You have many options for outsourcing your company’s human resources (HR) function.
These include working with multiple vendors, such as:
- HR consultants
- Temporary staffing agencies
- Professional recruiters
- Payroll companies
- Compliance management companies
- Benefits administration companies
- Training and development providers
Alternatively, you could work with a single vendor that combines these services under one roof, such as a professional employer organization (PEO) – and, more specifically, a full-service PEO.
Let’s explore all the services that a full-service PEO partner can perform for your organization and why your business may want to consider this option for the most comprehensive, cost-efficient and time-efficient HR outsourcing.
What is a full-service PEO partner?
Among PEOs, level of service matters.
This is because PEOs aren’t all created equal in their service delivery. For example, some PEOs:
- Specialize in or prioritize certain services over others
- Provide self-service only, usually pointing clients toward online resources
- Use general call centers for customer service rather than assigning dedicated teams
- Don’t offer client companies the option to meet in person
- Are web-based versus having fully staffed offices
- Have a reactive versus proactive approach to service
- Have a limited geographical scope of operations
What sets full-service PEOs apart is the depth and breadth of services they offer.
- Services cover both tactical, day-to-day HR tasks all the way to HR strategy and niche areas of HR expertise.
- They consult with client companies on a regular, ongoing and proactive basis.
- They are right there with you, ready to offer advice, best practices and answers to burning questions when you need them – in person, on the phone or virtually.
- You have a dedicated team or point of contact you can reach out to personally each time.
Many full-service PEOs offer a comprehensive, all-inclusive HR outsourcing option – like a one-stop shop for all things HR. Ideally, a full-service PEO also operates in all (or nearly all) 50 U.S. states so they can deliver service, and have knowledge of the regulatory environments, in the locations where your business operates – or may operate in the future. Additionally, in today’s virtual and hybrid workplaces, employees may live anywhere and you want to be prepared to capitalize on the best talent without restrictions on where your PEO operates.
These are all factors you should consider when selecting a PEO.
Full possibilities with a full-service PEO partner
For organizations partnering with a full-service PEO, an array of HR-related services are usually available through one source:
- Payroll and employment administration
- Benefit plan sponsorship
- Retirement Services
- Workers’ compensation plan coverage and administration
- Employment practices liability insurance (EPLI)
- Training and development
- HR-related support and compliance
- Performance management support
- Human Capital Management (HCM) technology
- Recruiting and employment screening services
Pros of having a single, full-service PEO partner
1. The ‘big picture view’
When you have multiple vendors, each assessing a portion of your business from a different angle, they don’t have the full picture to help inform their guidance and they can’t clearly see how their services impact other areas of your company. Collaborating with a single, full-service PEO partner who understands your strategic initiatives and devises a service plan around helping you achieve them can drive your business forward most effectively.
2. Ability to scale up and down easily
When your business needs change, it’s crucial to have a PEO with an HR infrastructure that can adapt alongside you. After all, you don’t want to go through the time-consuming process of searching for the right PEO and making a switch between PEOs often.
For example, if your business grows rapidly, a PEO that is limited in its breadth and depth of services, or geographical scope of operations, can’t assist you efficiently or well. This can hold your business back and allow opportunities for costly missteps, incidents of noncompliance, risk exposure or even poor people management to happen.
3. Time savings
Generally, it’s faster and more convenient to deal with only one company for a multitude of services, right? It’s:
- Fewer contacts to remember and keep track of
- Quicker and easier to get help on a variety of issues
- Less explaining or “catch up” information you have to provide each time you need help
Furthermore, a PEO partner can save HR personnel time on day-to-day tasks.
For example, a full-service PEO’s integrated HR systems work together so you don’t have to juggle multiple sources when you need to update information. With multiple vendors, performing even a simple HR task, such as updating an employee address, needs to be changed in multiple places, which is inefficient.
Likewise, negotiating renewal contracts with several vendors can be very time-consuming. Working with a single-source provider makes the renewal process much more efficient.
4. Cost savings
To cover the vast list of services and spheres of expertise that a full-service PEO partner can, calculate what it would cost to hire multiple vendors, as an alternative.
A single, full-service PEO will almost always be the more cost-efficient option for capturing all these services. Even when you factor in the possibility of additional fees for services beyond those included in an administrative service fee, a full-service PEO can cost favorably compared to paying several vendors.
5. Reduced potential for errors
Having all your employee programs under one umbrella reduces the potential for errors to slip through the cracks.
An example of this is a client company discovering that they’ve been continuing to pay for medical insurance for a terminated employee. This can happen when an employee is terminated with a payroll company, but the employer forgets to notify one or more insurance carriers – medical, dental or vision, for example – that the employee is no longer with the company. In some cases, this scenario can go on for months or years until their records are audited, costing the company unnecessarily.
With a single service provider, scenarios such as this shouldn’t be an issue.
6. Comprehensive benefits solution
Most full-service PEOs offer a comprehensive benefits solution, providing employees with access to a variety of high-quality benefits not often found at smaller companies. In addition, as the benefits plan sponsor and administrator, the PEO will typically handle the entire benefits process from beginning to end, avoiding the need for multiple vendors.
7. Peace of mind
Given all these advantages associated with a full-service PEO, as well as all the services they cover, it’s easy to see how PEOs confer peace of mind on business leaders. Imagine being able to focus on your core business entirely and know that your PEO partner has your HR needs covered for the present and future.
Considerations for using a single, full-service PEO
1. Unused services included in your fee
In any list of PEO services, there will be services that you don’t see your company using.
In reality, though, business needs change and having resources available when you need them can give many business owners peace of mind that they’re covered.
2. Some compromise may be necessary
When you choose your own insurance offering through a broker, you can select from a vast number of available insurance carriers and plan designs.
But when you join a PEO, your company will have to choose benefits based on the PEO’s benefit plans, which may not align perfectly with the benefits your company has historically offered.
However, PEOs often have many benefits over and above the traditional medical, dental and vision offerings that can be attractive to your employees and minimize any disruptions in plan design.
3. Possibility of costly termination penalties
Read any PEO agreement you sign carefully to determine if there is an early termination penalty and, if so, how much. Because you are putting so much of your company’s operations into a single provider, it’s essential that you have the ability to terminate when you want to or business needs dictate – and not be bound by financial penalties that make it too costly to switch.
4. Potentially cumbersome separation
When it’s time to end a PEO partnership, having one provider do everything for your company can be more tedious to undo as you’ll need to find replacements for the various services the PEO is providing (such as payroll administration, benefits, workers compensation Insurance, EPLI coverage and HR support). Before you partner with a PEO, ask how they’ll assist you in offboarding the relationship if there comes a time that it’s no longer beneficial for your company. Consider speaking to some former clients to better understand how this process works with each PEO you’re assessing.
Summing it all up
Compared to hiring multiple vendors to cover different aspects of your company’s HR function, collaborating with a single, full-service PEO can be a more favorable option. This type of PEO partner handles a comprehensive list of services, which benefits your business with efficiency and time savings, cost savings, fewer errors, scalability and a more overhead view of operations that aids strategic planning. Together, this equates to greater peace of mind that present and future HR needs are met.
To learn more about the extensive services you can access with PEOs, download our free e-book: HR outsourcing: A step-by-step guide to professional employer organizations (PEOs).