Is It Time To Leave Your PEO Provider?

A professional employer organization (PEO) is a firm that handles your management tasks such as payroll, employee benefits, workers’ compensation, and various others.

However, there are a number of reasons why this is not necessarily the best option for your company.

If your company is using a PEO, then you’re already aware of the benefits. But have you ever considered leaving your PEO provider? If you have asked yourself this question, here are three reasons to consider “yes” as the answer.

The Investment is High

One of the major reasons that a company might consider leaving their PEO is due to the high costs. While supposedly the company pays less for health insurance, it is at the offset of paying per-employee administration fees, which can reach hundreds of thousands of dollars.

If you think about it, what are you really saving in the end if the fees are higher than your savings? In fact, you may actually save more money than you are already saving with a PEO, which means the cost difference is even more significant.

Systems Upgrade

Another factor to consider when deciding on making the switch is the fact that a growing company needs services that a PEO does not always offer. Your company must then seek alternatives that often overlap with the services you are already receiving in addition to the new services that are needed.

For example: PEOs do not typically offer integrated human capital and performance management systems except in rare cases. This means that your company must find other software tools to take care of this need. This is when the overlaps often happen.

Services Become Duplicated

As mentioned above, services are often duplicated by the need of advanced services.

Another way that this happens is when a company employs a full-time People Operations manager or Human Resources manager. The tasks that are performed by these hired workers duplicate some of what the PEO offers, so expenditures are not managed efficiently and costs are higher than necessary.

Also, your company may end up being charged for administrative fees on support and systems that aren’t even being utilized.

Leaving Your PEO

Make sure that your technology is up to date and that your company will be okay with the overhaul that takes place. This is an excellent time to review your policies and make sure everything is relevant and up to date.

Keep in mind that your taxes do not reset with the new company, so that may be a factor. However, taxes are accounted for at the end of the year.

Take into account your workers’ compensation payments. At times, you may be overpaying with the PEO, so that is something to consider that is beneficial to your company’s bottom line.