Last month we posted an “AMA” on social media. A.K.A. ask me anything. We opened up the conversation with our audience to ask us the questions they have been dying to know about Professional Employer Organizations (PEOs).
We were blown away by the number of great questions we received. To continue the education, we are sharing some of the top questions below.
Q1: What is a PEO?
A: The acronym PEO stands for Professional Employer Organization, which is an outsourced solution for payroll, human resources, benefits, and compliance. One of the big benefits here is allowing business owners and their leadership team to focus on growing their business. Business owners gain peace of mind knowing the back office administrative tasks are taken care of.
Q2: How common is the use of PEOs?
A: According to the National Association of Professional Employer Organizations (NAPEO), PEOs operate in all 50 states and work with between 156,000 and 180,000 small and mid-size businesses. So, pretty common!
Q3: What kind of businesses use PEOs?
A: Businesses across all industries can benefit from a relationship with a PEO. Traditionally PEOs work with small (2-50 employees) to mid-sized businesses (51-200 employees) – with the sweet spot being 2-99 employees.
Q4: If I work with a PEO, am I still in control of my business?
A: Absolutely! The role of the PEO is to take care of the backroom administration. These business functions are offloaded from the business owner to the PEO. The PEO’s team of experts can successfully manage the ‘back office’ of the business. The business owner continues to run the day-to-day operations of the business. And the PEO works diligently in the background. How does this work? Through the co-employment relationship. Which leads us to the next question.
Q5: I’ve heard the term ‘co-employment’ thrown around. What does this mean for me and my business?
A: I had a feeling you’d ask! Co-employment is a unique relationship between the business owner, their employees, and the PEO. Co-employment is the foundation of the PEO model. How is each party impacted?
- Employer – The employer maintains the day to day control of decisions and operations. Your business is still your business, that never changes.
- Employee – Employees gain access to a rich suite of benefits often at a lower cost. This is an added benefit that is not always available to employees at small and mid-sized businesses.
- PEO – The PEO becomes the employer of record for tax and benefit purposes. The role of the PEO is to help the business stay compliant with laws and regulations.
Q6: If I work with a PEO, do I maintain the ability to hire/fire my employees?
A: As the business owner, you maintain control over the hiring and firing process. The PEO assists with the onboarding and offboarding of employees as they are hired or fired. However, it is not the PEOs responsibility to make any hiring or firing decisions. Once the business owner hires a new employee, the employee then meets with the PEO for the onboarding and benefits consultation. Similarly, when the business owner decides to let someone go, the PEO assists with making sure the employee is properly offboarded and appropriate documents are completed.
Q7: How do employees handle the transition of moving to a PEO?
A: Working with a PEO can actually enhance the employee experience. Business owners gain access to a rich suite of benefits that are traditionally out of reach due to financial barriers. Providing employees access to high-quality benefits helps foster a productive workplace. Nothing says “I care about your health and well-being” like top of the line health insurance. The ability to offer and promote quality benefits gives growing businesses a competitive edge in the job market. This helps to attract and retain top talent.
Q8: Is a PEO and an employee leasing company the same thing?
A: A PEO is actually very different from an employee leasing company. Employee leasing companies provide a business with workers. Usually on a temporary or project-specific basis. On the other hand, PEOs provide services and benefits to their clients, business owners, and their clients’ current employees. If a client terminates their relationship with the PEO, the co-employment relationship also ends with the employees.
Q9: What should I look for in a PEO?
A: Finding the best fit for you and your business is the top priority. We recommend keeping these questions in mind when considering a PEO.
- Years of experience – Does the prospective PEO have the necessary experience to help your business grow?
- Included services – What services will be taken off your plate?
- Benefits package – What benefits will be available for your employees?
- Service – Is the PEO local? Will you be able to reach your contact in a timely manner?
Were your questions answered?
Contact us today to learn more about PEOs and have your questions answered!
Focus OneSource is Iowa’s premier Professional Employer Organization. Our dedicated team has been helping growing businesses succeed for over a decade. As a PEO, we help business owners gain access to a rich suite of benefits at an attainable price point and monitor compliance with human resource practices. Business owners who have Focus OneSource working in their “back office” are statistically less likely to fail and have 10 to 14 percent lower employee turnover.