Managing everyday tasks such as payroll, benefits, and other responsibilities of employment can be challenging, especially if you lack the manpower to perform these tasks. This is why many small businesses choose to outsource all or some of their human resources functions. Companies have two main options when they need assistance with HR tasks. These include human resources consulting and a professional employer organization (PEO), commonly known as a PEO consultant.
While HR consulting and a PEO have many similarities, there are some distinct differences that you should be aware of before making your decision. So, what is a PEO consultant exactly and how does the role comparable to an HR consultant?
A professional employer organization is a type of company that contractually assumes responsibilities of employment on behalf of their client company. A PEO consultant may assist an organization in a wide range of HR tasks, such as employee benefits, payroll management, workers’ compensation insurance, and unemployment insurance. One major difference between an HR consultant and PEO is that the latter offers a package service while services offered by an HR consultant are chosen by the client.
Once an organization contracts with a PEO, a “co-employment” relationship begins where both the organization and PEO have an employment relationship with workers. This means that employer responsibilities are shared. With a PEO, organizations are able to outsource a variety of time-consuming tasks. This can range from providing HR software to assistance with developing a handbook.
Instead of choosing specific services offered by an HR consultant, some organizations prefer to invest in a package service. These comprehensive packages of outsourced HR services often include payroll and tax processing, risk management, employee benefits plan administration, government compliance, and various other services bundled into a single HR solution. This can help businesses better streamline their HR functions.
There are a number of benefits that come from investing in a PEO package service. One of the most common reasons organizations choose a PEO is for the insurance cost savings. By using a PEO, your business can leverage the large pool of insurance options resulting in better rates for your company. PEO package service may also include other key benefits designed to assist companies in daily operations, such as recruiting, compliance, and various paperwork-related tasks.
Employer liability can be a complicated topic for small businesses. While it is natural for a business owner to want to take care of his or her employees, most small businesses do not have the profit margin needed to settle claims and lawsuits. This is where a PEO can be of help. A business that works with a PEO is protected by the strength of a PEO through shared liability. For businesses, this means relief from stress and worry and the added protection of an HR expert.
So, how exactly does a PEO share liability for a business? When you partner with a PEO, they become a co-employer or “employer of record.” This partnership is what enables the PEO to assume certain responsibilities involved with tax and regulatory compliance, payroll, benefits administration, workers’ compensation, unemployment insurance claims, and other common HR duties. As the PEO company is also on the line, you can rest assured that all HR functions will be completed properly and on time.
Co-Employer and Administrative Duties
As a co-employer, a PEO takes on a variety of administrative duties. These duties can differ from company to company, but the main goal of these services is to free up an organization’s time to focus on growing their bottom line. It is important to remember that HR involves more than just paper pushing. It is also about leveraging a company’s most important asset: its people.
When administrative tasks are handled by a PEO instead of a company’s dedicated HR team, they can put more focus on other tasks like employee retention and talent development. A PEO can also help an organization gain a competitive edge by taking a fair amount of its responsibilities. This leaves more time for a company to strategize ways to attract new customers and keep existing ones.
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A professional employer organization can deliver significant advantages to small businesses, especially those who do not have extensive HR expertise or the proper system capabilities needed to streamline payroll and other human resources functions. When you team up with a PEO consultant, you can reduce your need for HR personnel, enhance employee health, lower premium costs, and promote greater employee satisfaction. A PEO consultant also acts as a source of knowledge that you can lean on when you have questions or concerns about HR-related topics.
At BenefitCorp, we offer a full range of professional PEO consulting services. To learn more about our services or to speak with a consultant, contact BenefitCorp today.