Professional Employment Organizations: How to Hire an HR Department

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In recent years the use of professional employment organizations has increased. If you are unfamiliar with these services then read on, as they may be very valuable additions to your business. For smaller businesses the expenses with needed internal departments can be hard to balance. Every business needs an HR department but it may not be financially feasible. The use of a professional employment organization allows your business to have a fully functional HR department without all the expenses involved in running your own.

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How PEO’s Work

A professional employment organization is an outside firm that specializes in employee management. When you do business with one your employees enter into what is referred to as joint employment. By this the PEO becomes the employer of record for your employees for the purposes of taxes and insurance. This co-employment allows several advantages. The professional employment organization handles your employees’ needed HR tasks while you still direct their work and day-to-day tasks. With your HR needs now externalized the PEO then charges a service fee for the HR needs they are now fulfilling.

Key Services Provided 

One of the main services provided by a PEO is workers compensation insurance. As a business providing workers compensation can be expensive. PEO’s can acquire insurance at a cheaper rate. The insurance they provide not only covers the PEO but also the hiring client businesses as well. The PEO can do this because they are co-employers of their client’s workers.

Another key advantage of a professional employment organization is simple overhead. Running a business you’ll find the costs of setting up a fully featured human resources department are massive. The costs of setting up building space, needed office equipment, and proper software are a huge investment. Then there are also the human costs to consider. A good HR department needs to be staffed by good employees. The yearly salaries of a fully staffed HR department are more then a lot of smaller business can afford. Finally there are upkeep costs to consider. Payroll and benefits are often provided electronically and such IT components require expensive computer programs and upkeep. A business cannot afford errors in payroll and any such errors can be disastrous no matter how quickly they are resolved.

One final key area professional employment organizations can prove useful is in employee benefits. As a smaller business it can be difficult and expensive for you to provide the best benefits available for your employees. Many PEOs can offer better benefit packages. This can prove very useful. Not only does it improve moral of current employees but it also can help in future hiring. By offering better benefits you can attract higher quality workers. High end workers due to their in demand skills often require a certain level of compensation before they’ll consider a job worth their time and efforts. By having access to a good benefits packages you can attract skilled employees in your business’s industry. This allows for a competitive advantage over your competitors.

 

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