Why Your Association Should (or Should Not) Partner With a Professional Employer Organization

Managing a business is hard enough without getting bogged down in payroll, benefits and compliance issues. If you’re struggling with rising employment costs, navigating complex regulations or trying to offer competitive benefits without breaking the bank, you’re not alone. Many associations face the same challenges, especially when managing a diverse workforce of office staff and field workers.

One potential solution? Partnering with a Professional Employer Organization (PEO). A PEO takes over many of the administrative burdens of employment, freeing you to focus on growing your business. But is it the right move for you? Let’s break down the benefits and drawbacks.

What is a PEO?

A PEO creates a co-employment relationship, meaning both your business and the PEO share employment responsibilities. You maintain control over day-to-day operations while the PEO handles tasks like payroll, employee benefits, workers’ compensation and regulatory compliance.

Benefits of Partnering with a PEO

• Lower Workers’ Compensation and Unemployment Costs
  PEOs leverage their large insurance pools to secure better rates on workers’ compensation and unemployment insurance, reducing financial strain on your business.

• Access to Better Benefits
  Offering top-tier benefits can be difficult for smaller businesses. PEOs provide access to high-quality health insurance, retirement plans and other benefits typically reserved for larger corporations, helping you attract and retain talent.

• Compliance Assistance
  Staying on top of ever-changing employment laws is challenging. A PEO ensures your business follows federal, state and local regulations, reducing the risk of costly fines or legal issues.

• Streamlined HR Management
  From recruiting to payroll to benefits administration, a PEO simplifies HR, allowing you to focus on running your business instead of handling administrative headaches.

Drawbacks of a PEO

• Dependency
  While a PEO makes HR easier, it can create reliance on their services. If you part ways, you’ll need to rebuild vendor relationships for payroll, benefits and insurance, which can be a hassle.

• Loss of Control
  Handing over HR functions means less direct oversight of payroll and benefits, which may not sit well with business owners who prefer full control over these areas.

• Fees
  While PEOs save money in some areas, they do charge fees—usually a percentage of payroll or a flat per-employee rate. If your workforce is large, these costs can add up.

Is a PEO Right for You?

If you’re tired of navigating complex HR and compliance challenges and want to offer competitive benefits while cutting costs, a PEO could be a game-changer. However, if maintaining full control and avoiding additional fees are top priorities, you may want to explore other options.

Ultimately, the right decision depends on your business goals and operational needs. Weigh the benefits against the trade-offs and choose the path that best supports your long-term success.