What if someone told you that a single business decision could result in 14% lower turnover, a 35% reduction in administrative costs, and overall better healthcare coverage for employees? Those are actual results realized by companies partnering with a Professional Employer Organization. But those outcomes are not guaranteed; they don’t come automatically by partnering with just anyone. In order to enjoy improvements such as lower cost of benefits, faster business growth, and the streamlining of HR operations, two things are needed: selecting the right PEO partner for you, and making the transition strategically.
When considering a new PEO, whether it’s for the first time or as a replacement, it’s necessary to make sure they are the right organization for you. To accomplish this, there are a number of questions to consider:
Once the field of PEOs is narrowed down, cost often becomes the biggest factor in the decision. However, backing out of a partnership at the last-minute due to concern over the price tag is short-sighted. A PEO that understands your business will ultimately save you money. Having a skilled PEO in control of your HR vastly reduces the risk and liability that comes with overworked or inexperienced HR representatives placed in high-profile positions. Additionally, employee and managerial training is bolstered, operations are streamlined, and recruiting improves. All these and more add up to a healthier bottom line.
While cost is certainly important, it’s the cost-benefit that’s the real consideration. When a PEO replaces an outgoing HR director or manager, the salary savings frequently offset the PEO fee while providing greater expertise and support. Alternatively, a smaller organization may not have an HR department or will have various employees attempting to fulfill HR duties without true HR knowledge. In this case moving to a PEO will require a new expenditure, but the benefits of such an investment will quickly outweigh the financial cost.
After the right PEO partner is chosen, it’s necessary to appropriately prepare for the transition of your HR responsibilities. A great PEO should be able to lead you with a transition plan and timeline that sets clear expectations, answering questions such as:
As the wheels are put into motion and the transition takes place, it’s time to focus heavily on communication to ensure things stay on track smoothly. Adopting a PEO partnership is an HR paradigm shift, and staying in contact with both the new PEO partner and your own internal employees can avoid disruptions or confusion. Your workforce may be initially resistant to change, especially where their payroll and healthcare is concerned. Explaining how a new partnership will benefit them and outlining the steps involved can alleviate employee concerns and help them understand that the role of a PEO is to be a true extension of their organization.
Putting the fate of your HR in another’s hands is not something to take lightly, but the right PEO partner will make the transition as comfortable and easy as possible. Once they’re on board, benefits such as improved compliance, a better grasp of law changes, and increased efficiency will quickly follow. Only one question will remain: why didn’t you transition to a PEO sooner?