| Running a business is a full-time job and you need to | | | | the employer from sudden rate increases in health |
| spend your time ensuring the business runs smoothly. | | | | care or workers' compensation premiums. |
| When managing payroll and related Human Resources | | | | Additionally, because the PEO specializes in |
| tasks begin to distract you from focusing your | | | | employment -related activities it is literally in the |
| organization's primary business, it may be time to | | | | business of employment. PEOs processes and files all |
| outsource some or all of your HR-related activities. In | | | | payroll administration and taxes, processes worker's |
| such cases it makes sense to turn to a company that | | | | comp claims, and administers employee benefits. This |
| handles HR administration as their primary business. | | | | reduces the amount of work the employer has to do |
| Depending on your needs, you may want to consider | | | | but also expands the benefits and service to |
| either a Human Resources Outsourcing (HRO) | | | | employees. Additionally, working with a PEO can |
| provider or a Professional Employer Organization | | | | eliminate unexpected paperwork and costs. For |
| (PEO). | | | | example, if payroll taxes are audited by a workers' |
| You should first consider how much of your HR | | | | compensation carrier it's the PEO who is audited, not |
| function you want to outsource. Working with an HRO | | | | your company. |
| lets you outsource specific HR functions. A PEO on | | | | Again, PEOs are not a replacement for your HR |
| the other hand "bundles" services such as workers' | | | | department but supplement your HR staff so they can |
| comp, payroll and benefits and generally can't offer | | | | focus on traditional HR areas such recruitment, hiring, |
| them as stand-alone options. | | | | and training. Don't have time for the traditional functions |
| Whether you hire a PEO or an HRO, you will still need | | | | either? No problem - most PEOs also offer the ability |
| an in-house HR administrator or manager to work with | | | | to handle recruiting, background checks and more. A |
| the vendor. However, the vendor can handle a variety | | | | PEO can provide complete support for all of your HR |
| of tasks your staff may not have the time to do. They | | | | functions, allowing your company to focus on why it |
| may also provide expertise in areas your staff is not | | | | got into business in the first place (probably not for |
| familiar with, such as making sure your company is in | | | | payroll taxes and benefits administration). |
| compliance with the latest employment laws, benefits | | | | So, should you use a HRO provider or PEO? |
| administration and payroll tax reporting. | | | | The first factor to consider in choosing between the |
| Neither a PEO or HRO provider will manage your | | | | two options is your company's size and scope of |
| employees. Rather, both will work with you and your | | | | need. Many HROs work with larger companies who |
| HR staff to handle some or all of your HR functions, | | | | because of their size can obtain more competitive |
| including payroll, benefits administration,compliance, | | | | pricing on benefits and risk management solutions and |
| training and more. Think of both as augmenting your | | | | also have a large in-house HR department. For these |
| Human Resources staff, not replacing it. | | | | companies, they save more money by outsourcing |
| For smaller businesses a PEO can help control HR | | | | specific areas of the HR such as benefits |
| costs such as Workers' Compensation Insurance, | | | | administration, application management, HR Information |
| Group Health benefits and Payroll Processing. In order | | | | systems. |
| to deliver these and other HR services the PEO | | | | Many smaller companies on the other hand (under 500 |
| becomes a co-employer of your organization's | | | | employees) benefit from bundling their services with a |
| workforce. | | | | PEO. The pricing advantages and efficiency offered |
| In most instances the PEO is considered the employer | | | | by a PEO make outsourcing HR-related administration |
| of record, though the client controls the day-to-day | | | | an essential component of their business planning. In |
| activities of the workplace. While you maintain authority | | | | either case, comparing HRO and PEO vendor |
| over your employees on your work site, the PEO is | | | | proposals is critical. Websites such as provide |
| responsible for managing benefits, remitting payroll | | | | businesses with free price quotes from multiple HRO |
| taxes, processing workers' compensation claims and | | | | and PEO vendors. You may also want to spend some |
| processing employment paperwork. | | | | time researching HR Outsourcing options at the |
| So, why would you want to let someone else | | | | Society for Human Resources Management (SHRM) |
| co-employ your workers? | | | | website, shrm.org |
| Pricing and efficiency. A PEO pools the buying power | | | | In summary, the decision to outsource HR is an |
| of many business just like yours, which provides pricing | | | | important one. First understanding the difference |
| advantages it can pass down to it's clients. Through | | | | between HROs and PEOs can help you make the |
| these economies of scale the PEO can often secure | | | | right choice. if you intend to outsource only certain |
| workers compensation insurance and group health | | | | functions, an HRO is the best solution. If you're looking |
| benefits (which are provided to your employees) at | | | | for a full-service solution, a PEO could be a better |
| much lower rates than your company may be able | | | | option. |
| obtain on it's on. Working with a PEO can also buffer | | | | |