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5 Surprising Facts About PEOs

Professional Employer Organizations (PEOs) – by administering payroll, benefits, workers’ compensation, and core HR functions – enable business owners and leaders to get out of the employer business. That is, instead of focusing on the day-to-day work of handling employee matters, PEOs free organizations to focus instead on their core work of business building and revenue generation. As a result of their value, PEOs have skyrocketed in number over the past few decades, yet many organizations still have only a hazy understanding of the PEO world. Here are five facts that might surprise you about PEOs.

1: PEOs are everywhere.
According to the National Association of PEOs, nearly a thousand different PEOs in the U.S. provide services to 175,000 small and mid-size businesses employing nearly 4 million worksite employees.

2: PEOs can work for small employers too.
Many organizations seem to think PEOs focus exclusively on midsize employers, but actually small employers are the most common PEO client. In 2015, the average PEO client employed only 22.5 worksite employees.

3: PEOs don’t take over; they work with you.
The number one concern prospective clients have about PEOs is losing control over employees, because PEOs typically become the “employer of record” for things like payroll taxes. However, clients always remain in charge of the relationship and maintain full control of business decisions.

4: Different PEOs can vary widely in their service offerings.
Geography isn’t the only thing that separates the nearly thousand PEOs spread across the United States. Some PEOs have national reach, while others work regionally. Some specialize in particular niches, like working exclusively with tech startups or with companies that operate in particular industries. It’s critical to investigate any PEO closely to understand whether they can meet your unique needs.

5: The benefits of a PEO are often measurable.
PEOs offer many intangible benefits, like “peace of mind” and “employee satisfaction,” but they also deliver quantifiable benefits as well. For example, NAPEO reports that PEOs are associated with reducing (1) HR administrative costs by an average of about 35% per employee, (2) turnover by 10 to 14 percentage points for the average PEO client compared to companies in the U.S. overall, and (3) the likelihood of going out of business from one year to the next by 50%.

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.

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