Four Key Distinctions Between Between Hro And Peo Services
The business world is filled with acronyms
The business world is filled with acronyms. Two that every small business owner should be aware of, and understand, are HRO and PEO. HRO stands for Human Resources Outsourcing, while PEO stands for Professional Employer Organization.
Are not these essentially the same thing? They are similar, but each is distinctly different in certain areas.
How much assistance does your company need? Should you even Outsource HR?
An HRO service is hired by your company to provide common human resources services. It is like a buffet; you can pick some of the items or you can pick all of the items offered. Services offered may include the administration of benefits, payroll, employee training, recruitment, or risk management. Your company can hire an HRO to do one or all of these functions.
A Professional Employer Organization differs in that they take care of all of their customers' human resources requirements. A PEO service will create an employee handbook, handle workers compensation, training, safety, payroll, background screening and much more - all of the human resources needed for a small-to medium size business. This Matching Tool will help determine your company needs.
How much liability will your company have?
With an HRO service, they are only liable for the services they provide.
With a Professional Employer Organization, they assume all legal accountability and any associated liability related to their services. Essentially, the PEO will be the administrative employer (or employer-of-record), while your company is the on-site employer.
What are the potential savings to your company?
With either an HRO or PEO, you can focus more on your business needs, rather than your administrative needs. You can concentrate on issues that will make or break your business; such as a marketing strategy. By hiring either an HRO or PEO service, you can cut expenses and save time.
A Professional Employer Organization can offer additional savings in both time and money. As the employer-of-record, the PEO will be responsible for taxes and workers compensation. And, the PEO can obtain reduced rates on retirement packages and health benefits by combining employees from all of their customers. This allows your company to offer competitive benefit packages to your employees; giving you an edge when competing with larger companies.
Which is better for my company?
If your company currently has a human resources department, you may want to consider hiring an HRO service for only one or two functions. Most businesses find their HR department is consistently over-worked with a wide variety of responsibilities. You may want to outsource payroll services in order to provide additional time for your HR staff to focus on training or recruiting. An HRO service can complement the expertise of your current staff.
A new business, or a rapidly growing business, may find a Professional Employer Organization is a better choice. You must consider how much time you can effectively dedicate to administering human resources; and how that time could be utilized more efficiently toward building your business.
A good way to determine which the best solution is for your company is by viewing this PEO & HRO Buyers Guide.
One question often asked by companies considering either Human Resources Outsourcing or Professional Employer Organization services is whether they will lose control of their business. The only thing you will lose is the potential headache of some, or all, of your in-house human resources responsibilities. You will enjoy the benefit of reducing time spent on administrative tasks, while maintaining control of the day-to-day management of your business and your employees. We would like to share this comprehensive Buyers Guide with you to assist in your selection of an HRO or a PEO.
by: Carolyn Sokol
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