How to Choose a PEO as Your Human Resource Outsourcing Partner

With changing times, question for big companies is that How to Choose a PEO as Your Human Resource Outsourcing Partner. remote staffing solution has become popular and cost-effective for many small and mid-sized companies. However, hiring remote staff is not as easy as it looks due to the legal complications involved including the risk of having a permanent establishment. With such risks and complications involved, the services offered by a PEO become all the more valuable. A Professional Employer Organization (PEO) or International PEO is a company that acts as an employer on behalf of other companies. A PEO provides Global employment Services and takes care of administrative tasks related to the hiring of an employee. Studies show that companies using a PEO grow 7-9% faster than their peers.

While, a PEO does provide a host of services from drafting employment contracts, managing employees’ expenses to taking care of exit formalities; it is interesting to know to keep a few things in mind before moving ahead with a PEO. The benefits are clear. So, How to Choose a PEO as Your Human Resource Outsourcing Partner or how can you select the right PEO for your business needs? The below set of guidelines may help you choose the right PEO:

  • 01 Whether the PEO is aligned to the goals of the company. It is also important to know people who would be serving you.
  • 02 It is important to determine the resources companies want to hire and any risk management requirements.
  • 03 Payment and Billing: Review the contract with PEO very carefully. Does the PEO require a long-term contract, or can you cancel anytime? What provisions permit you or the PEO to cancel the terms of the contract? Are the liabilities clearly stated? What guarantees are provided? Does a PEO disclose all the elements of an invoice and pass through all costs and bills a separate fee for each employee serviced? This will help in getting an accurate measure of your Return on Investment (ROI).
  • 04 A very important aspect while choosing a PEO is also understanding the HR solution covered in the engagement. The service scope is important to understand the services that would be delivered to the company and the employees.
  • 05 Try to know about the employee benefits offered by the PEO. Companies prefer PEOs that have a wide array of options and benefits for the employees to keep them happy. It would be good to know whether a PEO offers any value-add services such as employee assistance programs or extends services such as procuring laptops etc. or any IT solutions.
  • 06 Is the PEO equipped to handle remote staff’s ad hoc queries in a timely fashion? The aim is to reduce the burden of payroll plus day today employees’ queries related to leaves, salaries, taxes etc.
  • 07 The technology used by a PEO and the software solutions offered can be a good parameter to consider before making the final decision. All PEOs should have software that allow have access (as appropriate) to owners, managers and employees. You should ask for a demonstration and check for the system’s versatility and ease of use.
  • 08 In addition to considering company size, or specific goals, conducting a check on the management competence and expertise of the staff is very crucial for a long-term relationship with a PEO. Investigate the experience and depth of their internal staff. Does the senior staff of a PEO have professional training or designations?
  • 09 Make sure that the PEO is compliant and has all the required registrations to manage the legal compliance in a particular geography as one of the key concerns of companies is managing compliance. Since there are frequent changes in compliance and regulations, it is essential that the firm you are tying with has deep knowledge of such changes. Any non-compliance can have severe consequences and therefore, a PEO should be well equipped to manage the compliance concerns, make you aware of the changing laws, and support in adhering to the set regulations.
  • 09 A few professional references would surely bring more confidence in a PEO. Ideally, you want to work with a PEO that is well equipped and has an established track record working with companies like yours. Speaking to the customers of a PEO validates the service level and can help in gaining more details about the background of a particular PEO. You might to look at the case studies that can highlight how they will solve your challenges.

A right PEO can take your human resource and payroll management to the next level leading to happier employees with extended benefits. You might want to look into some fine details and follow the best practices that pay well in long run. As with the right PEO, companies can expect accelerated growth.

akm global
Written by: Tanu Arora (Director BD)

Leave a Reply