How National PEOs Optimize HR Outsourcing for Business Growth

If you own or manage a small or medium-sized business and you want to outsource HR functions, a professional employer organization (PEO) could be just what you need. When considering which PEO to work with, one important choice to weigh is between a local or national PEO.

Local PEOs work with companies in a localized or specific region. They may be experts in that specific region’s human resources and employment-related and payroll tax rules and requirements.

A national PEO, by contrast, may have more expertise on the employment-related and payroll tax rules and requirements throughout the U.S. National PEOs tend to have more resources available to help service throughout and offer access to local and national benefits.

The choice between a local and national PEO can significantly impact the HR support services you will receive. The choice can also affect aspects of your business beyond HR administration, such as the caliber of employees you are able to attract and retain, as well as your rate of business growth. The cost-effectiveness you might enjoy from working with a PEO could also be impacted by your choice. This article will provide you with insight on each type of PEO and how it may be best suited for your company.

What Are PEOs and How Do They Work?

Professional employer organizations (PEOs) provide human resources outsourcing services for their client companies. These administrative services can include payroll services, benefits administration, compliance support, and risk mitigation.

A PEO and the client company are in a co-employment relationship, where the PEO provides certain HR services as allocated in the client service agreement. PEOs are generally more flexible and scalable. You can get expertise levels of services as your business grows and your need for HR support increases. However, national PEOs, with their more robust resources and wider reach, may be better positioned to keep up with your needs as your business expands across states.

Working with a PEO can help free up the time you have been forced to spend on administrative HR tasks and potential significant cost savings. On average, PEO clients save $1,775 per employee per year, according to the National Association of Professional Employer Organizations.

Benefits of National PEOs

Let's review some of the benefits of HR outsourcing with a national PEO.

• Comprehensive coverage. A national PEO may have the resources to maintain HR expertise on the employment-related rules and requirements and market trends nationally. This is ideal for multi-state businesses. A national PEO could be a one-stop shop for your compliance support needs in all the states where you have employees.
• Economies of scale. National PEOs often work with many client companies. For example, TriNet has about 23,000 client businesses as of December 31, 2023, and services more than 356,000 client employees as of September 30, 2024. It works with local and national carriers to provide access to comprehensive benefits. The result is that small businesses that work with a national PEO can obtain access to employee benefits and services at more cost-effective pricing than they could generally get on their own. This can improve job satisfaction, work-life balance and workplace culture, making it easier to recruit and retain top employees.
• Consistency. If your business has employees in more than one state and you work with local PEOs, you might need to work with a different local PEO in each state to help handle payroll and other state-specific HR functions. Procedures, forms, and processes might differ from one local PEO to the next. With a national PEO, payroll processed through the PEO’s platform and payroll tax administration are centralized and streamlined.
• Best of both worlds. In addition to its expertise in federal and state employment-related rules and requirements, a national PEO can provide expertise in local rules and requirements by maintaining regional offices or hiring resources with a greater knowledge of expertise, while still providing greater resources.

Benefits of Local PEOs

Let's look at some of the benefits of local PEOs.

• Local PEOs may have less overhead and smaller staffs. That may enable them to charge you lower fees.
• Employment-related rules and requirements may differ from state to state and even from city to city. A local PEO is generally more focused on the specific rules and requirements locally. This focus enables the PEO to develop and maintain an in-depth knowledge of employment-related rules and requirement and relationships with local governing bodies. It can stay on top of the frequent changes to local rules and requirements to help their client navigate compliance.
• A local PEO (and a national PEO with regional offices) may have service teams nearby and may be able to provider in-person service if needed.
• Local PEOs may also have relationships with other professionals in the community.

When Should a Business Choose a National PEO?

Here are some things to consider when weighing local vs national PEOs.

• Multi-state operations. If your business currently operates in multiple states or plans to expand into other states, a national PEO can help your HR administrative needs and requirements governing pay and payroll taxes in any state. Using a single national PEO can be more efficient and provides more unified process than working with a different local PEO for each area where you have employees.
• Comprehensive HR needs. A national PEO is a good choice for businesses that need broad HR solutions, advanced technology and access to competitive benefit packages. It can provide services beyond the day-to-day routine administrative tasks involved in HR and help you strategize and grow your business.
• Workforce solutions. A national PEO can help you attract top employees by supporting you in developing of recruitment strategies and recruitment processes to enhance your talent acquisition and employee retention. It may also help you with a compensation strategy so you can identify and recruit top talent through attractive compensation and benefits. With comprehensive services and a team of HR experts, a national PEO can take a human capital management approach. Treating your workers as assets, a national PEO can help you enhance employee engagement, provide tools for performance management, training and development, support diversity and inclusion, enhance workforce planning and workforce management, and offer support for performance metrics that deliver actionable data to drive your strategic planning and decisions.
• Organizational development. A national PEO can assist your overall business planning with tools for succession planning, leadership development and business efficiency. The services could also help you develop a robust organizational culture.
• Regional focus. A national PEO has the geographic reach and expertise to handle multi-state compliance and benefits administration. It also provides expertise in dealing with remote workers.
• Business scalability. Compared to national PEOs, local PEOs may have fewer more localized resources. A local PEO may not be able to scale up as your business grows. A national PEO may have the resources to grow with you.

A National PEO with Local PEO Strengths

TriNet's PEO services provide extensive experience, robust expert knowledge, and advanced HR technology. It combines the best of the services of national and local PEOs. You’ll get the resources, support care and dedicated services.

TriNet’s expertise includes a full range of HR administrative tasks including payroll administration and benefits administration, best practices in recruiting and onboarding, employee relations, compliance support for complex situations, workers’ compensation management, risk mitigation, and access to comprehensive employee benefits. TriNet will provide a level of service that is just right for you now and that will grow with you as your needs grow.

To find out more, explore TriNet’s offerings or schedule a demo or a consultation.

This communication is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance. TriNet is the single-employer sponsor of all its benefit plans, which does not include Enrich products and voluntary benefits that are not ERISA-covered group health insurance plans and enrollment is voluntary. Official plan documents always control and TriNet reserves the right to amend the benefit plans or change the offerings and deadlines.