Running a business is a fulltime job and you will need to spend your time ensuring that the business runs smoothly. When handling payroll and related Human Resources tasks start to distract you from focusing your organization’s primary business, it might be time for you to outsource some or all your HR-related activities. In such cases it is logical to turn to a business which manages HR administration as their main business. <!–More–>
Based upon your needs, you might want to consider either a Human Resources Outsourcing (HRO) supplier or a Professional Employer Organization (PEO).
You should first consider how much of your HR function that you want to outsource. Working with an HRO enables you to outsource specific HR functions. A PEO on the other hand”bundles” services such as workers’ comp, payroll and benefits and generally can not offer them as standalone alternatives.
Whether you employ a PEO or an HRO, you will still require an in-house HR administrator or supervisor to work with the seller. However, the seller can handle an assortment of tasks your staff might not have enough opportunity to do. They may also offer expertise in areas your staff isn’t familiar with, like making sure your organization is in compliance with the most recent employment legislation, benefits administration and payroll tax reporting. For more detailed information about PEO Canada, visit us on https://www.peocanada.com/our-solutions/peo-standard/payroll-administration/.
Neither a PEO or HRO provider will handle your workers. Instead, both will work with you and your HR staff to deal with some or all your HR functions, such as payroll, benefits management,compliance, training and much more. Think of equally as augmenting your Human Resources staff, not replacing it.
For smaller businesses a PEO will help control HR costs such as Workers’ Compensation Insurance, Group Health benefits and Payroll Processing. To be able to deliver these and other HR services the PEO becomes a co-employer of your organization’s workforce.
In most cases the PEO is regarded as the employer of record, although the customer controls the daily activities of the office. As you maintain authority over your employees in your job site, the PEO is responsible for managing benefits, remitting payroll taxes, processing workers’ compensation claims and processing employment paperwork.
So, why do you need to allow someone else co-employ your employees?
Pricing and efficiency. A PEO pools the purchasing power of several business like yours, which offers pricing benefits it can pass down to it’s customers. Through these economies of scale the PEO can often secure workers compensation insurance and group health benefits (that can be provided to your employees) at substantially lower prices than your company might be able obtain on it is on. Working with a PEO can also buffer the employer from sudden rate increases in health care or workers’ compensation premiums.
Furthermore, since the PEO specializes in employment -related activities it’s literally in the business of employment. PEOs processes and documents all payroll administration and taxation, processes worker’s comp claims, and administers employee benefits. This reduces the amount of work the company must perform but also expands the benefits and support to workers. Furthermore, working with a PEO can remove unexpected paperwork and costs. By way of instance, if payroll taxes are audited by a workers’ compensation carrier it is the PEO who’s audited, not your employer.
Again, PEOs aren’t a replacement for your HR department but supplement your HR staff so that they can concentrate on conventional HR areas such recruiting, hiring, and training. Do not have time for the standard functions either? No difficulty – most PEOs also give the capacity to deal with recruitment, background checks and more. A PEO can offer complete support for all your HR functions, allowing your organization to concentrate on why it got into business in the first place (probably not for payroll taxes and benefits administration).
So, should you use a HRO supplier or PEO?
The first element to consider in choosing between the two options is the company’s size and range of need. Most HROs work with larger companies who due to their size can obtain more competitive pricing on benefits and risk management solutions and have a large in-house HR department. For all these businesses, they save more money by outsourcing specific regions of the HR such as benefits administration, program management, HR Information systems.
Many smaller businesses on the other hand (under 500 employees) benefit from bundling their services using a PEO. The pricing benefits and efficiency provided by a PEO make outsourcing HR-related management an important part of their business planning. Either way, comparing HRO and PEO vendor proposals is crucial. Websites like EmployHR.com provide businesses with free price quotes from multiple HRO and PEO sellers. You might also need to spend some time exploring HR Outsourcing options in the Society for Human Resources Management (SHRM).
To sum up, the decision to outsource HR is a significant one. First knowing the gap between HROs and PEOs can help you make the perfect option. If you would like to outsource only certain purposes, an HRO is the optimal solution. If you’re searching for a full size solution, a PEO could be a better choice.