A guide to proper management of your business

A PEO: your first step towards effective administration

A Professional Employer Organization (PEO) is a professional company that provides an outsourcing service through which an employer can contract out employee management responsibilities, such as employee benefits, payroll and workers' reimbursement, recruiting, risk handling, training and development. Thus a PEO is of great use to both employee as well as the employer. One of the basic functions of a PEO is to safeguard workers' compensation insurance coverage at a lower cost than customer companies can get per person. The PEO hires a client company's employees and becomes their employer of record for tax purposes and insurance purposes. This method is known as joint employment or co-employment.

In the practice of co-employment, the PEO becomes the manager of record for tax purposes, filing paperwork under its own tax identification numbers. The customer company is still the one who directs the employees in their day-to-day actions and routine. Fee charged by a PEO for their service for taking over the human resources and payroll functions of the client company varies from 3 to 15% of total gross payroll.

Want to increase your workforce?

The process of hiring temporary workers to increase the workforce of a company without putting much undue pressure of increased cost is also popularly known as employee leasing. A PEO plays a crucial role in this process. It acts as an interface between the employer and the employee. It benefits both the employer and the employee. On one hand where the employer gets more workforce at a much lower cost, as the PEO arranges insurance and other benefits at lower cost due to bulk negotiation. This increases the client company’s profit directly. On the other hand a worker enjoys better wages, superior job security and other benefits.

Thus one can easily use HR outsourcing services for to advantageously improve the quality of his personnel. Actually HR functions as a business partner and focuses on the basic and fundamental human resource activities that matter the most for business to flourish.

Advantages of hiring a PEO

Time and cost efficient

Outsourcing an administrative HR can help you reduce small scale paperwork for your company to maintain payroll. It not only provides a company much needed time for other administrative jobs, but also helps in reducing the cost to the company.

Reduces your legal responsibilities

A Professional Employer Organization reduces a lot of time and human resources that would be used to arrange payroll and manage benefits plans. It also helps you reduce legal liabilities of an employer but simultaneously insures safety and security of your employees.

Devises employee benefit strategies

A PEO provides better and lucrative employee benefit schemes at a price very reasonable and attractive for the employers.

Supervising the workforce

The outsourced employees work for the client company but still the client company need not take much of a headache to supervise them, as most of the PEOs can do this work for you.

Thus a PEO is therefore very useful not only for large MNCs but also for small and mid-sized businesses and helps them enhance their business drastically.

Professional Employer Organization, a sigh of relief for companies

A Professional Employer Organization is a type of establishment that can help to overcome a lot of headaches and stress by taking care of some of the major employee related issues which is the responsibility of a business manager or owner. These are jobs that can eat up valuable time.

HR Outsourcing is nowadays termed as Professional Employer Organization. A Professional Employer Organization, hence, offers cost effective and time sparing human resource management services, proficient human resource practices, streamlined human resource administration, intends to use the full potential of employees, and can infer rewards and benefits to workers to help them stay motivated and focused on your organization.

The issues

Managing a business is a tough job, and there is a small margin always left between winning & loosing the game. So you will be well served so that the manager can indulge on actually running the business rather than wasting precious time doing only the paperwork. By outsourcing certain employee related responsibilities, the owner is spared to take care of the things that affect the bottom line.

The Advantage

Professional employer management also offers payroll, tax, employee leasing, worker's compensation management, risk management and recruitment and selection services. Their services, besides being economical, are also usually customizable with the needs of the client and long term objectives. Motivating a team of employees is a major area of concern, especially when operating in a situation like recession. Managements need to find a way of ensuring the feel-good factor in your staff at all times.

Best practices has shown that the best way of motivation for employees is to organize small and frequently thanks giving ceremony, recognizing performances publicly with some rewards or appropriate employee benefits having a positive impact on moral and will begin to rectify the negative thoughts effecting the performance of manpower available.

Packages for Employees

Maternity leave and childcare are also significant benefits for employees, mainly women. A good maternity package involving a timed return to work is usually attracts female employees willing to start a career but is afraid of what will happen to their responsibilities at home taking care of their children. The increasing cost of childcare might also prohibit women from getting back to work after pregnancy , hence companies have started offering an allowance for childcare or sometimes started own child care services.

Fitness plans & Health Care also have a great appeal to employees across any organization. Some companies usually installed gym equipments inside the office premises for free usage for their employees or started offering discounts on gym membership, the charges got deducted from the salary of the employees taking an enrollment in the fitness services. Some business houses even offer medical insurance for their employees. This is one of the popular money saving perks, particularly if an employee is suffering from chronic or recurring medical problems, or if the management have the provision of extending the policy to cover spouse and children.

Professional Employer Organization can help companies of small or medium scale enjoy the same human resource benefits like large companies. A Professional Employer Organization costs less than hiring internal human resource manpower and they will take care all of the critical paperwork, negotiating rates for the employees on medical insurance or employee benefits etc. They will also look after all of the important data and forms needed to make sure that the company is compliant with tax and all kind of labor laws. Hence hiring a professional employer organization for a company makes sense.