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Published on Jul 28
Many companies have long relied on the assistance of professional employer organizations (PEOs) to alleviate the stress of human resource management and offer their employees better benefits. However, many misconceptions still persist about these types of organizations. While a full consultation with a high-quality PEO can answer all of the questions you may have, here is the truth behind four of the most common misconceptions about PEOs.
Misconception 1: I will have to get rid of my HR staff
For some small and medium-sized businesses (SMBs), there persists a fear that outsourcing HR functions to a PEO will mean staff cuts in their company. However, PEOs often work closely with in-house HR staff to supplement and enhance their current abilities.
Additionally, most SMBs don’t have a full-service HR department. Instead, they often rely on an HR generalist or office manager to handle much of their internal HR functions. Since individuals in these roles may not be familiar with all of the laws and regulations governing employment, an SMB’s existing staff can greatly benefit from the knowledge and experience provided by PEO experts.
Rather than replacing existing team members, a PEO partner can help internal staff learn more about federal and state employment-related laws and free up their time to deal with other issues within the company. Check out Three PEO Myths Debunked to learn more about what partnering with a PEO is really like.
Misconception 2: All PEOs are basically the same
Perhaps one of the most common – and often harmful – misconceptions about PEOs is that they’re all basically the same. Unfortunately, SMB owners who fall into this trap may find themselves with a less than reputable partner.
When it comes to selecting a PEO partner, business owners should look for an organization that goes above and beyond what’s expected. Perhaps no other single distinction demonstrates this quality more than being accredited by the Employer Services Assurance Corporation (ESAC).
ESAC accreditation is the gold standard in the PEO industry. By demonstrating financial stability, ethical business conduct, and adherence to operational standards and regulatory requirements, a PEO’s ESAC accreditation is a badge of trust and confidence for SMB owners looking for the cream of the crop. Of the more than 780 PEOs in the US, fewer than 5% have earned ESAC accreditation, proving that not all PEOs are created equally. To learn more about this distinction and why you should only work with an accredited PEO, read The Value of ESAC Accreditation.
Misconception 3: My business is too small for a PEO
When it comes to working with a PEO, there’s no such thing as being “too small”. While PEOs work with companies of all sizes, small businesses can benefit the most from partnering with a high-quality PEO.
According to the National Association of Professional Employer Organizations (NAPEO), the average PEO client has about 23 employees. From HR expertise and payroll processing to paid leave management and benefits access, PEOs have much to offer SMBs. Many PEOs are dedicated to only working with SMBs of 1 – 1,000 employees, providing these companies with a greater chance of survival and growth in their industries. Check out The Rise of Small Businesses Using PEOs to learn more about how your SMB can benefit from working with a PEO.
Misconception 4: My employees won’t like the change
For many employers and their employees, the prospect of change can be scary. With the many benefits and opportunities that working with a PEO offers to both staff and management, employees are usually quick to embrace the positive changes that a PEO partner brings.
In an SMB, employers and employees work closely together every day, allowing everyone to see the hard work and dedication of each team member. While SMB owners may want to reward their employees with great benefits, many small business owners don’t have access to affordable health coverage and other employment perks.
Since PEOs work with thousands of employers with tens of thousands of employees, they can leverage their collective buying power to offer SMBs access to Fortune 500-level benefits at a fraction of the price they would pay independently. Not only do PEOs offer access to health insurance plans, but they can also provide SMBs with the opportunity to offer additional benefits including 401(k) retirement accounts, flexible spending accounts, and many other valuable perks that employees today are looking for. Want to learn more about how PEOs and their clients work together? Check out How the Co-Employment Model Really Works.
Providing you with answers and solutions
Accredited by the Employer Services Assurance Corporation (ESAC) and Certification Institute, and backed by a multi-million dollar Employment Practices Liability Insurance policy, Sheakley’s 120 years of combined PEO experience and expertise are unrivaled in the industry. Even if you already have an in-house HR team, Sheakley’s PEO experts have the skills and expertise to deliver top-notch human resources solutions to meet the needs of your company.
Schedule your free consultation with a Sheakley PEO professional today. For more in-depth information about PEOs, download our Streamlining the Business of HR e-book.