5 Financial Benefits of Using a PEO

Running a small or mid-sized business pulls owners and CEOs in a dozen different directions, leaving little time to focus on day-to-day human resources management. And even if you had the time, you likely don’t have the expertise or desire to navigate the administrative complexities of managing a workforce in today’s ever-changing compliance landscape. This is where a professional employer organization (PEO) can be an invaluable HR management partner to your business.

PEOs not only free up your time by handling essential tasks like onboarding, payroll, and benefits administration; they also provide comprehensive HR support to help you manage your workforce more cost-effectively.

Here are five ways a PEO can save your SMB money:

1. Lowers the Cost of Benefits

It’s no secret that benefit costs continue to rise, and small businesses especially feel the pinch. In a recent National Federation of Independent Business (NFIB) survey, 94% of small employers said it was challenging to manage the cost of employer-sponsored health insurance. However, by outsourcing benefits administration to a PEO and leveraging its ability to negotiate more favorable premiums, you can secure group employee benefits at a much lower cost. A PEO’s medical plan is classified as a large-group policy versus a small-group policy that companies with less than 50 or 100 employees have.

Obtaining lower-cost benefits through a PEO doesn’t mean you have to compromise on quality. In fact, it’s often the opposite. Partnering with a PEO makes it possible to provide employees with Fortune 500 caliber benefits at affordable prices. With the right PEO, you can improve your bottom line and attract quality hires with highly competitive benefits and other offerings.

2. Boosts Efficiency with Automated HR Processes

PEOs leverage HR automation technology to reduce manual workflows across a broad range of HR activities, including payroll, benefits administration, and recruitment. This technology can speed up routine processes and make it easier for employees to access information such as open enrollment materials, pay stubs, and shift schedules. As a result, you can focus more on growing your business and less on managing day-to-day HR admin functions.

When you partner with a PEO offering a full-service suite of HR tech capabilities, you can keep employee data secure and optimize HR processes across the entire employee lifecycle. Examples include:

• Onboarding: Manage new hire forms and follow a streamlined, paperless process for welcoming new employees.
• Compensation management: Track employee rewards and keep pay aligned with performance and market data.
• Performance reviews: Access tools for setting goals, sharing feedback, and tracking employee progress.
• Employee training: Offer personalized job skills and workplace behavior training.
• Time tracking and scheduling: Replace time cards and spreadsheets with automated timekeeping.

3. Helps Manage Compliance Risk

Every business must manage hiring and talent management risk, but it can be especially taxing for SMBs. According to the National Small Business Association (NSBA), small businesses have a disproportionately higher compliance burden than large businesses, spending over $12,000 and 80 hours per year managing federal regulatory compliance.

With help from a PEO like Aspen HR, you can avoid the headaches of labor law compliance and accomplish the following:

• Sidestep potentially costly errors such as missed payroll filings and improper HR recordkeeping
• Maintain compliance with evolving labor laws like the recent rule changes for overtime and employee non-competes.
• Ensure offer letters, severance agreements, and HR policies are crafted to protect your business from lawsuits and reputational damage.

4. Improves Employee Engagement and Retention

Creating an environment where employees are paid competitively, treated fairly, and have access to quality benefits is crucial to building a highly engaged workforce. Your PEO can help make this happen by providing quality HR support that enhances employee health, well-being, and overall engagement.

With a trusted PEO, you don’t have to worry about payroll errors, benefits coverage hiccups, and policy inconsistencies that can be distracting and frustrating for employees. Instead, you can rely on streamlined HR functions that enable employees to focus on their work rather than considering other job opportunities, helping your organization avoid the costs associated with high turnover.

5. Delivers Full-Service HR Expertise

Not all PEOs are the same, but one offering deep expertise across the entire HR spectrum makes it easier to handle the talent management challenges that come your way—typically for much less than hiring an in-house HR team would cost. Whether you need a fractional HR leader to help you craft and implement your talent management strategy or comprehensive payroll and benefits support, a PEO like Aspen HR can customize its services to match your organization’s size, budget, and business objectives.

Get the Full Benefit of a PEO Partnership

Whether you operate a startup or an established SMB, there’s much to gain from a PEO’s expert guidance and comprehensive services. In addition to saving money, you can save time and deliver a better overall experience to your employees.

If you’re ready to explore the many advantages of white-glove PEO services, contact us to discover everything Aspen HR has to offer.