A recent survey conducted by the National Association of Professional Employer Organizations (NAPEO) this past February has some not so surprising results. Well, not surprising to anyone who is currently working for, with, or partnered with a PEO. The survey revealed that the PEO industry is experiencing continued growth across all areas including: revenue, gross profits, operating income, average number of worksite employees, and average number of clients. What these survey results all boil down to is one simple fact: PEOs are becoming increasingly more popular and an increasingly more common way for businesses to provide their employees with the best HR, benefit, and insurance packages.
Of the 71 PEO executives who took part in the survey, a whopping 99% are optimistic about the prospects for strong industry growth in 2017. We assume that the remaining 1% were just having a bad day the day of the survey. The remaining executives all agree that more and more businesses are recognizing the value of a PEO, creating a bright future for the PEO industry.
So why are PEOs becoming so popular? And more importantly, what does all this mean for your business?
Unbelievably enough, the concept of PEOs has been around since the 1960’s, then known as Employee Leasing Firms. The industry was established as a way to help companies cope with the rising costs of workers’ compensation coverage. However, it was not until the 1980’s when regulatory laws were increased and businesses were forced to deal with even more complex legal red tape than ever, that PEOs really began to gain popularity.
A PEO firm can handle payroll, and even assist with the hiring, training, and firing of employees. With a PEO, the employer is no longer left to deal with such tedious tasks as onboarding new hires, handling all the necessary paperwork, providing employment information, conducting performance reviews, managing expenses, recruiting, conflict resolution, providing substance abuse services, conducting company policy review, dealing with OSHA and EEOC and I-9 requirements…and the list goes on and on. Plus, a PEO allows companies to offer insurance and benefit packages that rival those of bigger companies. With a PEO, it’s no longer only the bigger fish that get the bigger benefit package.
PEOs basically take on the tasks that are too time consuming, expensive, and complicated to handle in-house, so that your time is freed up to grow your business, allowing you to save money. But even better, with a PEO, less mistakes occur, allowing you to build a better company with better employees and better incentive packages to retain employees.
But PEOs do a lot more for business owners than rescue them from HR and red tape purgatory. Since the PEO’s job is to stay on top of business regulatory laws, including all those new ones that seem to endlessly pop up, a business that partners with a PEO is more likely to always be compliant. A PEO also helps their clients navigate the hundreds of regulations and labor laws that are applicable to their specific industry, undertakes audits to determine if the company is in violation of any laws, and then helps their client address any issues they may have.
And as any business owner understands, better compliance means fewer penalties and fines, saving businesses time, money, and frustration, while increasing employee contentment, productivity, and as a result, the company’s bottom-line.
In recent years, PEOs have begun including even more sophisticated services, such as employee screening and training, safety training and audits, lawsuit protection, processing payment of premiums, certificates of insurance and injury claims, giving businesses further reason to partner with a PEO. With workplace lawsuits and increasingly complicated government regulations becoming more and more common, it’s no wonder that the idea of using a PEO to handle these tasks have also becoming more and more common.
So as I stated at the start of this article, the results of the recent NAPEO survey are not very shocking. PEOs are definitely becoming the standard way of business for many smart businesses. The only question remains is: Is your business one of them?
To find out more about how a PEO can help your business or if you are getting the most out of your PEO partnership, click here or contact one of our PEO consultants today.