PEO Services Guide: How to Streamline HR and Drive Growth

Many small and medium-sized businesses (SMBs) lack the internal resources and expertise to manage the full range of their responsibilities. They are looking for effective, cost-efficient support in managing their HR functions. This need is one of the main reasons the professional employer organization (PEO) industry has experienced significant growth in recent years. According to the National Association of Professional Employer Organizations, over 200,000 SMBs use PEO services.

A PEO provides human resources outsourcing to businesses, typically small and mid-sized businesses. It helps handle essential tasks like payroll processing, benefits administration, HR expertise and risk mitigation, freeing up business owners to focus on core operations and strategy. In many cases, PEOs are an indispensable resource for SMBs that want to streamline HR functions without sacrificing operations or employee satisfaction.

By leveraging a PEO, businesses can access comprehensive HR services often like larger enterprises. In addition, PEOs can help companies mitigate risks and provide access to competitive benefits package that can attract and retain talent in a competitive market.

This guide will focus on unpacking the wide range of PEO services, so business owners and managers can understand the possibilities.

Core Functions

A PEO becomes the co-employer or employer of record for payroll tax purposes for its clients’ employees. This means that the PEO takes on certain responsibilities such as payroll tax administration, workers' compensation, and benefits administration for the PEO-sponsored plan on behalf of the client.

A PEO can help handle a broad range of functions to support HR operations, compliance and a positive employee experience. By working with a PEO, businesses can focus on strategy and organizational culture while leaving HR administration in expert hands.

General core functions of a PEO include:

• Payroll administration
• Employee benefits administration for PEO-sponsored plans
• Compliance support and risk mitigation
• Workers’ compensation
• Recruiting and onboarding tools
• HR administration
• Employee relations support
• Training and development tools and consulting
• Leave management tool
• Health and workplace safety program management assistance

Benefits of Working with a PEO

Working with a PEO offers numerous benefits to SMBs, including:

• Frees up time for higher priority initiatives. Handling HR tasks can be time-consuming. By outsourcing tasks like payroll processing and benefits administration, businesses can focus on their core operations.
• Cost effective. Small businesses may have limited resources and lack the budget for a full-time HR person or team. In many cases, PEOs can help handle the brunt of the workload more cost-efficiently than the use of in-house employees.
• Enhanced resources. Employment-related rules and requirements are complicated and change often. Companies that can’t keep up with them can be at risk for non-compliance which can lead to fines and penalties. PEOs provide HR expertise and resources to help clients stay on top of HR compliance requirement, enabling them to navigate and comply, thereby helping to avoid potential costly concerns.
• Attractive employee benefits offering. Today's workers put a high priority on benefits. The 2024 Maven's State of Women's and Family Health Benefits report found that 35% of Millennials and 46% of Gen Z say that reproductive and family health benefits influence their decision to stay at their job or take a new one. PEOs provide access to premium-level benefits which can also be cost-effective.
• Better caliber new hires (and better employee retention). PEOs can help SMBs enhance talent management. They can assist with recruitment strategies and help streamline the hiring process with tools. Additionally, PEOs can enhance the onboarding process with its technology which can create a better employee experience and higher employee engagement. This can contribute to a more talented and stable workforce.
• Specialized HR support. A small business may be unable to afford a full-time specialized HR professional. However, they may be able to access one through a PEO. This option gives them expert best practice guidance on complicated HR concerns like handling employee relations, performance management and succession planning.

Comprehensive Services

We’ve touched on the type of services a PEO provides to their clients. Let’s drill down into more specific details about the services offered by a PEO provider.

HR services

PEOs offer full-service HR to small businesses. They help take on certain functions of human resource administration and provide a wide range of services to help SMBs streamline their HR operations. These services can include:

• Providing best practice guidance on employee handbooks and policies.
• Assisting with employee onboarding and offboarding.
• Providing expertise on performance management and employee reviews.
• Administering PEO-sponsored benefits and leave policies.
• Providing best practice guidance on employee relation questions.
• Providing tools to help conduct employee training and career development.
• Tracking tool for time and attendance.
• Consulting on compensation structures and benchmarking.
• Handling workplace safety programs.
• Providing an HR software with document management.
• Conducting employee satisfaction surveys and engagement initiatives.
• Offering best practice guidance on diversity, equity and inclusion (DEI) strategies.
• Supporting on organizational structure and workforce planning.

