7 PEO Mythbusters: Uncovering the Truth about PEO Benefits

Author: Ashlee Lunce

7 PEO Mythbusters: Uncovering the Truth about PEO Benefits

The thought of using a Professional Employer Organization, also known as a PEO, scares many small and mid-sized businesses. There could be reasons varying from not recognizing the true value of PEOs to not even understanding the concept of the services they provide. Misconceptions such as these can prevent a business from gaining the benefits of using a PEO and having their back office managed in a simple and cost-effective way.

The 7 Myths about PEO Benefits

So, what are some myths about PEOs that are floating in the marketplace? Here are our top seven myths about professional employer organizations.

1. PEOs are there to compete with the internal HR department

They really aren’t; they’re there to offer support through their focused expertise. It’s safe to say they actually compliment. Picture a scenario where your HR department can focus more on the human aspect of things by ensuring more engaged, optimistic, and high-performing employees. While PEOs concentrate on the more mundane tasks that include calculating payroll taxes, benefits administration, and labor law compliance. This would be beneficial, leading to higher retention and more business growth—a definite win.

2. PEOs creep into the control seat

You do not lose control over your business by engaging PEOs, as their main focus is relieving HR from administrative burdens. PEOs have ideas and frameworks to make your life easier, but your employees’ hiring, firing, discipline, and other daily decisions still rest with you.

3. PEO is just employee leasing rewritten

No, it’s not. Employee leasing is about placing employees with organizations for temporary or short-term jobs. A PEO, on the other hand, is different as the organization hires the employee, but the PEOs help on the back office elements of HR and allow the company being serviced to retain absolute control over the team as well as critical decisions. Employee leasing doesn’t allow for this.

4. Employees don’t like working with PEOs

PEOs are all about creating good employee experiences that make their interaction with payroll, benefits, and back office elements easy and seamless. From having first-class customer service and quick turnaround times on requests, employees see and feel the benefits of partnering with PEOs.

5. PEOs cost too much

PEO services can vary depending on your employee size and the services required, but cost savings come with those services. Most of the cost savings come from benefits and worker’s compensation plans because, by engaging PEOs, the company can provide a high-quality benefits plan at a cheaper rate due to the number of organizations they serve. This is what we call winning.

6. You need to be ready to bring in a PEO, we aren’t there yet

Who told you that myth? With PEOs, you don’t need to have all your ducks in a row in order to optimize and maximize their services. No matter if you’re still using a paper filing system or a state-of-the-art platform, one of the best benefits of a PEO is that it will help you upgrade and manage your system for ease of use. A little bit embarrassed about some fines or tax paperwork? Don’t sweat it! PEOs can be your best friend in sticky situations like that and give you the guidance, advice, and support you and your business need to get on the right track and the tools to stay that way.

7. If the work structure is remote, then PEOs are not needed

And who says? Going remote has nothing to do with not needing HR services. In fact, with remote teams, you might need to pay closer attention to labor laws, payroll, employee retention, and employee engagement. A PEO will serve as a great addition by helping you stay afloat on the ever-changing laws and trends.

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