How to choose a PEO

What should you ask when choosing a PEO (Professional Employer Organization)

by Andrew Sowell, on September 16, 2020
There’s a lot to consider when shopping for a PEO to augment or fully outsource your HR function.

A PEO can offer small to mid-sized companies HR services such as payroll, benefits, tax administration, on-call human resources and regulatory compliance assistance.

The reasons to consider a PEO are clear: Small businesses that use PEO services grow 7 to 9 percent faster, with lower employee turnover. Studies have shown that outsourced HR assistance means a company is 50 percent less likely to go out of business.

So how can you pick the PEO and services that are right for your company right now?

For a complete step-by-step guide, check out "How To Choose a PEO: A Complete 6-Step Guide"

What services do I need?

The first step is to assess your HR needs now and how they may change over time.

PEOs can offer "a la carte" services to fill the gaps in your HR capabilities, such as managing benefits or employment law compliance. Or, you may decide to take HR tasks off your plate altogether and fully outsource your HR functions.

It’s not uncommon for a company to initially outsource a portion of their HR functions, then add more PEO services over time. Having a single provider ensures all the pieces are harmonious and can make compliance easier.

Through a PEO, small business employees can have big company benefits at lower costs, including 401(k) plans; health, dental, life, and other insurance; dependent care; and more.

Some questions to ask as you begin this journey include:
  • What PEO services do you offer?
  • What will I pay for?
  • What are the benefits, financially and from a service standpoint, of bundling multiple functions?
  • What employee benefits are available?
Tech that makes management easy

PEO technology (an HRIS) can manage everything from applicant tracking and onboarding to performance management and time tracking. Keeping this information integrated and accessible makes it easier for you to see your big people picture.

Be sure to ask a potential PEO provider:
  • What HRIS capabilities/platform do you offer?
    • Do you offer a time & attendance software?
    • Do you have applicant tracking?
    • Do you have electronic onboarding?
    • Do you have a Performance Management System?
    • Do you have a Learning Management System?
    • Are all these systems integrated?
  • Do you have to use all of these modules, or can you pick and choose the ones you want?
  • What is the cost for each module?
The best PEOs keep you in the loop, are fully transparent, and give you the access to information you need whenever you need it.

LandrumHR gives employers access to a wide range of reports and information through the MyLandrumHR portal.

Is this PEO certified?

Before you put your trust in a PEO, make sure they adhere to and are recognized for the highest industry standards. Does the PEO have an impeccable history of adherence to the industry's professional practices and responsible financial management guidelines?

A PEO should be able to show you that:
  • A CPA independently audits financial statements.
  • The Certification Institute has independently certified risk management practices.
  • ESAC has independently accredited operational, financial, and ethical practices.
  • The company meets all state requirements.
  • It is a member of NAPEO, the national trade association of the PEO industry
LandrumHR is:
  • IRS Certified Professional Employer Organization
  • ESAC Bonded and Accredited
  • A member of the American Staffing Association
  • A member of Staffing Industry Analysts
  • A member of NAPEO
Don’t be afraid to ask for references from clients!

And, of course, the biggest question, what is the ROI on using a PEO?

A PEO's economy of scale enables you to lower employment costs and increase your bottom line. A PEO provider should be willing to show you case studies and provide references so you can judge the effectiveness of their solutions.

You want to know that the PEO is a good fit for your company, they have your best interests at heart, and are invested in your success. LandrumHR has helped organizations recruit and retain great teams and manage HR functions for growth and success for more than 50 years.

Contact us today, and we'll show you what our personal service paired with integrated technology can do for your business!
Andrew Sowell

Andrew Sowell currently serves as the Director of Business Development for LandrumHR. He received his degree in Business Marketing from Florida State University and has an extensive background helping business owners solve problems that impact the bottom line. His passion is consulting with business owners and highlighting areas where the company can save money, increase profits, improve employee engagement, and protect the business from compliance issues.

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