced provider has to work hard to prove their value to your organization. A PEO can bring up-to-the-minute training and industry insights to the table, often helping you to identify inefficiencies in your internal processes.

A PEO also brings a level of objectivity to your organization. This can help you make decisions with confidence, avoiding common liabilities and risks in the operation of your business that naturally emerge without having an outside, objective partner.

Get Ahead with Focus HR

Take the time to review the administrative bottlenecks and inefficiencies in your business and what may be hindering your growth as a business owner. There’s a good chance your current approach to HR is contributing to your frustrations.

Focus HR is here to help. We offer a range of services designed to take some of the burdens off your shoulders, so you can focus on growing your business and getting ahead.

Contact us today for a free consultation and learn more about how we can help your company achieve new heights through effective and comprehensive HR services.

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