13 Ways PEO Services including HR Make Businesses More Efficient

Companies that want to outsource their HR functions often work with a professional employer organization (PEO). The never-ending quest to boost efficiency is a major motivator for businesses to sign up for PEO services.

A PEO and its client company enter into a co-employment arrangement. The PEO assumes specific responsibilities pursuant to the client service agreement. The PEO becomes the employer of record for certain purposes, reports and remits employment taxes under its own employer identification number for the payroll processed through its platform

Businesses can gain a number of benefits from PEOs. The PEO takes over many of the company’s HR  administrative tasks, which frees up resources for company leaders to pursue their core mission. A PEO helps mitigate certain risk for its client. That’s especially important for small or medium-sized businesses.

According to the National Association of Professional Employer Organizations (NAPEO), PEO services help hundreds of thousands of small and medium-sized businesses in the U.S. that have a combined total of more than 4.5 million employees. NAPEO research indicates that businesses that work with a PEO*:

• Grow 7% to 9% faster
• Have 10% to 14% lower employee turnover
• Are 50% more likely to stay in business

PEOs can do a lot for their clients. In this article, we'll look at how a PEO can help a business become more efficient.

13 Ways PEOs Make Businesses More Efficient

PEOs provide a wide range of services to companies, including:

• Administering payroll
• Collecting and remitting employment taxes
• Providing companies with HR expertise so companies can navigate HR compliance
• Providing access to premium benefit and administering benefits
• Tracking time and attendance with tool
• Recruiting and onboarding tools for new employees

PEO clients reported saving an average of $1,775 per employee per year and saw a 27% average annual return on their investment, according to a white paper from the NAPEO*.

In this article, we’re going to focus on just one of the many benefits that PEOs provide — greater efficiency.

Payroll processing

If your company is manually performing any aspect of payroll processing, a PEO can help free your employees from having to handle these repetitive, time-consuming tasks. The software systems that PEOs provide also tend to be more accurate than manual processes. This helps to reduce the expenses that may result from data entry errors, including correcting the record, recalculating, and, possibly, paying potential non-compliance penalties. Even if you aren't doing these tasks manually, a PEO can integrate time tracking, time off requests, and expenses into its payroll services for maximum efficiency.

Payroll tax compliance

A PEO provides help with payroll tax compliance tasks, including calculating, filing, and remitting payroll taxes for the payroll processed in its platform. With their expert knowledge of local, state and federal payroll tax rules and requirements, PEO professionals can perform these tasks efficiently. You and your staff don’t need to spend time trying to keep up with all the rules and requirements.

Access to benefits

PEOs provide access to big-company employee benefit plans, which can help improve employee relations and retain top talent. Company leaders can spend less time and hassle with:

• Researching benefits plans for their employees
• Coordinating benefits selection with HR staff
• Dealing with benefit brokers
• Sponsoring benefit plans on their own

Benefits enrollment and administration

A PEO provides a self-service portal for employee for the PEO-sponsored benefits, enabling your workers to get information about available benefits plans, access tools to make informed selections, and sign themselves up. The PEO might even offer a mobile app for convenient access. Employees like access to the self-service system the PEO provides, and your HR staff can save time with less involvement in the minutiae of benefits administration.

Recruitment and hiring

A PEO can provide best practices and software support for recruitment and hiring. The best candidates get scooped up quickly, and nothing is less efficient than a slow hiring process that results in a new hire that doesn’t align with your company. A PEO's solution can help you reach out and target top candidates more efficiently and keep track of people and documents through the application stages to streamline the recruitment process.

Onboarding process

Along with a sophisticated talent acquisition process, a PEO's experienced professionals can improve your onboarding process. No need to reinvent the wheel every time there's a new hire. A PEO can help a small business with its process that can help new employees hit the ground running. You can give employees a good first impression with an efficient process including teaching them about, and showing them, a workplace culture that help sets them up for productivity and success.

