Once you decide to opt for PEO outsourcing, it is vital for your employees to understand the overall functioning of PEO. The term PEO stands for Professional Employer Organization. The PEO industry has been expanding for the past thirty years. Its growth has been further accelerated by the present dynamic and pandemic work environment.
Once your employees understand how and why a PEO aligns with your company’s goals and model of functioning, your employees will be receptive towards it because;
- Primarily there job will not change
- They will gain access to better healthcare benefits and retirement benefits
What is a PEO?
To begin with, your employees need to get familiar with the concept of a PEO. A PEO is an entity with whom you enter into an agreement to share your company’s responsibilities such as HR management, payroll, employee management, administrative tasks, compensation, compliance, tax deduction and submission and performance management.
A PEO renders all these services by charging a fee. Now, the computation of this fee amount could be based on the percentage of the payroll or charged per employee in your workforce.
How does the model of PEO work?
This business model works on the co-employer pattern. This implies that a PEO becomes the professional employer of record of its client’s employees. From now onwards, the employee will work towards achieving your business goal under the HR guidelines set by a PEO. A PEO will look after the payroll of the employees and employees will work with ease in alignment with the company’s mission.
Clarity on Misconceptions about PEO
You as an employer need to clear the doubts and misconceptions if any, of your employees about a PEO. You need to give them the assurance that you would not lose control of the business, the tasks and responsibilities of your employees will not increase and there will be no extra financial burden on the company.
Benefits to be derived from a PEO
Several valuable benefits that are derived by working with a PEO are as follows:
- Payroll management: Your employees need to understand that even though their salary will be disbursed by a PEO, they are in no way accountable to it. Moreover, small and medium enterprises, will find ample time at their disposal to focus on their business goals. A PEO will take care of salary computation, tax deduction and submission, leave and bonus calculation of the entire workforce efficiently and without error.
- Compliance: A PEO has a team of finance and legal professionals who aid and facilitate in the functioning by adhering strictly to the laws of the country. Moreover, a PEO is always familiar with any kind of changes or new implementation of labour laws being made in the country. In other words, your company gets saved from any kind of fines or penalties as a PEO remains fully compliant.
- Risk exposure: A PEO shields your company from all hazards in case you wish to expand your business in foreign lands. Yes, the biggest asset of hiring the services of a PEO is that you do not have to set-up an entity in a foreign land. Instead, a PEO will help you hire global employees as per the laws, take care of their payroll and compensation and other claims. In the meanwhile, your company can easily test new markets and make assessment and accordingly devise further plans of expansion.
- HR administration: A PEO assists your internal HR team in the daily HR activities and in maintaining records, time and attendance, working hours calculation and addressing employee grievances and conflicts if any. It is to be noted that a PEO keeps the data of your employees and company with utmost security in its database.
Role of PEO in the Post-Pandemic Working Scenario
The new ‘normal’ way of working in the pandemic and post-pandemic working environment is here to stay and flourish. In simple words, the remote working concept bringing about several improvisations in the working hours, hybrid working culture is set to throw up numerous challenges to the employers never ever before confronted by them. The HR department has played a pivotal and instrumental role in devising, implementing and being proactive while handling these challenges. However, just imagine if you are working with a PEO then all these challenges can be more easily handled by your HR department and that too with ease and peace of mind. This is because your PEO will help to streamline all the mundane time consuming tasks through their expertise and automation processes at hand.
How to select a PEO?
A PEO will handle your sensitive employee data, legal formalities and documentation and financial transactions. Hence, it is vital that you select the right PEO only after verifying the following aspects:
- Accreditation from reputed agencies
- Auditing from external resources
- Performance in the market
You can also convince your employees about the services offered by a PEO by taking a trial run of its services for a week or fortnight. This trial run can give a sneak insight to your employees as to how the working environment and culture would continue to be like after the introduction of a PEO.
Therefore, to conclude, how you explain PEO to your employees is crucial so that they begin to have faith in the operations of a PEO. The employees need to be given a clear picture as to how they would ultimately benefit when the company begins to work with a PEO.
Moreover, a PEO becomes extremely required when you plan expansion of business worldwide. Moreover, the chances of your employees getting hold of overall benefits also get enhanced. So, do liaise up with a certified PEO and stay ahead in this competitive and dynamic business environment. A PEO is the one-stop solution providing wide-ranging services customized according to your business requirement and the dynamic business world.