Depending on the PEO, each of those services may have layer upon layer of tools and benefits.

Payroll and taxes

Payroll-related tasks can be a big headache for SMBs. A PEO provider helps clients achieve a smooth and efficient processing of payroll. Pay calculations, direct deposits, garnishments, payroll taxes and year-end tax documents such Form W-2s are all examples of tasks assisted by PEOs.

By outsourcing payroll services to a PEO, businesses can potentially save more time, less vulnerable to errors, and pay their employees efficiently. A PEO can also help take care of certain reporting requirements.

Compliance

With employment-related rules and requirements often in flux, staying compliant can be an ongoing struggle for small businesses with limited resources. A PEO's compliance experts can offer specialized best practice guidance on employment-related rules and requirements. This includes monitoring changes and providing resources to stay up to date.

PEOs also help administer certain compliance-related tasks related to workers' compensation, unemployment claims and Occupational Safety and Health Administration (OSHA) requirements. By staying current on these changes and with expert consulting, PEOs help businesses mitigate risk that can be costly and impede their operations.

Employee benefits

PEOs provides access to comprehensive benefit packages. These include:

• Health insurance. PEOs can offer access to competitive benefit plans that cover medical, dental and vision care.
• Life and disability insurance. PEOs often provide access to life insurance and both short- and long-term disability coverage, giving employees peace of mind and added financial security.
• Wellness programs. A recent survey by One Medical found that 64% of workers are struggling with mental or behavioral health issues. 91% of these employees said they’re less productive due to their mental or behavioral health issues. PEOs can provide access to wellness programs that promote healthier lifestyles through initiatives like gym memberships, health coaching and stress management resources.
• Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs). PEOs can help administer FSAs and HSAs, which allow employees to set aside pre-tax dollars for healthcare expenses, enhancing financial well-being.
• Employee Assistance Programs (EAPs). PEOs offer access to EAPs, providing employees with confidential counseling services for personal or work-related issues. According to the National Institutes of Health (NIH), 32% of employees at companies with 1–99 workers have an EAP.

Administration

In addition to providing access to comprehensive benefits, PEOs can also provide support for the PEO-sponsored plans. This eliminates the need for business leaders to juggle time-consuming tasks like:

• Benefits enrollment and renewals. PEOs platform provides a central location for the enrollment process, helping the employees understand their options and can easily sign up for benefits.
• Claims support. PEOs support the claims process and with communication with insurance providers, helping employees navigate the complex claims process.
• Compliance and documentation. PEO-sponsored plans comply with certain federal, state and local regulations, helping to mitigate risk.

Retirement plans

PEOs may also offer access to competitive retirement plans, including:

• 401(k) plans. PEOs may provide access to 401(k) retirement plans with options for employer matching contributions.
• Plan administration. PEOs help handle administrative duties for retirement plans, including automating contributions, compliance reporting and filing necessary tax forms.
• Investment solutions. PEOs retirement plan may offer access to a broad range of investment options, giving employees flexibility in how they save for retirement.

Recruitment and training

By taking over the administration of these time-intensive processes, PEOs allow businesses to focus on core operations and career development with the peace of mind that their workforce will remain productive. The key categories of services PEOs provide for recruitment and training include:

• Recruitment support. PEOs can provide the tools to help with job postings, candidate screening and interview scheduling. PEOs also can provide best practice resources to assist in job analysis and drafting job descriptions to help businesses attract the right talent for their specific needs. Streamlining these processes helps businesses quickly and efficiently find qualified candidates.
• Onboarding and integration. According to the Job Seeker National Report, 30% of new hires have left their new jobs within the first 90 days. PEOs offer services that streamline the employee onboarding process. This includes a platform that can streamline onboarding instead of manual paperwork, benefits enrollment and administering Form I-9. By standardizing the onboarding process, PEOs help new employees ramp up quickly, creating a positive initial experience and helping to reduce the likelihood of early turnover.
• Employee training programs. Ongoing training and development programs include everything from job-specific skills training to broader professional development courses like leadership, communication and teamwork.
• Performance management. Regular evaluations, feedback mechanisms and goal-setting initiatives are key components of performance management. By facilitating performance reviews and offering coaching or mentoring programs, PEOs help employees stay motivated and aligned with business objectives.

