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The Difference Between a PEO and Online HR Services Company

There are several alternatives if you’re a business owner seeking to improve the way you handle HR. You can do it yourself and handle HR in-house, you can partner with a PEO or you can try to get by with one of many online HR services available on the market. Each alternative has its pros and cons. 

Business owners who don’t want to deal with the expense and liability of hiring HR staff (as outlined in this blog article) turn to PEO (ie. HR Outsourcing firm) or online HR services providers. Before deciding which solution works for you, it’s important to fully understand the differences between PEOs and online HR software providers. 

Let’s look at some crucial distinctions between these two kinds of service offerings.

PEOs Incorporate HR Software in Their Offerings

PEOs like Focus HR understand the importance of software, making it easier for companies to establish automated workflows and processes. We often find that administrative HR processes in small businesses are a combination of paper, spreadsheets and manual processes. These create numerous inefficiencies, and worse, expose businesses owners to unnecessary risk.

Good HR software helps automate and simplify key employee documentation, like I-9s, tax forms, company handbooks, performance reviews and compliance data. It helps to manage benefits administration and employee onboarding and keeps track of vacation, sick time, and bonuses.

Without effective HR software, employee-related processes and documentation can quickly become cumbersome and fragmented, increasing the likelihood of mistakes and audit exposure. Companies may struggle to keep up with necessary details contained in different spreadsheets or even physical file folders stored in an office.

HR Software Is Just a Tool

Despite the importance of HR software, it remains just a tool. People need tools to perform their jobs, but tools can’t replace the people who use them. 

HR tech companies that offer bundled HR software can’t remove the “human” element from human resources. Too many local regulations, individual decisions, and other oversights are required to effectively manage HR for your business. It’s practically impossible to meet those needs with an online, out-of-the-box software solution that tries to satisfy everyone’s needs, but can’t quite address the unique, custom needs you likely have as a business owner.

Consider popular accounting software, like QuickBooks or NetSuite. While companies may modify accounting software to incorporate certain functions, like recording bank transactions, this software can’t replace accountants. 

A knowledgeable accountant looks at monthly financial reporting holistically and strategically. Accountants record the entries the software can’t handle systematically and review reports with a skilled eye to catch errors.

If you attempt to handle accounting for your business independently simply with a software program, you’re likely to run into problems — especially as your business expands and becomes more complex. Similarly, handling HR processes with software alone increases your risk of making serious errors that affect compliance and can cost you money. You will also miss out on the strategic advice and consultation a local, professional HR advisor can provide. 

PEOs Are People-Oriented

PEOs, like Focus HR, tailor their solutions to meet their client’s business needs. Rather than providing a one-size-fits-all solution, PEOs meet with their clients to understand their individual businesses, their unique challenges relative to managing employees and where they are in the business lifecycle. 

Some companies are in the early growth stages, while others are expanding rapidly. PEOs seek to accommodate each individual customer, ensuring that the services provided meet the business’ particular needs. 

When you hire a local PEO, you gain access to a team of HR professionals whom you can contact via phone or a quick visit. They understand your business, as well as local laws and regulations. You can have peace of mind knowing an expert is just a phone call or short drive away when you need them. At Focus HR, our clients build a more personal relationship with each of our team members that service their business. Those relationships matter – especially when you need something immediate or unique that falls “out of the box.” When you pick up the phone to call us, you can expect to speak to someone right away who can help… no 1-800 number, no waiting on hold or trying to work through some automated menu system! 

In contrast, companies that choose HR tech software as their HR solution often find the results lacking. Business owners may receive some initial assistance setting up the software for their business, but then help can quickly subside.

Many HR tech solutions offer 1-800 numbers subscribers can call for assistance, but you’ll never know the qualifications of the person who answers your questions. They may not even know where your business is or what type of organization you operate.

HR Consulting Services When You Need Them

As you scale your business, you’ll likely encounter many human resources concerns. You may want to expand your business to another city or state or hire a mix of contractors and employees.

With each HR decision comes various considerations related to taxes and compliance. A PEO can help you skillfully navigate your concerns, ensuring that you stay compliant with the appropriate regulations. 

In contrast, an online HR software provider can only provide limited help with company expansion and staffing changes. Software may provide you with some basic instructions on hiring practices, but fall short in providing, say, an analysis of employees’ salaries or payroll tax costs in a different city. 

On the other hand, a PEO can help you with any HR question you have as your business expands and will be there to help you throughout the entire process.

More than just a software

At Focus HR, we certainly leverage a robust HR platform. But, just as (or more important) we provide numerous, value-added services a software provider simply can’t such as:

  • Assistance with recruiting, interviewing, onboarding and terminations
  • Employee benefits plan selections & administration
  • Workers’ Compensation management 
  • Payroll & Payroll Tax filings
  • 401K solutions

Choose Focus HR for Your PEO Needs

Focus HR is a Tucson-based PEO with clients throughout the country. Our company provides a full suite of HR solutions from which you can select, no matter how small or large your business is. Schedule a consultation with our team today to learn more about Focus HR.




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