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Should You Hire a PEO or New HR Rep?

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Your company has grown in recent years, and this is certainly welcome news to be sure. With the growing success of your company comes a long list of questions. For example, when should you hire a new human resources (HR) rep? Do you even need to hire another HR rep?

You need a strong HR presence throughout your business’s lifespan to establish your objectives, goals, culture, etc. Your company’s HR presence will have a long-term impact on your employees’ success and your company’s overall success.

As your company grows, the current HR team you have assembled will ultimately run out of real estate and need help. One of the choices you will have will be whether to hire another HR representative to help you meet your company’s growing needs.

One choice that you will have is to outsource human resources. One of the best HR outsourcing solutions available to companies like yours is a Professional Employer Organization (PEO). One of the most critical questions is whether you should hire another human resources rep or partner your existing HR team with a PEO.

Why use a PEO?

A PEO will have a fully staffed team of experts who specialize in payroll and human resource services. With a PEO on your side, you can pay a fraction of the salary you would pay a full-time employee to manage payroll management responsibilities and other administrative burdens.

The average HR manager will earn more than $75,000 a year, in addition to benefits. A small business or a mid-size business can spend hundreds of thousands of dollars on hiring a full-time HR employee. Outsourcing HR responsibilities to a PEO can greatly reduce those expenses. When you use a PEO, you will also see a reduction in the costs for hiring and training.

Save Money

PEOs provide access to higher-quality employee benefits at a lower price than would otherwise be possible. A PEO can also help you save money by helping you avoid making any HR-related compliance mistakes.

The average ROI on a PEO is 27.2 percent. The estimated ROI was obtained by calculating PEO-related cost savings in these five areas:

  • Health benefits
  • Workers’ compensation
  • Unemployment Insurance (UI)
  • HR personnel costs
  • Additional HR services, such as payroll

Many small businesses cannot afford to offer high-quality health insurance and retirement plans on their own, but partnering with a PEO will allow small businesses to provide employees with the type of benefits package they deserve.

Gain Expertise

Businesses that do not have enough resources or expertise to successfully perform some HR functions can gain a substantial amount of expertise by hiring a PEO. A new HR representative will likely specialize in one or two areas of human resources. A PEO will have a full team of experts who specialize in all aspects of HR, from payroll to compliance and benefits administration.

Every service that a PEO advises on will prompt advantages for your business and your employees. When you are faced with high-risk HR situations, the expertise of a PEO can help reduce your business’s exposure to any liabilities.

Extra Services

Hiring a PEO does not mean that you will eliminate the need for your current HR staff. An experienced PEO will help your current staff get more work done. A PEO can also be your company’s secret weapon in attracting and retaining the top talent with competitive benefits and structured services.

Rules, procedures, and regulations will change year-to-year, and keeping tabs on all the laws and regulations can consume a significant amount of your time. A PEO will ensure you remain compliant. You will no longer have to spend part of your days reading the latest articles and books on HR laws.

You did not start your company to focus solely on HR. A PEO will allow you to focus on what actually matters — your company. For companies that are looking for additional services that can fulfill or exceed their needs, you will find that partnering with a PEO will provide you access to more services than your new HR rep will be able to offer.

The Best Way To Go

A PEO is designed to help you better run your company and enhance your employees’ experience. The services of a PEO are not meant to replace your current HR team. Instead, a PEO will serve as a trusted advisor who will take administrative burdens off the shoulders of your HR team. A PEO will not assume control over your hiring efforts, but it will provide you with the tools and services you need to attract better talent and streamline your hiring experience.