Nothing good comes easy, and that includes hiring and managing good employees for your small business. That’s why many entrepreneurs are turning to professional employer organizations (PEOs) to handle the complex, time-consuming administrative burdens of human-resource management.
PEOs are companies that help businesses find and hire people, plus manage such things as health benefits, workers’ compensation claims, payroll, unemployment insurance and more. As a business owner, you contract with a PEO to assume these and other responsibilities, allowing you to concentrate on the revenue-producing side of your operations. PEOs establish and maintain an employer relationship with the workers assigned to you and assume many employer responsibilities and risks.
Most small businesses are new to the human-resources field. But one advantage of using a professional employer organization is that it already has experienced HR pros who can handle benefits, payroll, Occupational Safety and Health Administration compliance and just about everything else you will need. By bringing employees into a larger overall group, a PEO can offer your workers benefits such as health insurance and retirement plans — valuable perks you would be hard-pressed to deliver on your own.
Pre-employment testing is another area where PEOs can help. Without a screening process, you risk placing the wrong person in the job, leading to lost productivity and costly turnover. PEOs tailor pre-employment tests to predict loyalty to you as well as success on a specific job. The tests aren’t foolproof, but they can have a big impact.
Small-business owners often dread the prospect of reading mountains of résumés and conducting interviews for prospective hires. PEOs can reduce this burden and deliver candidates quickly, then handle the paperwork for the new hire. Some PEOs have entire divisions devoted to recruiting and helping small-business owners gather information to make the right hiring decisions. Small wonder why many entrepreneurs credit PEOs with helping them quickly grow their businesses.
An excellent source of information for identifying and working with PEOs is the National Association of Professional Employer Organizations. NAPEO’s website, www.napeo.org, describes how PEOs work, the benefits they offer new and growing small businesses, and guidelines for selecting one that is right for your HR needs.