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5 Signs It’s Time to Outsource HR to a Professional Employer Organization (PEO)

There are simply not enough hours in the day to manage all of the HR responsibilities, including payroll, benefits administration, hiring, and termination. Keeping current on labor and tax laws adds another layer of complexity. If your business is struggling to manage it all and is challenged with maintaining compliance, it might be time to outsource some, if not all of your human resources function to a professional employer organization (PEO), a firm that provides HR and compliance services to small and medium-sized businesses. If you’re not quite sure if you need the extra help just yet, read the five signs that indicate when it’s time to contact a PEO.

Signs It’s Time to Work With a PEO

1. You’re overloaded with HR administration.
Payroll processing, writing job descriptions, verifying new employees, and updating policy manuals are examples of tasks that all require attention, but are time intensive. If one person is managing HR, while also working in other areas of the business, many administrative tasks can easily be de-prioritized or overlooked. Unfortunately, these tasks are essential to operate the business and build a healthy, productive workforce.

A PEO can help offload HR administrations, so that you can focus more on your business. You’ll no longer have to dedicate time to tracking payroll, managing employee paperwork, or developing manuals or handbooks. A PEO can ensure everything will be managed correctly and efficiently.

2. Your business offers little to no benefits.
Medical insurance, health savings plans, and retirement plans are typically a major incentive for job candidates. However, some benefit providers resist providing coverage to a small business. If they do offer coverage, premiums can be high, forcing business owners to opt out of benefits packages altogether. Small businesses that offer little to no benefits may have a hard time attracting employees.

Working with a PEO can offer your business more affordable benefits packages. By pooling all of its client companies together, the PEO is able to negotiate rates with benefits providers. Therefore, a PEO is often able to offer you and your employees access to health insurance coverage, retirement plans, and workers’ compensation at significantly lower rates than you would be able to obtain on your own.

3. There is no consistency when handling employee-related situations.
Whether you’re terminating an employee, addressing a sexual harassment claim, or handling a formal complaint, you need to handle employee-related situations with care and caution. HR professionals need proper training on how to manage these types of situations to avoid risk of a lawsuit or future litigation.

In many small businesses, business owners, managers, and HR administrators may not have the experience to properly handle these situations and often do not have time to take the necessary training. A PEO can provide help handle disciplinary situations and take the appropriate steps to correct them, including verbal counseling and proper written documentation. In addition, a PEO can help you limit your liability by ensuring employee-related concerns like safety, worker’s compensation, and EEO are handled properly.

4. It’s challenging to keep up with government regulations.
Laws and regulations are constantly being updated and changed, and your business needs someone dedicated to keeping current on rules and regulations like the FLSA, FMLA, and HIPAA. If there is no one in charge of monitoring the changing legal landscape and no one experienced in HR laws and standards, your organization increases its litigation risk profile.

A PEO is well-versed in federal and state laws and is constantly monitoring changes and updates. They can help you understand what regulations affect your business and what actions you need to take to comply. In some cases, the PEO will handle any necessary actions, so you don’t have to.

5. Employee turnover is high.
Is your business a revolving door of employees? Is it difficult to find the right talent? Your business needs to have a recruiting strategy and a retention plan to ensure strong candidates apply to your business, and when hired, stay long-term.

A PEO is skilled in hiring, onboarding, and talent management to ensure new employees are the right fit and will stick around. PEOs are also versed in employee engagement strategies and creating healthy cultures to help retain a positive workforce.

Work with a PEO to Offload Your HR Workload
If you’re inundated with HR tasks, requests, and responsibilities, it’s time to call a PEO to handle the things taking your time away from managing the business. Many PEOs cater to small businesses, which means they work with you to provide the services you need, helping you reduce costs, improve efficiencies, and keep your employees happy.

Interested in learning more about what a PEO can offer your business? Download our Guide to Hiring a PEO for Your Small Business to learn the benefits of outsourcing HR to a PEO.

OROhr partners with small and medium-sized businesses to deliver HR services and solutions that fit your business’ needs. Partner with OROhr to experience an increase in workplace profitability and productivity without worrying if your business is maintaining compliance.