If your small business has already joined a PEO (Professional Employer Organization), then you likely already know the advantages of using a PEO model — for example, how companies using a PEO are 50% less likely to go out of business.
What you might not know is that not all PEOs are created equal.
Maybe you’ve been contemplating switching to another PEO, but the difficulty of the task, or just finding the right fit, feels daunting. And there are so many questions — Does your current PEO service your company in the way you need? Is finding a new PEO a complicated process? Will it cost more? What about fees for switching?
Here, we’ll try to answer those questions by helping you navigate some of the differences, both small and significant, between different PEOs.
Get the guide on how PEOs work for small businesses.
Finding the Right Fit
Perhaps you’re on the fence about switching PEOs and want to know how a switch would be beneficial to your team and your company overall.
Finding the best fit depends on what needs your team has. Have your team’s needs changed as your company has scaled? Are you receiving the level of service you expect from your PEO? The answers to these questions will help you determine what you’re looking for in a new PEO.
In addition to asking yourself those questions (and maybe these, too), you’ll want to consider a few other aspects as you evaluate other PEOs. Let’s dig into these key aspects.
Features, Integrations, and Usability
As we mentioned, not all PEOs are created equal. Some are fresh to the market, while others have been around the block a few times. Each PEO will have slightly different offerings, but most provide customers with systems or software that facilitate or automate various operational tasks. Some PEOs work with third-party vendors to provide access to even more features and functionality that aren’t built in-house.
Both older and newer PEOs may include some of the same features and third-party additions in their systems or software, so it’s important to consider what unique functionality is most helpful for your business operations. Some common PEO platform features and third-party additions to consider include:
Automated payroll with flexible pay frequencies for different employee types as well as contractor and vendors
HRIS tools for onboarding, PTO tracking, reporting, document storage, and compliance
Support for withholding, reporting, and remitting payroll taxes as well as filing W-2s and 1099s
Online enrollment in health, dental, and vision insurance, as well as other benefits and perks
Employee Assistance Programs (EAP) like Health Advocate
Compliance training through vendors like EVERFI
Payroll software like Xero, Quickbooks Online, and Quickbooks Desktop
Benefits and perks providers like ClassPass and 401k
In addition to features and integrations, you should consider how various PEOs operate themselves. Some PEOs do more business over phone calls, while others may rely heavily on email to get things done. Think about what approach aligns most to your business and how the various approaches may impact how things run — the right PEO might just help your business run more efficiently!
Service and support look different from company to company, and PEOs are no different. It’s important to understand how your business will be supported, including what services are available and how often they can be accessed.
Consider using the following points as a mini-checklist when evaluating current and prospective PEOs:
Communication - What are your preferred methods of communication? Some enjoy using tech-forward channels like online chats and social media for help. Others much prefer working through things over the phone or in-person. Understand what methods of communication will work best for your organization, and choose a PEO whose support framework offers what you need.
Availability - Does the support availability align with your schedule? Some PEOs offer 24/7 support, while others have specific windows of time when reps are available to assist. It’s important to think about when you or your teams might need the most help — will you need support when you’re handling operations on nights and weekends, or will your team need answers to questions during business hours? This brings up another important factor — will your chosen PEO support your employees? Some PEOs offer support to the admin only, whereas others do extend support services to employees.
Partnership - Are you interested in adding value to your PEO as a customer? Not every PEO is in a position to directly use customer feedback to improve their products and services. But some PEOs can and do make this a priority with a customer-centric approach that actively solicits feedback for the purpose of improvement. If this is important for your business, find which PEOs have this type of relationship with their customers.
Cost and Value
Cost is always a consideration, and many PEOs charge a startup fee for joining. These fees can run up into the hundreds for each employee, or thousands for the company. Because fees can add up quickly, look for PEOs with transparent pricing. Justworks’ simple pricing structure, for example, is clearly outlined on our site. It’s important to do your research to understand the true cost of joining a prospective PEO.
When thinking about cost, it’s also key to consider the overall value of joining a PEO. The less obvious perks of joining a PEO may benefit your company more than you realize. Some other things to think about in terms of value include:
Scaling as needed - If your business experiences moderate turnover, perhaps you’d benefit more from a PEO that can scale pricing accordingly. For growing companies, this might be important as they continue to grow and hire more employees.
Transparent pricing - Explore your options and ask your prospective PEO if there’s flexibility in choosing only the services your company needs You may save money while still getting the services that are most important to running your business.
Offering access - One of the biggest draws of a PEO is its ability to offer small businesses access to high-quality health insurance. The cost savings are great, but also consider the impact of having access to enterprise-level health insurance plans through trusted carriers. Improved health and quality of life for your employees can mean long-term value for your company.
There are plenty of other ways PEOs can add value, so review each prospective PEO closely to determine all the ways in which your business may benefit.
While PEOs can save companies time in the long run, the process of joining a PEO does require some time upfront. If you’re looking to switch PEOs, you already have something working in your favor — you’re already familiar with the process of joining one.
Keep your eye out for PEOs that have teams dedicated to the onboarding process. You’ll want a company that’s prepared to help you and your team get acclimated while making sure nothing slips through the cracks. How easy they make it matters, too — the simpler the process is for you and your employees, the faster you’ll be able to enjoy all the benefits of joining a PEO. For some, a simple process might mean easily accessible online onboarding with as much automation as possible. For others, working with people directly to onboard might provide the personal touch your company needs.
How Justworks Can Help
Justworks is a modern PEO that makes it easier to start, run, and grow a business. With Justworks, entrepreneurs and their teams get access to big-company benefits, automated payroll, compliance support, and HR tools — all in one place. By combining the power of a Professional Employer Organization (PEO) with expert 24/7 customer service and a simple and friendly platform, Justworks gives teams of all sizes the confidence to work fearlessly. Get to know us and learn more about all the ways your business could benefit from joining us.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.