Human resource management is a complex field that involves handling a lot of different chores including but not limited to – recruitment, training, and development, placement, orientation, payroll, incentive distribution, employee grievance handling, handling legal disputes relating to employment, etc. All these activities present a diversion of time, money, and resources. Fortunately, there is an alternative. One can easily outsource them or at least some of them to a PEO firm that can handle them much better. The following discussion will enumerate the various benefits of going for the services of a PEO first but it is important to understand their nature before that.
The meaning of PEO
PEO is the abbreviation for a ‘Professional Employer Organisation’. A PEO is thus an example of a B2B business – it provides a kind of Business Process Outsourcing (BPO) service letting a business outsource the human resources management-related activities that were conventionally done by the enterprise itself.
The chief reason an enterprise may opt for outsourcing these activities, much like in the case of any other kind of outsourcing, is because it might result in lesser costs and more efficient results.
A Professional Employer Organisation (PEO) is capable of handling all these functions – and it is better placed to do so in a better, more efficient, and more informed manner.
It is important to observe here not all Professional Employer Organisations will handle all such activities and they may be more specialized. Moreover, a client may only want the enterprise to handle particular functions. Thus the particular tasks undertaken by the PEO will depend on the specific contact made between it and its client.
Most valuable benefits of a Professional Employer Organisation (PEO)
The benefits of taking the services of a PEO will depend on the kind of services undertaken as well as the efficiency of the agency. Generally speaking, an enterprise can expect some of the following benefits based on the activities they have outsourced:
· Efficient payroll management
The first and one of the most important benefits of Professional Employer Organisations (PEO) is that they provide a better and more efficient way of managing one’s payroll. Managing payrolls can be a sort of nightmare for the HRD department of companies. However, a PEO specializes in handling this complex process. Taking the benefits of a PEO for this purpose can also help an enterprise avoid having to establish its payroll management system.
· Better Legal Assistance
With globalization and digitalization, there are several MNCs that may have operations in different countries and each of these countries may have its laws and rules relating to employment. It is a matter of time before an enterprise finds itself in a lawsuit entangled with such a labyrinth of laws. Fortunately, a PEO or Professional Enterprise Organisation offers a solution to this problem as, unlike its client, employment laws concern the area of its key focus. That means these organizations are also the best place to help an enterprise avoid a legal suit and also to resolve one in case a legal dispute does arise.
· Recruit new employees more efficiently
Another valuable benefit of taking the services of a PEO agency is that it is an excellent way of getting recruits. These agencies double as recruitment agencies at times and tend to have a ready supply of potential employees with all kinds of desirable skills at all times, and thus their clients get a cost-effective recruitment solution. That particular benefit is of great advantage to enterprises that are consistently in need of highly skilled recruits.
· Better utilization of resources
One of the crucial benefits of a PEO organization is that it lets enterprises focus on the things that they provide opportunities for better utilization of resources by letting a company avoid dedicating resources to the management of employees. They can eliminate the need for a human resource department or at least reduce its need for a mere skeleton crew.
· Highest quality of service
One of the biggest reasons for taking the services of a PEO company is that they have the best human resource managers in the market and thus the client of such enterprise gets the results of the highest quality.
· Lower costs
A crucial perk of PEO companies is that taking their services can significantly reduce the employee management costs of the company by managing them better and cutting costs.
· Helps avoid PR nightmares
In these times, every company must maintain goodwill in society, and taking good care of workers is an important part of that as companies often face PR nightmares when they fail to take proper care of their employees – such nightmares have multiplied in the internet age. Taking the services of a good PEO firm can help avoid this particular nightmare.
· Increased profitability
One of the most crucial benefits of taking the services of a PEO firm is the increased profits resulting from the reduced costs of recruitment and better management of resources. They also help avoid losses due to potential lawsuits and bad publicity arising out of bad handling of employees.
· Build a better future for the enterprise
The last but not least important benefit of a PEO agency is that doing so can help build a better future for the enterprise. Increased profits from doing will, in turn, result in a better return on investment (ROI). A higher ROI can lead to an increase in the value of shares.
The above list contains only some of the most crucial benefits of a PEO agency and is by no means exhaustive, but these benefits should be able to convince anyone of their desirability.
The Bottom Line
One can easily wrap up the above discussion by concluding that PEO companies offer numerous immensely valuable services. However, to get the best of these benefits, it is crucial to select the PEO companies carefully as not all PEO companies are the same and a bad PEO company may do more damage than good. If selected with due diligence though, they can help take an enterprise to new heights.