What are the Top Myths of Working with a PEO?

Depositphotos_27576151_l-2015Professional employer organizations (PEOs) can be an effective means for businesses of all sizes to handle and improve upon their Human Resources capabilities. However, many organizations who are new to the industry don’t understand what to expect from their PEO partners. As one of Connecticut’s leading PEOs, OEM America is no stranger to working with businesses who have fallen for a few misconceptions. In this post, we examine and debunk some of the biggest myths we’ve encountered.

PEOs Take Absolute Control

This is a major fear for many businesses, as they worry that they must surrender all control of their HR functionality to the PEO. This is not the case. While the PEO does technically become the “employer of record” for things like payroll taxes, the contact will typically stipulate that the business is the one in charge of making decisions to run their business. In other words, the business will retain control over decisions while freeing themselves from the tedious aspects of administrative tasks like payroll, benefits administration and compliance issues. The business still remains responsible for hiring/firing employees, maintaining a safe work environment, and keeping track of actual hours worked.

Employees Will Resist This Change

Contrary to this belief, there are a few reasons why your employees may actually embrace the fact that you’ve decided to partner with a PEO company, including the fact this gives them access to several benefits they may not otherwise get. For instance, not all small to mid-sized businesses have access to affordable health coverage; however, by partnering with a PEO company, you may have access to a group policy.

Working With a PEO Company is Too Expensive

Partnering with a Connecticut PEO company can actually be one of the most affordable business decisions you ever make. Not only do PEOs have the experience necessary to help lower your worker’s comp premium to a competitive rate, but they can also provide you with a simple pay-as-you-go option for your premium. Often, premiums are based on payroll amount, not a fixed dollar amount.

In addition to helping businesses save money, PEOs also have several programs that pass the savings on to your employees, including major health plans, supplemental benefits, and so on. These plans would be quite costly for a small to mid sized business to offer on their own; yet, by partnering with a PEO company, you can offer all these incredible benefits to your employees without working about breaking the bank.

We’ll Have to Dismiss The Current HR Team

In our years of experience, we have noticed that HR professionals will discover that they have more time to work on strategic projects when they delegate the administrative responsibilities to their PEO.

It’s hard to imagine that many HR professionals enjoy administrative tasks, like developing an employee handbook or crafting job descriptions; rather, they would hope to be developing a strategy to increase employee happiness and effectiveness.  If HR professionals are too busy with administrative tasks, they won’t have the time necessary to plan and pursue strategy; yet, if they don’t pay enough attention to administrative tasks, important tasks may fall through the cracks or become out of compliance.

With the HR manager taking on the primary projects and the PEO executing the tertiary projects, all administrative tasks gets covered, which frees the HR Director to do strategic thinking.

Beyond that, when you work with a PEO, you gain access to a team of HR professionals who have tremendous insight in very specific aspects of HR. In other words, it’s very difficult to become a master in worker’s compensation, payroll, benefits administration, risk management, etc.

Finally, consider that your HR specialists will always be available in the event your internal team is not. If your in-house HR director is absent or busy at the moment, you still have access to a team of HR professionals who can ensure that you have the best and up-to-date information should an issue arise.

OEM America | Connecticut PEO

When shopping around for a PEO, look for firms that offer modular packages that will let you get custom-tailored support in the areas you need it most. This approach will let you leverage outsourced services as cost-effectively as possible.

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