Running human resources for a growing company is no easy task. As your workforce expands, HR gets more complex and time-consuming. At a certain point, most business owners consider outsourcing HR to a Professional Employer Organization (PEO).
While PEO services offer immense value, integrating a PEO with your existing HR team takes planning and care. When done right, the partnership enhances HR. When done poorly, it creates redundancies and confusion.
Deciding if You’re Ready for a PEO
Adding a PEO partner makes sense when HR outgrows what your internal team can handle alone. But how do you know you’ve reached that point? Consider these signs:
Your Current HR Team Is Stretched Thin
Do you have a backlog of open HR tasks and unresolved employee issues? Is your HR staff constantly playing catch-up rather than thinking strategically? If so, maybe you need more hands on deck. A PEO provides this through HR specialists and technology systems that take time-hungry administrative work off your team’s plate.
Compliance Worries Keep You Up at Night
With constantly changing laws, staying legally compliant gets harder as you grow. Are you losing sleep over missing a labor law update or filing deadline? PEOs stay on top of regulations in their specialty. Their guidance ensures you meet requirements like ADA, FMLA, affirmative action plans, and more.
No Time for Strategic HR Initiatives
Does your team want to implement strategic HR programs but can’t find the time? For instance, you may want to improve:
- Recruiting and retention
- Employee development
- Performance management
- Company culture
- Diversity, equity, and inclusion
A PEO provides bandwidth for these initiatives by owning tactical HR. This empowers your team to operate more strategically. If any of these issues ring true, a PEO may provide relief.
Selecting the Right PEO Partner
Once you decide to add a PEO, choosing the right one is critical. Consider these factors:
Services Offered
Think through the HR functions you want to outsource. Common PEO services include:
- Payroll
- Benefits management
- Compliance
- Recruiting and hiring
- Employee relations
- Performance management
- Training and development
Choose a PEO that provides the specific services you need. Some PEOs offer an expansive menu, while others specialize in certain areas.
Cultural Fit
Make sure the PEO aligns with your company culture, values and work style. Meet with PEO representatives and employees to get a feel for their vibe. A mismatch in culture can cause friction in the partnership, but when cultures click, you can collaborate seamlessly.
Technical Capabilities
Assess each PEO’s technology and analytics offerings:
- Robust HRIS technology
- Real-time data and dashboards
- Custom analytics and insights
Advanced capabilities like these optimize efficiency and strategy.
Experience with Similar Companies
Choose a PEO showing a track record of success with companies like yours. Relevant experience indicates they understand your needs and priorities. Ask for case studies, client referrals, and examples of program results, then select carefully to find the best fit.
Defining the PEO’s Role
Once you select a partner, clearly define the PEO’s role and responsibilities. Delineate which HR tasks remain with your team and which shift to the PEO.
HR Areas to Consider
Determine who owns what across every facet of HR:
- Benefits administration: Who will manage your health plans, 401(k), etc.?
- Payroll: Will the PEO run payroll completely or collaborate with your team?
- Compliance: Which party ensures compliance with regulations?
- Recruiting and hiring: Who handles job postings, screening, interviews, offers, etc.?
- Onboarding: Who onboards new hires? Is it a shared responsibility?
- Employee relations: Who will manage HR issues like investigations, PIPs, and terminations?
- Performance management: Who handles reviews, feedback, goal-setting, and promotions?
- Training: Who conducts harassment prevention and other required training?
- Reporting and analytics: Who provides HR metrics and dashboards to leadership?
Plot out all such details in a responsibility matrix. Update as needed once in action.
Ensure Open Communication
Build in ongoing touchpoints between your team and PEO. This facilitates open communication and collaboration. Schedule check-ins at least weekly at first. Troubleshoot any partnership kinks and continue connecting regularly after things smooth out.
Communicating the Changes
When introducing a PEO, clearly communicate changes to managers and employees. Confusion can easily throw a wrench into your plans.
Explain the Why
Help everyone understand why you added a PEO partner. Explain how it benefits the company and frees up your team for more strategic work.
Set Expectations
Teach employees what to expect from the PEO relationship. For example:
- How/when to contact PEO team members
- How new hires get onboarded
- Who sends out companywide HR communications
Address Concerns
Listen to any worries about the change and provide reassurance around:
- Job security
- Policy changes
- Continuity in HR support
Issue Joint Communications
Have your HR team and PEO co-author onboarding materials and rollout info. This presents a united front.
Monitor Reactions
Check in with managers and employees regularly at first. Gauge their sentiment and gather feedback, then tweak your approach as needed.
Collaborating for Success
Once the PEO is on board, set your partnership up for ongoing success.
Schedule Regular Check-ins
In the beginning, meet at least weekly to discuss:
- Process effectiveness
- Workflow kinks
- Any confusion among employees/managers
- Upcoming projects and needs
Share Knowledge Openly
Avoid silos by sharing information between your team and PEO. Give them insight into your company culture, strategic goals, challenges, etc. to better align.
Measure Results
Analyze data together to assess the partnership value-add. Track metrics like:
- HR team productivity
- Time spent on strategic initiatives
- Manager sentiment about HR support
- HR service ticket resolution rates
- Compliance audit results
- Recruiting and retention stats
Plan Forward Strategically
Have your internal team and PEO plot projects and goals quarterly. This ensures you move forward in sync strategically.
Adjust as Needed
Review the partnership framework routinely. Scale PEO services up or down as your business needs evolve.
Integrating a PEO enlarges your HR capabilities without losing touch of HR strategy and culture. Following these best practices will help unite your internal team and PEO for the best possible results as you journey forward together.
