What to Know before Leaving Your PEO

HR Question: We've outgrown our PEO and are considering a switch to a different HR support model. What should we know before making that move?

HR Answer: Professional Employer Organizations (PEOs) can be a great fit in the right situation, especially for organizations looking to simplify HR administration, payroll and benefits in a season of growth. That said, needs evolve. As your organization matures, you may find that a PEO no longer fits the way it once did. Whether that shows up as a desire for more control, some confusion among employees about who employs them or a sense that the support has become more transactional than strategic. It is common for companies that join a PEO for the initial convenience to eventually outgrow it. The good news is that you have options and it’s worth taking a thoughtful look at what will serve you best going forward.

What Are the Signs It’s Time to Leave Your PEO?

A few patterns tend to show up together when a PEO relationship has run its course:

• Your benefits no longer fit your workforce. What worked when you were smaller doesn’t always scale. If you’re customizing workarounds to make bundled plans fit your team, that’s a signal.
• You’re paying for scale you don’t need anymore. PEO pricing is often built around access to a larger risk pool. Once your own headcount and claims history are strong enough to stand on their own, that pricing model can start working against you instead of for you.
• Employees aren’t sure who they work for. Co-employment can create real confusion about who to go to with a problem. If HR issues feel like they’re bouncing between two organizations, that’s a cultural cost, not just an administrative one.
• You want a strategic partner, not just a processor. Many companies find that PEOs are built for administrative efficiency, not long-term workforce strategy. If you’re looking for a partner who helps you think ahead, not just process payroll, that’s a different kind of relationship entirely.

Please select this link to read the complete article from OSAP Member Clark Schaefer Strategic HR.