Do you ever feel like you are stuck between a rock and a hard place?
Small business HR managers have to deal with a never-ending list of functions and compliances every day.
However, it is important to know that running a business requires much more than delivering products and services on-time and meeting clients’ needs.
And this is where Professional Employer Organizations (PEOs) come to the rescue.
PEOs are often seen as a pathway to reduce administrative burdens. But, they are capable of so much more that is often overlooked.
For instance, a recent study by NAPEO found that companies partnering with PEOs are, on average, 16% more profitable than those that don’t.
So, how can a partnership with PEO increase profitability for a business? Mentioned below are a few ways.
Top Ways PEOs Can Increase Profitability for a Business
Outsourcing payroll can help small business owners ensure error-free filing. It also provides significant relief from the extra burden of payroll compliances.
But, how do businesses benefit the most from their PEOs?
It happens in two ways:
- Saves costs
- Increases productivity
Let’s discuss them in detail!
Saving Costs
Here are a few significant ways through which PEOs can lower the costs of a business:
Eliminates the need to hire additional HR staff
PEOs take on routine compliances to benefit the company’s administration. It can help your HR team focus more on improving its culture and growth-driven prospects. It is vital to note that a PEO is not a replacement for your in-house HR team. Rather, it can help your business grow further before needing to hire additional HR staff.
Provides better benefits to employees
It is true that in today’s competitive job market, most small and medium business entities are unable to afford employment benefits that could help them compete. Through a PEO, your business can avail of an exclusive package of benefits, available to top-tier companies usually.
Lowers turnover
Turnover costs a huge load of money to companies. Training, on-boarding, and hiring new employees are time-consuming and expensive. PEOs help in transforming the company culture and retain employees.
Moreover, reports say that employees of a PEO client show increased intent to stay. Statistically, only 8% of PEO employees decide to leave an organization within one year. Hence, the longer the company partners with PEO, the more willing its employees are to stick around.
Increases Productivity
Apart from saving costs, PEOs can significantly increase business productivity. Find the ways below:
Increases engagement
Employee engagement is vital for business profitability, which is sometimes difficult to measure. Recent statistics show that engaged teams show 21% more profitability. Moreover, reports suggest that employees who feel they are being heard are 4.6 times inclined to give their best to a company.
Decreases administrative burdens
With the PEO already managing payroll, worker’s compensation, and other matters, your in-house HR team can focus on hiring employees for business growth. This will lower the burden and lead to a more organized process.
After choosing a PEO and partnering with one, you eliminate any mistake outside HR’s scope of work.
Helps support better hiring practices
As a matter of fact, PEOs do not hire or fire employees. However, they can help you in better decision-making by sharing their hiring knowledge.
By hiring the right employees, you will reduce presenteeism, absenteeism, and turnover. This, in turn, ensures better work quality and increases business profits.
Growing a business is a big step for a company that requires an immense amount of sweat. As we can see, hiring a good PEO can help reduce various costs and risks that a business has to deal with.
Improve your company’s core functions by partnering with a PEO. If you want to avail of professional advice on Professional Employer Organizations, you can contact us. Schedule a free consultation with us today and know all about PEOs.
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