Pros and Cons of PEO

The pros and cons of PEO can heavily influence your business’s decision on whether or not to outsource your HR to a third-party organization. Utilizing a PEO can be liberating for businesses of any size or volume and is an efficient way to use your company’s capital to streamline its processes. Read on to learn more about the intricacies of outsourcing your HR to PEOs.

Pros and Cons of PEO: What is a PEO?

To better understand the pros and cons of PEO, it’s essential that we first lay a baseline for what a PEO is. For starters, PEO stands for Professional Employer Organization. A PEO acts as a co-employer for its clients’ employees and does so to handle various administrative tasks for these individuals. These administrative tasks include payroll administration, workers’ compensation, risk management, and more. While there are many different ways that a PEO can benefit your business, some misconceptions have led to there being some perceived cons associated with the service. We will be clearing some of them up in the next section.

Cons of PEO: Misconceptions

As mentioned previously, a PEO’s services can immensely benefit any business, regardless of size or volume. Unfortunately, many of the perceived cons of PEOs and their services stem from misconceptions regarding the ones they provide. Some misconceptions are:

  • They take away your authority. This misconception most likely stems from the terminology of co-employment. At first, being a co-employer may seem like the PEO then has equal authority over an organization’s employees as that organization would have. This isn’t true: being a co-employer means that the PEO serves their client by performing the administrative duties associated with employment. The organization retains full authority over its employees while enjoying the benefits associated with a PEO’s services.
  • PEOs are only for large organizations. However, this also isn’t true. A PEO and its services can be helpful for every organization and will allow a company’s leaders to stop spending time on employment tasks. 
  • You’re better off doing the work yourself. Whether you intend to do the work yourself or delegate your company’s HR tasks to one of your managers, this still cannot compare to the expertise and experience of a human resources professional. Canal HR, for example, has decades of experience that many different organizations have come to rely on. Investing in outsourcing a human resources team that knows what they’re doing can mean immeasurable differences in your company’s performance.
  • A PEO is just a payroll service. Another misconception about PEOs and their services is that they are a PS or Payroll Service. A payroll service- as its name implies- simply administers payroll. A PEO, on the other hand, administers payroll while also handling the other employment and human resources tasks for its clients.

If these misconceptions haven’t cleared up your idea of a PEO and its services, check out our blog post: Canal HR: Your Local PEO.

Pros of PEO

There are many different benefits to adopting a PEO into your organization’s processes. A PEO can:

  • Help your business grow. Do you or your staff spend more time handling administrative duties such as payroll administration, workers’ comp claims, or other tasks? A PEO is a type of organization that was created to alleviate this issue. Freeing up time for yourself by outsourcing these tasks can create valuable space for you and your team to focus on the business itself.
  • Save money. Are you looking for your human resources services handled by a group of professionals with decades of experience? If so, you’re faced with two choices: hire your own team, or outsource. The latter can be a supremely efficient use of your money and time, saving your business some precious capital in the long run.
  • Streamline your business’s operations. A dedicated team of professionals handling your organization’s employment tasks can streamline your operations. When you don’t have to spend time on the administrative and human resources tasks within your business, you have more time to focus on operations, thus streamlining them significantly.
  • Provide your employees with the benefits they deserve. Unfortunately, deciphering complicated benefits requirements and keeping your company’s benefits packages competitive with the market can be difficult and time-consuming. Learn more about the importance of providing a competitive benefits package by reading our whitepaper on the subject. 

If you’re still on the fence about investing heavily in human resources for your organization, check out TechFunnel’s article on the subject. Investing in human resources is integral for nearly every business and something that should never be overlooked.

Invest in HR with Canal HR

Canal HR is a PEO serving the southeastern United States for three decades. Armed with industry knowledge and a wealth of experience, Canal HR is dedicated to providing you and your employees with the human resources services you need with the quality you deserve. Contact us today or visit our website to learn more about how Canal HR can help your business grow.