You find the perfect candidate for the job, interview them several times, and give them the highest wage in your range, but they choose a competitor who offers almost the same pay. The reason is that bigger organizations can readily offer benefits packages, retirement plans, possibilities for professional development, and other incentives.
For a lot of small and medium-sized firms, it can seem like they can’t compete with companies that have bigger HR teams and better benefits for their employees.
A Professional Employer Organization (PEO) can really help in this situation. A PEO helps businesses compete for the best employees without boosting salaries or going over their budgets by offering them access to enterprise-level benefits and HR support.
Recent research by Gallup shows that 54% of workers would think about quitting their current job if they could get a big raise or better perks.
Here’s the problem. When you’re a business with 45 employees, and you’re up against companies with thousands of employees that offer full health insurance with low deductibles, employer-matched 401(k) plans, life and disability insurance, employee assistance programs, wellness benefits, professional development budgets, and many other benefits. You have basic health insurance with a high deductible and maybe a simple 401(k) if you’ve had time to set one up.
Candidates look at these packages and compare them. Your $75,000 offer comes with $15,000 in perks, while their $75,000 offer comes with $30,000 in benefits. Candidates know that you’re offering $15,000 less.
Georgetown University research shows that there will continue to be a shortage of skilled workers until 2032. This is because about 5 million more qualified people will retire than will enter the workforce, and 685,000 additional positions that require postsecondary education will be created. You’re competing for a smaller group of qualified applicants who have choices and know what they’re worth.
In this situation, competing for talent without raising compensation is a must. You need to match what your competitors provide in terms of total pay while sticking to a wage that your budget can handle.
People frequently think of compensation as just salary, but it’s much more than that.
Compensation and benefits include both financial and non-financial rewards that employees receive in exchange for their work.
Financial rewards typically include:
Benefits make employees happier and healthier overall. Some such examples are:
According to research from the Society for Human Resource Management (SHRM), 60% of employees say that pay and benefits are the most important things that make them happy at work.
Another study indicated that companies with good pay and benefits plans have turnover rates that are up to 57% lower. This shows how important benefits are for keeping employees.
This is why companies that want to hire the best people without raising salaries typically work on making their benefits better overall.
Small and medium-sized firms can give resources that are usually only available to large enterprises by working with a PEO.
Here are some of the most important PEO talent acquisition benefits.
One of the best things about dealing with a PEO is that you can get good benefits at a low cost.
A PEO can get better pricing from benefits providers since it represents workers at several different employers. This group buying power lets firms give perks like:
For a lot of small businesses, it would be quite expensive to offer these benefits on their own. They become possible with a PEO.
These better rewards make it much easier for a company to find the best individuals.
Many PEO partners provide tools and expertise that improve talent acquisition, including:
These services help companies find the right applicants faster and make the hiring process more professional.
Attracting talent is only part of the equation. Keeping great employees is equally important.
PEOs offer services to help organizations keep their employees and make their workplaces better. These services could include:
According to research from the National Association of Professional Employer Organizations (NAPEO), organizations that use PEOs had 12% fewer employee turnover than companies that handle HR themselves.
Less turnover means you don’t have to spend as much time and money on hiring new employees all the time.
Managing HR in-house might take up a lot of time.
Small business owners often spend 40 hours or more a month on payroll processing, compliance tracking, answering employee questions, and managing benefits.
A PEO takes care of these duties by using a co-employment model. The business owner is in charge of everyday operations and company strategy, while the PEO is in charge of HR administration.
The end consequence is that you have more time to work on expansion, new ideas, and customer relationships.
The laws about work and employment are always evolving. If you make mistakes with payroll, classifying workers, or managing benefits, you could face expensive fines.
A PEO keeps an eye on changes to the law and helps businesses follow employment laws. This lowers the chance of getting penalties, having legal problems, or hurting your reputation.
For a lot of business owners, the compliance help that comes with working with a PEO is one of the best things about it.
More and more, modern workers look at the whole employee experience when deciding whether to accept a job offer, not just the compensation.
A comprehensive benefits package can include:
88% of workers feel that good benefits make them more likely to stay with a company. Companies can still compete for talent even if they can’t match the highest compensation offers by delivering these advantages through a PEO.
This is the question that every business owner asks. How am I saving money if I’m giving the PEO 3% to 12% of my payroll?
The answer is that you’re not only saving money on benefits. You’re avoiding the cost of losing prospects and the cost of hiring new ones when people leave.
Think about a business with 45 employees that pays $3.6 million a year in wages. A PEO may charge 7%, which is $252,000 a year. But what are you getting?
If you get health insurance that costs 20% less than what you’d pay on your own, you could save over $60,000 a year. Group rates for workers’ comp save another $25,000 or more. Access to retirement plans and other benefits that you couldn’t afford on your own offers more than $50,000 in value to your employees. Lower turnover (12% less equals 4–5 fewer replacements each year) saves $25,000 or more in hiring and training costs. $40,000 or more in productivity gained from saving time on HR administration. Better at finding new hires, which cuts the time it takes to fill a position and the cost of hiring by more than $30,000.
That’s more than $230,000 in measurable value, not adding the benefits of faster development, lower risk, or better competitive positioning. The PEO pays for itself and changes how you compete for talent.
Working with a PEO can help your firm do better in general, not only when it comes to hiring and keeping employees.
Organizations working with PEOs often experience:
Companies can focus on strategy, innovation, and customer service by outsourcing HR tasks.
OEM America offers full PEO services for hiring employees, managing benefits, making sure the company is following the law, and planning HR strategy. These services help businesses cut down on paperwork and offer benefits packages that are competitive.
If you want to compete for talent without rising salaries, get in touch with OEM America immediately or call 860-528-5555. OEM America is a member of NAPEO and the BBB, and they are dedicated to helping businesses create better, more productive workplaces while giving employees the benefits they expect.
NAPEO data shows that organizations that use PEO services to keep employees have 12% less turnover than businesses that don't. This happens because comprehensive benefits packages make employees happier, professional development resources help them grow, wellness programs and EAPs help employees stay healthy, competitive total compensation makes it less stressful to look for a new job, and professional HR support makes employees feel good about their jobs.
Yes, genuinely. PEOs bring together workers from thousands of client organizations, making groups of hundreds of thousands or perhaps millions of people who are insured. Insurance companies and benefits providers charge these big groups the same amount as they do Fortune 500 businesses. A business with 35 employees that gets benefits through a PEO joins this huge pool. It can get the same health insurance carriers, plan levels, retirement plan providers, and voluntary perks as big companies.
Candidates don't care who gives them perks; they just want them to be good and complete. Your employment offers and benefits brochures show things like medical coverage, retirement plans, life insurance, EAPs, and other benefits. Candidates don't care if these originate from a PEO or from inside the company.
Improvements in recruiting start right away. When you switch to PEO benefits (usually within 4 to 8 weeks), make sure to update your job advertising to show off all the benefits, talk about the total compensation during interviews, show off the retirement plans and professional development options, and stress the wellness programs and support for work-life balance.
Quality PEOs offer a full range of recruiting services, such as tools for screening and evaluating candidates, background checks and drug tests, tracking applicants and managing interviews, salary benchmarking and advice on compensation strategies, professional onboarding programs and systems, and strategic recruiting consultation.