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How Does a PEO Benefit Employees?

As a small or medium-sized business owner, you face a lot of challenges—not the least of which is how to handle HR functions and provide a great employee experience in a cost-effective manner. It’s tough work, but well worth it when you consider how costly employee turnover can be: replacing just one employee costs around one-third of their full salary. But how can you dedicate the time and energy to administering HR functions when you have countless other responsibilities pulling your attention away? Fortunately, there’s a solution that many businesses your size utilize: hiring a professional employer organization (PEO).

In this article, we’ll outline a few of the most compelling benefits of a PEO—including how it can help with attracting, retaining, and supporting employees (while increasing productivity and profitability).

Five diverse employees smile at the camera, wearing business attire.

How does a PEO benefit employees? Let’s get into the details!

Hiring a PEO for your small business benefits employees in myriad ways, with the most commonly cited being HR services and support, high-quality benefits, and employee empowerment. Just as important to an employer, a PEO partnership can also enable revenue growth, reduce turnover, and even reduce your likelihood of going out of business.

What’s not highlighted as often, but just as important, are the benefits of a PEO for employees—from their perspective. A few of the top PEO employee benefits include:

  • HR Services and Support: For many employees, an organization’s HR infrastructure and processes can make or break their impression of the company. From having a dedicated point of contact for questions and concerns to being able to count on being paid accurately and on-time (consistently), utilizing PEO services can help fill in any HR gaps and ensure a positive employee experience.
  • Competitive Benefits: Hiring a PEO enables your organization to provide your employees with competitive, Fortune 500-level benefits regardless of your company’s size or maturity. Competitive benefits not only keep employees around—they’re also a differentiator that can attract top talent, providing the entire business with a lift.
  • Employee Empowerment: When employees don’t feel heard, valued, or supported, they’re likely to start looking around for other opportunities. While the high cost of employee turnover has a big impact on businesses (especially smaller businesses), turnover also degrades employee satisfaction. And without stability and a cohesive team dynamic, your rate of turnover can increase – resulting in a big hit to your bottom line and significant loss in institutional knowledge. With a PEO, you can increase employee satisfaction with top-tier benefits and HR management support, like training and development, performance management, goal setting, and more.

These points only scratch the surface of how a PEO like G&A Partners can help you take your business to the next level.

Who owns the employees in a PEO?

When you decide to hire a PEO, you enter into a contractual relationship known as co-employment. In a co-employment agreement, your company and the PEO share responsibilities and employees are employed by both your company and the PEO. The co-employment relationship essentially sets your PEO partner up as the administrative employer – giving them the ability to handle employment-related services, such as payroll processing, payroll taxes, benefits administration, workers’ compensation and claims management, and more.

You may be wondering, when you’re in a co-employment agreement with a PEO, is employee ownership an issue? The answer is, no. You’re in charge of your employees, assigning their day-to-day responsibilities, setting their wages, deciding who to hire or terminate, assessing their performance, and more. Your PEO is simply there to answer your employees’ HR-related questions, ensure your employees are paid on time, and help you provide comprehensive, affordable benefits.

With co-employment, you are still in charge of:

  • Day-to-day operations
  • Setting wages and hourly rates
  • Any and all business decisions
  • Sales and marketing campaigns
  • Employee performance reviews
  • Personnel decisions (i.e. hiring and firing)
  • Decisions regarding employee benefits

Should I hire a PEO? The pros and cons for employees

To better understand the pros and cons of a PEO for your employees, we recommend reading some of our client stories and case studies from companies that have realized the benefits of hiring a PEO like G&A Partners. These are companies that have realized that keeping existing employees happy and taken care of is the key to growing and scaling a business over time—and that they don’t have to pay extreme costs for Fortune 500-level benefits.

Why G&A?

At G&A Partners, we offer access to HR experts with years of experience helping businesses develop their employees, improve their workplace cultures, implement new HR processes and procedures, and more. Schedule a consultation with one of our trusted business advisors to learn more.