This ARTICLE On PEO Companies North Carolina Was Written By Staff Writer of Gustan Cho Associates
PEOs or Professional Employer Organizations have become popular ways of outsourcing the human resources function of a business. Statistics indicate that these organizations employ over 3.7 million people and that they are serving 175,000 SMEs with at least 10-99 employees around the country. Are you thinking of hiring a PEO company like digitalexits.com? Here is a complete guide with everything you need to know to make an informed decision:
First things first: what is a PEO?
A PEO is an HR outsourcing organization whose role is to help their clients manage all staffing related functions such as recruitment, payroll management, taxes, and corresponding state and federal regulations. The agreement between a PEO and a client is one of ‘co-employment’ where both companies employ the employees, and the PEO assumes some of the employers’ responsibilities for the client.
Who needs a PEO’s services?
Most business owners will agree that HR is the most challenging aspect of management. Aspects like maintaining talent, keeping up with employees’ time and regulations, are being cited as most cumbersome by HR managers. A PEO comes in with ready structures to relieve you of this workload. If you are looking for expert solutions to challenges in workmen’s insurance, regulatory compliance, payroll management, taxation, and worksite safety, then a PEO is the choice for you.
How do they handle these functions for you?
The contract was drawn between you and the PEO will be a business-to-business type, where you as the client will handle some of the employee’s duties. You can have either a general arrangement or have it customized to suit your needs. Employees rarely notice the PEO’s involvement, only getting involved when administration issues crop up.
Merits of hiring a PEO:
With a PEO running your HR functions, you get to delegate other resources and time to other business functions like marketing and research.
PEOs also have in place mechanisms to handle legal issues arising from international law should you decide to expand your venture overseas.
PEOs reduce your legal liabilities that may arise from failing to observe state laws regarding unemployment and compensation costs as they monitor these regulations carefully and ensure you pay the right amounts.
They significantly reduce your costs of providing competitive employee benefits such as health insurance, if your team consists of 5-100 members.
PEOs cover various employee rights and offer covers forwork-related risks.
Demerits of hiring a PEO
The main reason why some business managers avoid PEOs is the perceived loss of control over the HR function. This is mostly because hiring and firing are done on the PEO’s terms and policies, rather than those of the client company. Moreover, some may see HR as a normal function whose outsourcing raises unnecessary costs. Legal employer responsibilities also still lie with the client, not the PEO.
Another issue raised often is the confusion created among employees as to who is in charge, and the potential mess that they can produce in the HR department.
The information above sheds some light on the operations of a PEO, which makes them so popular and why they might not work for you.
January 29, 2019 - 2 min read