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Why PEO Pays Off

In early August 2011, Aberdeen Group published a research brief describing why using a Professional Employer Organization (such as G&A Partners) pays off for small and medium-sized companies. Aberdeen is a firm that conducts primary research studies which provide “specific insight by industry sector, company size, and geography, as well as by job role, business process and technology.”

In December 2010, an Aberdeen report revealed that 52% of business executives believe the top barrier hindering HR’s ability to contribute to overall strategy is “too much time spent on day to day tactical activities”. The report also revealed that increasing regulations have made compliance concerns a major factor in driving core HR investment.

One of the primary factors driving companies to use PEOs is the rising cost of healthcare, especially with the healthcare reform set to take effect in 2014. They want to have the ability to offer employees competitive healthcare benefits at a reasonable cost.

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Companies are also attracted to PEOs because it frees up key employees to focus on core business processes, rather than day-to-day HR activities.

Aberdeen’s research has found that most companies currently working with a PEO have an average of 40 employees. Using that number, the group found that these companies can expect to pay about $56,640/yr to provide high quality HR services, healthcare benefits, remain compliant, and free up staff to tackle core priorities in the company. This amount is 27% less than the average salary of one HR professional ($65,000).

Because of this, the vast majority of companies currently engaged with a PEO would recommend the service to others (about 82%). Their ability to offer high-quality services and benefits to employees has been a major factor in attracting and retaining top-notch talent.

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In companies who work with a PEO:

  • 62% are more likely to be satisfied with the healthcare offered
  • satisfaction with employee performance is slightly higher: 83% vs. %79%
  • Worker’s compensation burden is likely to be lower

There are several major conclusions that can be drawn from the Aberdeen research brief. In general, there are large advantages for a small or midsize company working with a PEO:

  • Relieved of the burden of tactical HR administrative duties
  • Gain expert knowledge of regulation and compliance
  • Receive access to attractive healthcare benefits
  • Enhanced ability to attract and retain top talent

G&A Partners is equipped to offer all desired services of a top PEO. In most cases, G&A is able to offer high quality HR and administrative services for less than the cost of hiring one HR professional. Employers gain an entire HR department for the cost of one full time employee. The result is a reliable service that brings cost savings and more free time for owners to focus on their core businesses.

 

Source:

Saba, Jason. “PEO: Taking Outsourcing a Step Beyond Pays Off for Small and Mid-Sized Companies.” Aberdeen Group – Home. Aberdeen Group:, Aug. 2011. Web. 09 Aug. 2011. <//www.aberdeen.com/Aberdeen-Library/7272/RA-professional-employer-organization.aspx>.

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