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why use a PEO

Why You Should Consider Using a PEO

February 19th, 2020

As an employer, you have a hundred choices to make on any given day. Even with a strong team, you are thinking about your business almost 24/7. You want it to succeed, and sometimes that success hinges on partnerships you can trust. Outsourcing some aspects of HR – like benefits and insurance – can feel a little uncomfortable at first. We get it. But if you’ve been considering using a PEO to help move your organization forward and are still on the fence about it, let’s take a closer look at the benefits PEO’s provide (figuratively and literally).

Cost ROI Alone

From a strictly bottom-line perspective, companies who use a PEO save, on average, 27.2% more than organizations who don’t. Where did this number come from?  The National Association of Professional Employer Organizations (NAPEO) conducted a study sampling from a variety of organizations – different sizes, different industries, etc – to determine the ROI on using a PEO. The average determined by this study was 27.2%. It’s worth noting that as an average, that means about half of prospective employers should expect to see an ROI higher than that percentage. What are the contributing factors to a higher ROI? Above-average HR personnel costs and above-average health benefits cost per employee.

The cost ROI analysis, it should be pointed out, only takes into account the dollars spent and the dollars saved. It does not account for the additional benefits an employer is likely to experience when using a PEO.

Lower Employee Turnover

Organizations that use a PEO often streamline their HR resources and increase employee engagement in a way that decreases employee turnover. The cost-benefit to companies that lose fewer employees is incredible. As you know, the cost of onboarding an employee can be immense. Attracting and retaining top talent from the start is much more beneficial, and PEOs specialize in helping you do just that.

Fewer Concerns About Employee Challenges

As with lower employee turnover, when the quality and alignment of your team is higher, you are less likely to run into employee challenges. Your employees are more likely to problem-solve effectively without your oversight and are far less likely to run into interpersonal problems. Because PEOs place such an emphasis on cultural alignment and definition, the likelihood of an entire team fully committed to your company’s values and mission is much higher.

Higher Rates of Growth

This one may be obvious, but when your organization is aligned culturally and your team is engaged and motivated, things start to run like the well-oiled machine you’ve worked to achieve. When that happens, growth is a natural byproduct. Because of this, companies that partner with a PEO often see higher rates of growth than those who don’t.

Overall, the benefits of utilizing a PEO far outweigh the cost of trying to cobble together a benefits package that provides a lot of value. If you’re ready to see the difference a PEO could make in your organization, let’s talk. Give us a call at 303-221-0558.