What is a PEO? PEO stands for Professional Employer Organization and is a company that typically works with small and medium sized businesses, helping them with a wide range of human resource and back office needs. The largest trade organization for the industry is NAPEO (National Association of Professional Employer Organizations), formed in 1984 and representing roughly 350 member companies. When businesses find themselves over their heads or struggling because of increasing HR demands, turning to a NAPEO member company is often the most cost-effective solution.
Why would a business choose to seek out a PEO company instead of simply taking on all HR functions in-house? The answer is that there is nothing “simple” about human resource functions. They are complex and can be labor-intensive, especially when the staff doesn’t have access to the latest software and web-based tools. As businesses grow, HR demands also grow (sometimes exponentially) and a shortfall in capabilities or capacity can cripple a business just as it begins to achieve success. When a business is a small operation, HR functions are often limited to cutting a few paychecks every month. As a business grows, the function becomes much more important and much more involved. That’s where a PEO company often makes the difference between succeeding and failing, by streamlining and supplementing human resources and back office functions.
Even small businesses can’t afford to overlook complex requirements like labor law compliance and Workers’ Compensation administration. The ramifications of falling behind in these areas can be severe. While a small business may lack the expertise and staff cycles to ensure the accounting of vital HR functions, they can hire a PEO company to support them. Payroll becomes much more involved as a business grows. There may be demands for direct deposit or PayCards, managers need advanced reporting on vacation and absenteeism in order to maximize their schedules, taxes need to be calculated and there may be a need for deductions and other complications. Benefits are another area that often impacts a small, but growing company. As the staff grows, demands for benefit packages increase and are necessary in order to retain experienced employees. Once again, a PEO company can provide the expertise needed to successfully implement and track a benefits program.
As small companies grow, quality hires are important for maintaining momentum. Turning to a PEO company to conduct recruiting, interviews, salary negotiations and background checks allows management to focus on continuing to expand the company while knowing that qualified and high quality employees are joining to their team. Small and medium sized businesses that entrust their HR needs to a PEO firm gain all the benefits of having a highly experienced, fully capable human resources department without the cost of creating, staffing and equipping one from scratch.
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This article was sponsored by National PEO, LLC. National PEO is a leading provider of PEO services to hundreds of companies all over the US. Let us handle the burden of Payroll Services, Benefits Administration, Worker’s Comp, and Human Resources for your company. Contact us today to request a quote!
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