The Value of a PEO

Give Your Company a Competitive Advantage

Partnering with a PEO gives your company a competitive advantage. With a PEO partner, you can offer better employee benefits, recruit better employees, lower administrative costs, add dollars to your bottom line, and create safer work environments. This means focusing on what really matters: growing your business.

What is a PEO?

Professional Employer Organizations (PEOs) operate in a co-employment relationship with client businesses. You manage business operations while the PEO is responsible for the administrative tasks associated with your employees. PEOs began about 30 years ago and currently about 700 PEOs operate in 50 states. The industry projects growth of about 4.5% per year. The National Council of Compensation Insurance (NCCI) is setting up rules and advisories for the PEO industry so these businesses can be better understood, regulated and evaluated.1

Why Do You Need a PEO?

The bottom line: PEOs save you money. On average, HR administration cost is over $1,500 per employee, but with a PEO this cost is only $1,187.2 The HR and benefit services PEOs offer provide an efficient outsourcing option for businesses in many industries. They allow you to, “reduce costs and free up time to devote to revenue generating activities,” according to the Society of Human Resource Management.

Who are PEO Clients?

The average PEO client is a small business with an average of 19 employees, but larger business clients are becoming more common. Clients range from accounting firms to high-tech companies to manufacturers to government agencies. Anyone who needs support in HR can benefit from a PEO partnership.

The Power of PEOs

  • According to the Small Business Administration, between 1980 and 2000, labor laws and regulations increased by almost two thirds. They estimate owners of small or mid-sized businesses spent up to 25% of their time on employment-related paperwork. PEOs save you time by taking this burdensome responsibility, while helping your company remain compliant.
  • PEOs provide improved access to employee benefits for 2-3 million employees. 40% of businesses that use PEOs are able to upgrade their benefit packages as a result of the partnership.
  • PEOs help tens of thousands of companies provide 401(k) tax-free savings accounts to their employees. According to Towers Watson, a leading HR consulting firm, 47% of employees cited retirement benefits as an important reason to remain with their current employer.3 In fact, 35% viewed retirement benefits as the principal reason they decided to work with their current employer in the first place. Small businesses are typically unable to offer retirement plans on their own, but an estimated 95% of companies in a PEO arrangement can.
  • PEOs improve work environment and safety. They establish workplace risk management and safety programs. PEOs even arrange workers' compensation coverage with major insurance carriers and manage the claims for you.

If we are currently your PEO partner, be confident that you have made the smart decision. You have a built-in competitive advantage over those of your competitors who are not using a PEO. If you are ready to gain a competitive advantage or want to learn more, contact us for more information.


1. "The committee intends to drive consistency, state-by-state and carrier-by-carrier, in how we establish coverage." according to Jeff Rendell of the NCCI; 2. The National Association of Professional Employer Organizations White Paper 2013; 3. 2011 survey

Posted in: News and Events
Twitter Facebook LinkedIn Digg Delicious StumbleUpon Email
The information contained in this article was obtained from sources that to the best of our knowledge are authentic and reliable. Fortune Industries makes no guarantee of results, and assumes no liability in connection with either the information herein contained, or the safety suggestions herein made. Moreover, it cannot be assumed that every acceptable safety procedure is contained herein, or that abnormal or unusual circumstances may not warrant or require further or additional procedures. Mention of any product, service or company is not an endorsement from Fortune Industries.