Data management

PEOs leverage technology to offer businesses data management solutions to perform HR tasks efficiently. A PEO's data management support may include:

• Worksite employee data management. PEOs handle worksite employee HR records, including personal details, employment history and sometimes performance reviews. This centralized management helps businesses access critical HR data quickly when needed.
• Payroll and benefits data. PEOs use systems to manage payroll and benefits data, tracking employee wages, tax information, deductions and benefit enrollments. Secure data management keeps businesses compliant with tax regulations and benefit plans, while allowing for efficient processing and reporting.
• Compliance support. By providing access to resources that provide important business and HR deadlines and reports, PEOs can help businesses navigate compliance so they can comply.
• Data security and privacy. PEOs prioritize data security, setting forth controls for sensitive information like Social Security numbers, tax forms and payroll data to be managed in compliance with data privacy laws. Encryption, secure servers and access control protocols mitigate the risk of data breaches and protect businesses.
• Real-time insights and reporting. Real-time data insights guide informed decision-making based on up-to-date payroll, performance and compliance data. These reports help businesses spot trends, make workforce planning adjustments and improve operational efficiency.

Specialized PEO Services

In addition to core HR functions, PEOs offer a range of specialized support services designed to address the specific needs of businesses. These services can help companies overcome obstacles and manage complex challenges. By accessing these specialized services, SMBs can better mitigate risks, enhance employee engagement and stay competitive.

Workplace safety and risk mitigation

Through expert best practice guidance, PEO services, and marketing-leading coverage, PEOs can help businesses to mitigate risks. These can include:

• Workplace safety programs. PEOs provide access to training, a comprehensive resources library to help provide tips on safeguarding your employees and workplace, helping to reduce accidents and promote an organizational culture of safety.
• Risk assessments. A risk assessment to help identify potential concerns in the workplace. PEOs will recommend risk reduction measures to help mitigate these risks.
• Compliance. PEOs monitor evolving local, state and federal requirements, helping businesses stay up-to-date.
• Claims management. Guidance on best practices helps reduce the likelihood of work injuries and associated expenses, and claims management team that is experienced, responsive and focused on expediting every case.

Employee relations

PEOs provide valuable support in helping businesses address employee relations concerns, fostering a more positive workplace culture and resolving conflicts effectively. To strengthen and maintain employee relations, these services can include:

• Conflict resolution. Resolve disputes? Check. Avoid escalation? Check. PEOs provide support to help businesses address this so they can maintain a harmonious work environment.
• Performance management. PEOs provides a performance management systems that businesses can use to do regular reviews, goal setting and constructive feedback. This process proactively helps employees stay motivated and aligned with business objectives.
• Employee engagement surveys. Employee engagement surveys gauge satisfaction levels, identify concerns and gather feedback. Collecting and reviewing this information gives businesses insight into ways of improving workplace culture and employee retention.
• Policy development. PEOs provide best practice guidance on policies, enabling businesses to manage workplace conduct, attendance and disciplinary procedures, which encourages consistent and fair employee treatment.
• Employee assistance program (EAP). PEOs can provide access to EAP to support employees’ well-being. Generally these type of programs provide assistance for work and life concerns.

Strategic HR Services

Beyond day-to-day HR management, PEOs can provide strategic organizational consulting services that help businesses align their workforce with long-term goals and growth strategies. These services can help businesses focus on creating a high-performing, agile organization capable of navigating market changes and sustaining growth.

• Organizational assessment. Do you know how your organization is doing? PEOs can provide a tool to help you evaluate. The assessment of organizational structures, processes and workforce alignment enables you to identify strengths, weaknesses and areas for improvement. This helps businesses get the most out of their operations and maximize employee productivity.
• Vision and strategy development. By developing clear organizational visions and HR strategies that align with the company’s goals, PEOs equip the workforce to support long-term growth.
• Leadership agility. Being able to adapt may be the difference between an SMB thriving for years and shutting its doors. Leadership development programs promote resilience, so leaders know how to plan for and manage change, inspire their teams and drive organizational success.
• Talent and succession planning. PEOs help businesses place the right people in the right roles. They can also provide guidance on succession plans for organizational continuity and leadership strength.
• Culture and inclusion. PEOs can help businesses with their diversity, equity, and inclusion initiatives. A culture that promotes a positive, respectful environment where every employee can feel valued and engaged.