HR compliance

A PEO can help your company mitigate certain risks by:

• Providing best practices on employee relations concerns
• Helping companies navigate employment-related rules and requirements
• Generating reports and recommendations
• Providing web-based training, employee handbooks templates, and other resources

Your employees will spend less time and resources keeping track of the ever-changing rules and requirements that may apply to your business. A PEO’s employment practices team can help prevent, mitigate and provide coverage for employment-related claims  — so you help protect your business better.

If an employee gets injured on the job, a PEO's experts can help expedite the process of getting them whole again. The PEO can manage complex workers' compensation programs and even help to prevent fraudulent claims. Businesses also can benefit from cash-flow efficient plans that include pay-as-you-go with no deposits and no deductibles.

Employee training and leadership development

When you sign up with a PEO there may be less expense of locating and paying for quality outside training. A PEO can provide a catalog of HR compliance courses, incorporate your employee training models, and give employees personalized dashboards to track their progress.

PEOs can provide a wide range of courses and these courses can help your employees apply what they learn in real-world situations.

Those courses also can apply to leaders and potential leaders in your organization. In addition, a PEO's HR consulting services can help design a talent strategy that unlocks the potential of your people. They can help you identify and develop employees and leaders to prepare them for bigger roles.

Performance evaluation

Part of investing in your workforce is giving employees consistent feedback on performance. A PEO can help you deliver a comprehensive performance management program using experienced consultants and cloud-based applications. The program can be geared to your strategy, but bring resources to bear that might be too costly for small businesses to obtain on their own. For example, a PEO can help a small business track performance metrics to build better individual employees and teams.

This approach can help transform performance evaluations from a dreaded chore to a welcomed venture, boosting employee engagement and improving employee relations. Companies are more efficient when employees' individual goals match business goals, when employees have better job satisfaction, and when retention rates are high. And those are the kinds of results possible with effective performance management.

Risk mitigation

A PEO can help you minimize risk from potentially costly concerns related to the PEO-sponsored plan such as the Affordable Care Act, COBRA support and employment practices liability (EPL). Rather than react to problems, it's more efficient to help prevent them with the help of tools and expert support.

If problems do arise, a PEO can help with certain claims mitigation — facilitating the process and helping to control costs. In addition, claims coverage can limit your exposure and a PEO's claims experts can help manage the process for you.

Data management

A PEO technology will store your employee data in a way that is easy to access. This can save you time when you need to produce reports, make filings, or get information for workforce management. A PEO can provide enhanced security and data protection . In addition, a PEO's software can generate pre-built or custom reports quickly and efficiently on things like benefits, employee census, payroll and payroll tax info.

Expense management

When you outsource HR to a PEO, you can benefit from advanced technology to automate the expense reporting and management. You can efficiently handle the process online or via the PEO’s mobile app, instead of having to keep track of paper documents. For example, employees could upload scanned receipts or take a picture using the mobile app.

Another efficiency boost: You can export data on expenses directly to payroll for reimbursement and sync up with other business software that you use.

Business strategies

The time and cost efficiencies that a PEO provides can help enable you to devote more of your efforts to your long-term organizational development and human capital management strategies.

Another factor to consider is the way a PEO compiles your HR data so you can use for strategic planning to make your business more productive and efficient. First, it makes the data available when you need it — you don't have to dig it out of the payroll processing silo. Secondly, the data itself and the dashboards and visualizations a PEO technology provides can help you spot trends, gain insights and make decisions.

How PEO HR Outsourcing Can Serve You

Contracting with a PEO could make your company more efficient by automating core HR processes, reducing administrative overhead costs, providing guidance to mitigate potential risks, and taking advantage of the PEO’s resources and tools to bring big-company efficiencies and benefits to small and mid-sized businesses. PEO clients reported saving an average of $1,775 per employee per year and saw a 27% average annual return on their investment, according to a white paper from the NAPEO*.

TriNet was named the PEO with the best industry expertise in a 2024 report by Business News Daily. Our complete HR solution can save you time on payroll processing, benefits and HR administration. We’ll help you navigate  federal, state, and local employment-related rules and requirements so you can comply. Our comprehensive HR technology platform can streamline your HR business operations, freeing you up to focus on business growth. Book a demo today to see for yourself how a PEO can make your business more efficient.

*Individual business results may vary including clients of TriNet.