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Professional Employer Organization – What is a PEO? Why use a PEO?

Often referred to as employee leasing, a PEO delivers human resource services by establishing a co-employer relationship with its client. According to the U.S. Small Business Administration (SBA), a typical business with 100 or fewer employees does not have a Human Resources (HR) staff even while today’s business climate has grown increasingly more complex and prone to litigation. PEOs provide five core benefits to their client companies:
  • time savings,
  • reduced costs,
  • enhanced employee benefits,
  • regulatory compliance,
  • and employee satisfaction.
A recent SBA report suggests that small business owners spend up to 25 percent of their time handling administrative paperwork related to their employees, much of it because of government regulations. The report also says that the average small-business owner spends 7 to 25 percent of the day on employee paperwork, and most did it incorrectly. According to a survey by the Society for Human Resource Management (SHRM) Foundation, nearly nine out of ten companies (89%) reported their PEOs significantly reduced their time demands. Outsourcing your human resources functions allows you to focus on your core competencies and provides administrative relief from many employer-related responsibilities, so you can concentrate on developing strategies that enhance your bottom line.