Technology solutions

PEOs help clients use the best technological solutions to empower their talent management efforts. They can provide businesses with advanced HR technology solutions that streamline operations, enhance efficiency and employee experience.

• HR management platform. PEOs provide comprehensive HR management platforms that centralize core HR functions.
• Integration network. Integration networks that connect with existing business systems that directly sync data across departments. This can reduce duplication of manual efforts and enhance overall operational efficiency.
• Self-service employee portals. Self-service portals allow employees to access their payroll and benefits information, make updates and manage tasks such as benefits enrollment.
• Compliance support tools. Compliance support tools automate certain changes and update relevant HR processes. This helps businesses comply compliant with employment-related rules and requirements and industry standards.
• Applicant Tracking Software (ATS). ATS streamlines the recruitment process. This software simplifies the process of creating and posting job openings, choosing candidates and tracking them throughout the hiring journey.

Industry-specific solutions

Another reason PEOs are a popular choice for SMBs is that they offer industry-tailored HR solutions to the unique needs of various industries.

For instance, a construction company that employs numerous independent contractors can benefit from a PEO's software to pay their independent contractor. Similarly, a company with a global workforce could engage with a PEO to provide a global workforce solution, which may include navigating international employment-related rules and requirements, benefits administration and multiple-location tax requirements.

Key industry-specific solutions PEOs offer solutions that include:

• Independent Contractor Payment Solution. PEOs can provide a payment solution that includes recordkeeping contracts and streamline payments.
• Global workforce solutions. PEOs can provide a solution that includes international HR expertise helping global businesses hire, manage and pay their workforce worldwide.
• Industry-specific compliance support. PEOs can provide industry-specific compliance information, so businesses can navigate requirements related to safety standards and certifications (which vary widely by sector).
• Payroll solutions. PEOs offer services for industries with a variable workforce like temporary or seasonal work.

Choosing the Right PEO

With numerous PEOs offering a variety of services, it’s important to choose one that aligns with your business needs and goals. The right PEO will provide industry tailored solutions that helps you navigate HR requirements and scale as your business grows.

Now, let's look at how to choose the right PEO for you.

• Assess your needs. Begin by thoroughly assessing your business’s HR needs. Do you require help with payroll, compliance, benefits administration, or all of the above? Understanding your specific challenges will help narrow your choices.
• Evaluate service offerings. Not all PEOs provide the same services. Compare each PEO’s offerings to see if they cover the essential functions you need. Consider any specialized services that are relevant to your industry.
• Measure the cost. PEO pricing models vary, so it's important to understand the cost structure. Consider whether the PEO charges a percentage of your payroll or a flat fee per employee. Compare these costs to the potential savings and value the PEO offers regarding compliance, efficiency and reduced administrative workload.
• Understand what's included in technology and software. A PEO’s technology platform should significantly streamline your HR processes. Evaluate their HR software, including payroll processing system, benefits administration and employee self-service portals. Look to see if the technology integrates with your existing systems.
• Ask questions about training and support provided. Confirm if the PEO provides resources for employee onboarding, compliance training and regular updates on HR best practices. Access to expert HR support is key to long-term employer success.

TriNet Provides Big Advantages for Your SMB

Working with a PEO can provide significant benefits to businesses that may lack the internal resources to manage complex HR tasks. From core functions like payroll administration and benefits administration to specialized offerings like employee relations, PEOs deliver comprehensive solutions that help businesses operate more efficiently.

Companies can depend on PEO provider to help reduce administrative burdens, navigate compliance and help them focus on growth and innovation.

With its expertise and experience, TriNet is your company’s top PEO option. Our robust, user-friendly platform, knowledgeable support team and long list of services can be tailored to industry specific needs. Book a demo today to see how TriNet can give you all the services you need to help your business thrive.