Scaling up With PEOs: The Ultimate HR Solution
Published: November 1st, 2023
As a business owner, you know that growing your business is a top priority. But as your company grows, so do the challenges associated with managing HR responsibilities. This is where a PEO steps in. Businesses looking to scale up can benefit from the comprehensive solutions that these providers offer.
This blog will help you understand PEOs and how they can help manage HR functions effectively. We'll discuss how PEOs can contribute to scalable HR infrastructure, allowing for rapid business expansion while mitigating risks during critical growth phases. Then, we'll explain how a robust HR infrastructure can support business growth and how effective HR practices can promote scalability. Finally, we'll answer the question on every business owner's mind: Can PEOs improve your bottom line? In summary, scaling up with PEOs may be the ultimate HR solution for your business. Keep reading to learn why.
Understanding HR Infrastructure & How It Promotes Business Growth
For small businesses looking to grow and expand, having a robust and competent HR infrastructure is your best bet. Long ago, having a small HR team was necessary to oversee all human resources functions; however, as the marketplace expanded and competition grew, so did the requirements of having a large HR department.
The growth of a business depends entirely on the quality of new talent, the onboarding process, and employees in general, and human resource management is a crucial aspect of reaching the growth stage of a business’s lifecycle. Without a proper HR infrastructure, growing a business can be an uphill battle.
Therefore, your HR infrastructure has several effects on your business and workplace. It is, in essence, the backbone of an organization. The HR department is responsible for recruiting and training new employees, ensuring employee satisfaction, and providing risk management practices.
How do effective HR practices promote business growth?
Effective HR is not limited to employment paperwork, implementing policies, and compliance; it goes beyond that. An HR department oversees all the stages in the employee lifecycle, encompassing attraction, recruitment, onboarding, development, retention, and separation.
Potential employees are drawn to the company when it communicates clearly and uses good HR marketing strategies. When companies interview people, they use effective talent acquisition metrics to help them hire the right people. This helps them make good decisions. Once the right people are employed, a well-designed onboarding and employee training process is crucial to setting them up for success.
Next is employee retention and development. These stages are linked, as employees who see a high possibility of career growth are likelier to stay. To retain employees, HR departments focus on employee development, creating a positive work culture, providing valued perks, and more.
Lastly, when an employee leaves, the HR department handles the final steps of the process. If a company has an excellent off-boarding process, they can look for ways to improve and give the best employee experience possible, even after they have left.
These services empower employee engagement and morale, thus improving overall business operations. Furthermore, effective human resource management addresses one of the biggest challenges businesses face - ensuring compliance with employment laws.
The Impact of PEOs on HR Management
Professional Employer Organizations (PEOs) are third-party entities that outsource human resource services under a co-employment relationship. This means they essentially become employers of record to share employer and legal responsibilities with your business.
Following rules and regulations is not limited to client companies. A PEO can have specific industry certifications, such as being IRS & ESAC-certified, which guarantees compliance with particular tax and regulatory standards, providing clients with extra assurance as an HR outsourcer.
A PEO's core functions
Human resource management: One of the main things a PEO does is make human resource management more straightforward. This includes providing consultation, management, and the required software. Usually, a PEO will provide the client business with a team of HR experts to proactively handle all risk areas and address any issues or concerns.
Regulatory compliance: Navigating the complexities of compliance can be a daunting task, and PEOs help alleviate these difficulties. PEOs will handle everything from filing income taxes to workplace safety regulations, ensuring your business complies with state, federal, and local laws. Their experts will also keep you in the loop about changing laws.
Enhanced employee benefits: Health insurance, life insurance, retirement plans, and more are essential to keeping your employees satisfied and attracting top talent. Because PEOs often work with reputable and high-quality insurance companies, these benefits can be offered at competitive rates. A PEO’s flexibility allows businesses to tailor the benefits they require depending on each employee’s unique needs, which would lower employee turnover.
Recruitment, training, and onboarding: PEOs know how important it is for a business to find the right employees and train them quickly. So, to make the process go smoothly, they help with recruiting, hiring, training, and the overall onboarding process. They also handle all the paperwork necessary and provide employee handbooks, as well as benefits and payroll enrollment.
Payroll processing and tax filing: Effective payroll management and tax filing are vital to any organization. PEOs offer streamlined solutions for payroll processing and tax filing. Employee wages, tax deductions, and other payroll-related transactions are calculated and paid accurately and on time through their automated payroll software.
To sum it up, because of these core functions, a PEO's impact on HR management is highly positive. They streamline all HR management functions, provide priceless HR expertise, offer enhanced employee benefits, and simply contribute to a better working environment for employees and business owners alike.
How PEOs Help You Scale Up Your Business
Many HR outsourcing options exist, but what makes a PEO different is that additional human resource support is given, allowing you to spend more time on critical and strategic decisions for your business’s rapid growth. PEOs possess the necessary solutions to contribute to building a scalable human resources infrastructure for businesses. According to the National Association of Professional Employer Organizations (NAPEO), companies that hire a PEO are 50% less likely to go out of business.
For starters, they help clients understand the complicated parts of human resources by drawing on their many years of experience. They possess a strong understanding of the best practices to implement, compliance requirements, and the management of a workforce, which is invaluable for businesses looking to scale up.
Secondly, a PEO will leverage economies of scale and give access to comprehensive benefits at competitive rates, which reduces costs. Additionally, they will handle the task of benefits administration, ensuring higher retention, lowering employee turnover, and allocating focus to other core competencies.
Thirdly, PEO companies can scale up alongside your business, seamlessly addressing all the HR needs that emerge as your enterprise expands. This scalability ensures your growing business receives the necessary HR support while maintaining optimal efficiency. Finally, their indispensable software lets your business comply with employment laws, administer timely payroll, and streamline HR operations.
Mitigating risks with PEOs during critical growth phases
A significant factor in the failure of business operations is the risk that comes when a business is in its growth and expansion phase. Partnering with the right PEO provider will reduce these complicated risks in several ways.
They will provide risk management services to minimize or eliminate all employee-related liabilities, such as benefits administration, payroll taxes, and workplace safety. With the Occupational Safety and Health Act (OSHA) of 1970, it is mandatory to maintain workplace safety. A PEO can ensure that businesses follow all OSHA requirements and regulations by performing safety training and audits to detect any safety hazards.
Moreover, a PEO will provide workers’ compensation for employees who have injured themselves during work hours. This also benefits employers, as the payment is not made out-of-pocket and eliminates the need for employees to pursue criminal prosecution.
Overall, a PEO's services handle legal compliance, from insurance claims management to worker's compensation, which allows businesses to excel during these risky growth phases.
Do PEOs Actually Boost Your Bottom Line?
In conclusion, scaling up with a PEO can be the ultimate solution for your growing business since having a robust HR infrastructure is essential for success. By partnering with one, you gain access to the expertise and tools required to streamline all HR processes, reduce administrative burdens, and guarantee legal compliance.
A PEO offers scalable services that adapt to changing HR demands as your business grows. With these services, you can diminish risks during critical growth phases and improve your business’s bottom line. Suppose you’re interested in partnering up with a PEO. In that case, we highly recommend you look at our dedicated reviews of the top PEO companies and our comparison tool, which lets you quickly compare the different services of PEOs.