PEO Pros and Cons: What's Holding You Back?
As a small business owner, you’ve got your plate full. Every. Single. Day. If someone promised to take on a significant chunk of your busywork, freeing you up to focus on the things you love and that will move your business forward, wouldn’t you jump at that chance?
For most people, the answer is: it depends.
It depends on how important that busywork is to the growth of your business and how much you trust the person you’re handing it over to.
PEOs make small businesses 50% less likely to fail, but sometimes you still have questions about the nuts and bolts of the process. If you’ve considered outsourcing your HR responsibilities to a PEO but you haven’t taken the plunge yet, what’s holding you back? Let’s look at some of the most common objections.
- It costs too much. Cash flow is probably the number one concern for any small business. Can you do the work cheaper yourself? Will the benefit outweigh the cost? As you consider these questions, don’t forget to calculate the potential for lost revenue if you don’t take action. Every minute you spend researching compliance laws and calculating taxes is a minute you’re not marketing and growing your business.
- I'll lose control of my business. When you partner with a PEO, you enter a co-employment relationship. The PEO acts as the employer of record and shares the risk associated with legal compliance, workers’ compensation, and employee disputes. But that doesn’t mean they will take over your business. As the worksite employer, you retain control over all business and hiring decisions. The PEO is there to manage administrative HR tasks and to offer legal guidance as needed. But you are still the decision-maker.
- I don't need all those services. PEOs offer a wide range of services to their clients, including payroll, tax calculation and filing, benefits management, recruiting, workers’ compensation, employee handbooks, and much more. Some, like TriNet, also offer industry specific solutions, so you can trust that they understand the specific challenges of your business. If you’re looking just for payroll, a PEO may not be the best choice for you. But if you want a partnership that will manage your HR department efficiently while protecting you from fines and legal complications, you won’t be disappointed.
- They won't have my best interests at heart. Because PEOs work with many clients at the same time, it may seem like they wouldn’t prioritize the specific interests of any one business. But the truth is that when you succeed, they succeed. Because they are a co-employer, they share the risk associated with lawsuits and compliance violations. It is the PEO’s job to make sure your business runs smoothly—and that means you sleep better at night, too.
- I won't get to pick my insurance provider. When you have an insurance carrier you love, you may be hesitant to turn over decisions about benefits management to a PEO. But the truth is that it is in the PEO’s best interest to make sure you get the best possible rates and benefit packages on the market. Most of the time, they can provide Fortune 500 level insurance and benefits based on economy of scale.
- It will make my HR department impersonal. It’s true that you won’t have a dedicated HR person sitting in an office at your place of business, but that doesn’t mean you won’t have access to a real person who can answer questions and provide guidance. Most PEOs assign a team to your business or industry so you know you’ll be dealing with someone who understands your needs. Employees can also reach out to the PEO with questions or access information online through the employee self-service portal.
If these objections have prevented you from exploring a PEO partnership, it’s time to put them aside! Pros like vendor management, better insurance, and shared risk far outweigh the potential cons.
Take a few moments to research the possibilities PEOs have to offer. Then, check out our PEO matching tool to find a provider that meets the specific needs of your business.
You won’t regret it.
About the Author
Susan McClure is our resident content marketer at PEOCompare.com. She writes about HR outsourcing, HRIS, and general employment issues. When she isn't writing, you might find her browsing shelves at the library, exploring a local hiking trail, or digging in the garden with her family and fur kids.
