How PEO Services Help Companies Manage Human Resource Responsibilities

Posted by Beyondhrsolutions on February 11th, 2015

In business, productivity is of paramount importance and cumbersome tasks not only take time but affect efficiency. This is where a professional employer organization (PEO) can provide practical assistance, offering companies a comprehensive approach to managing HR responsibilities and other tedious HR tasks. They are organizational specialists dedicated to providing companies with the best guidance and recommendations to serve your business' needs.

A professional employer organization (PEO) is a firm that provides a service under which an employer can outsource employee management tasks. They also offer a complete set of HR services, ranging from recruitment to benefits administration, and other related services. Depending on your service terms, these assistances and benefits can be acquired through packaged bundles or on an as needed basis.

Outsourcing employee management tasks can provide such a benefit to employers as partnering with a PEO frees up the business owner’s time from having to be accountable for tedious, yet integrated management processes like managing employee benefits, risk and safety management, recruitment, payroll/compensation, as well as training and development. 

A PEO co-employs a client company's employees, which makes them joint employers of record for insurance and tax purposes. This co-employment business model puts the burden of filing employee's paper work under the PEO's tax identification number, while the client company continues to direct their day to day activities. PEOs charge a service fee for managing the human resource and payroll functions of the company. This service fee, typically ranges from 3 to 15 percent of the gross payroll and is in addition to other employee overhead costs like Medicare, FICA share, and unemployment insurance withholding.

Another key service that PEOs can provide is secure employee compensation health coverage, often Fortune 500 benefits, at much lower costs than a small company could ever obtain on their own. A PEO acquires workers' compensation coverage for clients by vying for coverage that covers not only the PEO, but also their client companies. This is possible because the PEO is a legal co-employer of the employer.

Using PEO services saves a great deal of time and resources that many companies waste in administering benefit plans, preparing payroll, and other related HR tasks. It also helps reduce the legal liabilities and obligations of the company to its employees, while allowing them to offer better benefits packages for their best employees, thus attracting more dedicated workers into their teams and retaining top candidates. A PEO is a very beneficial business model for small to mid-sized organizations and businesses.

About The Company:

Barry Davis is a Senior Business Performance Advisor for Insperity. He is a trusted advisor to many of America’s top businesses for more than 25 years. He is an expert in improving the business performance.