What is a PEO and how does it work?
What is a PEO and how does it work?
A PEO stands for a Professional Employer Organization. It exists as a separate, stand-alone organization focused exclusively on managing its clients’ human resource-related functions, including benefits administration, regulatory compliance, workers’ compensation, payroll, taxes, and similar practice areas. It is more than just an extension of your Human Resources department.
A PEO will assume the role of “employer of record” for a company’s employees, taking on the responsibility of administering most or all of the administrative tasks – as well as a fair measure of the risk associated with maintaining a workforce.
In recent years, PEOs have staked out a claim to a growing portion of the HR field, supplementing or eclipsing in-house Human Resources departments in many small to mid-sized companies. Even as the popularity of PEOs have increased, many business owners and C-suite decision makers do not understand how their organizations can benefit from these services. Once they find out more about a Professional Employer Organization, they quickly come to understand that they are fundamentally changing the way American businesses manage interactions between employers and employees.
What is the benefit of using a PEO?
A PEO shifts some essential functions and responsibilities from employees to an experienced, external third party that works with your team. The professional employer organization will assume the role of “employer of record” for a company’s employees, taking on the responsibility of administering most or all of the administrative tasks – as well as a fair measure of the risk – associated with maintaining a workforce.
By engaging with a PEO, client businesses gain a number of significant operational and competitive advantages:
- The ability to reallocate both attention and resources from HR functions to core areas of interest and expertise – the making and selling of the company’s product or service.
- A measure of insulation and/or indemnification.
- The streamlining of human resource functions placed under professional administration.
- The ability to leverage economies of scale in securing necessary benefit and insurance programs.
- Improved adoption of HR best practices under professional administration.
Is a PEO a staffing agency?
Most PEOs are not staffing agencies, which essentially lease employees to other businesses and remain the sole employer for those workers. PEOs do not generally supply businesses with staff, but instead assume certain responsibilities that make them co-employers with their partner companies.
Is a PEO the same thing as HR outsourcing?
Human resources outsourcing (HRO) is not the same as a PEO, although some PEOs (like Trion Solutions) can meet both needs. A PEO acts as a co-employer, whereas an HRO works with processes that are already established by your organization. PEOs and HROs fulfill different roles as an HR provider.
Working with a PEO can benefit businesses of any size. A PEO is a good choice for organizations looking for a turn-key solution that reduces overall administrative burden in human resources as well as limits your organization’s liability. PEOs offer a more inclusive solution and HROs often provide individual solutions à la carte
What functions does a PEO not do?
While the specific functions of individual PEOs vary from one provider to the next, there are some general functions which you should not expect a PEO to do. Those include:
- Influence or define your company culture
- Hire and fire your employees
- Set workers’ schedules or pay rates
- Define your business goals
- Participate in marketing your products or business
Is Trion a PEO?
Michigan-based Trion Solutions is among the nation’s Top 10 Professional Employer Organizations (PEOs). Trion relieves the stress and burden of payroll and other HR-related functions for companies – from small to large – so they can remain focused on their core business.Trion’s size provides client employees access to better benefits and HR services available usually to only large corporations – all while taking employer risk and regulatory strain off of partner organizations.
Can my business benefit from a PEO?
The growing popularity of the PEO model is driven to a great degree by the increasing challenges and stressors facing small to medium-sized businesses. An increasingly technology-driven, global marketplace heightens competition and shrinks margins, even as increased regulatory and legal risks impose additional complexity and costs upon HR departments and practitioners. A PEO can deflect risk, contain costs, ensure consistency and predictability in practices, and effectively address complex taxation, insurance, and regulatory issues becomes increasingly valuable to companies operating within this challenging environment.
As your business evolves, chances are that a PEO model can support growth and operational efficiencies for companies in a wide range of industries. The experts working on your behalf as part of the professional employer organization can also deflect risk, contain costs, and ensure consistency and predictability in practices to support the completion of taxes, insurance decisions and other regulatory issues.
See if a PEO would be a value-added service for you by contacting Trion Solutions to speak to one of our experts.