An effective and efficient workforce is pivotal for a company to reach its business goals and continue to succeed. Companies are adapting to the “new normal” post-Covid-19. For example, business owners across the world are reducing their office space, as well as encouraging remote work and switching to a more conservative hiring policy in times of uncertainty. For companies that have manpower needs but are hesitant to commit to permanent employees when entering a new market, or want to scale up and down quickly amid uncertainty, Professional Employer Organization (PEO) is a cost-efficient staffing solution to address human resources needs with flexibility.
What is a PEO?
A PEO is an all-inclusive outsourcing solution that hires and manages staff as a legal employer on behalf of a company, and seconds the personnel back to the company under a service contract. The centerpiece of the PEO solution is the co-employment relationship. As a co-employer, the PEO takes on the responsibilities that come under employer obligations and provides end-to-end HR management and administration services from recruitment to off-boarding:
- Recruitment
- On-boarding
- Payroll
- Benefits and pension administration
- Leave management
- Tax filing
- Regulatory compliance assistance
- Off-boarding
Is a PEO right for a business?
In recent years, the startup community has been flourishing. Usually, new and small businesses start with minimal capital. With limited resources, they focus on honing their solutions and processes to establish a stand in the market, as well as bringing on competent staff to support business growth. If everything goes well and the business starts growing quickly, the company will need to expand its workforce and a more diversified pool of talent. Yet, the accompanying personnel or hiring issues can become exponentially more complex. Utilizing a PEO can save substantial time and hassles, and lower the costs for a small business in terms of HR implementation and maintenance.
Furthermore, PEOs give small- to medium-sized businesses the employee benefits of larger companies that might not otherwise be accessible to them. By leveraging technology, as well as economies of scale that typically are available to companies with bigger scale and budgets, PEOs can also manage HR-related administrative tasks, such as payroll, employees benefits and tax filing, etc. in a more organized and cost-efficient manner.
Employer compliance is another important aspect of business ownership. Employment regulations can be fast- changing, and employers can find it overwhelming to stay on top of compliance rules. A PEO can simplify compliance by handling it for a company completely. Anything from compliance to employee records, a PEO can help make sense of it all so the company can focus on the core business functions.
On a global scale, international PEOs enable companies to hire supported employees anywhere in the world quickly and compliantly, without the need of establishing a foreign legal entity. In other words, businesses can expand abroad through a PEO partnership to build a remote team internationally without the upfront capital expenditure required to have a physical presence in the country, saving both time and money.
Having said that, PEO are not only suitable for small- and mid-sized companies. Larger corporations are also turning to PEO to streamline their operations, making their organizational structures less bulky, and reduce administrative workload of the HR department so that they can focus on the more important tasks such as workforce planning, training and talent development.
How to choose a PEO?
Like choosing other outsourcing firms, the PEO should possess the right expertise and experience, and the services that it provides should match the needs and goals in both short and long term. There are questions like the followings to be answered:
- What HR services does the PEO offer?
- What kind of skilled professionals does the PEO have access to?
- Create, follow up and update database / reports on the deals progress
- How can the PEO tailor its services to fit business needs?
- Does the PEO have a team well trained in knowing local labor laws?
- What technologies, such as an employee self-service portal or an mobile payroll app, does the PEO offer?
- As business expands, will the PEO service be able to meet the growing needs?
Engaging a PEO
In general, an eligible PEO should have the experience and infrastructure to quickly adapt to employee needs and governmental policies, and possess a deep local market and consumer behavior knowledge to support business.
The PEO industry has developed into a flourishing industry in the past few decades. Going forward, it is expected that an increasing number of companies, big and small, will turn to PEOs in order to streamline their HR operations, reduce administrative burdens and stay agile in the fast-changing business environment with the flexibility to scale up and down quickly. By providing comprehensive HR and staffing services, PEOs help businesses improve operational efficiency by taking care of HR matters, and hence allow them to concentrate on core business activities and strategic goals.
Tricor Staffing Solutions is an all-round human resources service provider. Our recruitment network and advanced e-recruitment platforms, coupled with deep knowledge of local employment regulations, help companies to identify the most competent staff, yet without administrative and staffing burdens.
Please get in touch with our dedicated team for more information or to schedule an informal discussion.
