If you’re a small or midsize business interested in partnering with a professional employer organization (PEO), you may be:
- Overwhelmed by all the different types of PEOs out there, and…
- Considering using a PEO broker to help you make the right decision.
It’s completely normal to feel a little deluged by your options. From the big name PEO vendors to regional companies, from ESAC to CPEO, there is a lot to consider! And, even from our perspective as a PEO, it can be hard to muddle through the jargon in our industry and learn what services prospective partners actually provide you and your team.
So it makes sense that you might want someone to help “guide” you through the process. Enter a PEO broker.
What is a PEO broker?
A PEO broker is someone who works with employers to find an outsourcing partner for the HR function of their business.
Brokers are responsible for identifying and vetting PEO options in the market, and helping employers identify and understand the pros and cons of each offer. A broker will get quotes from various PEOs and help the employer figure out the best option for them.
We don’t recommend working with a PEO broker. Here’s why:
1. Working with brokers inflates the cost of working with a PEO.
The cost of engaging a PEO broker is absorbed by the PEO and then passed along to the employer (that’s you!) who engages the broker. So even though it appears as though a PEO broker doesn’t cost anything, the PEO broker is getting paid by the PEO selected. PEO brokers are not inexpensive, and PEOs must shift the cost in order for the transaction to make financial sense. On the other hand, if an employer comes to a PEO directly, it costs them less, because a PEO doesn’t have to pay for a middleman.
2. PEO brokers may not be neutral on the PEO option they’re presenting.
Some brokers may get paid more by one PEO than others or are otherwise incentivized by PEOs. Working with a broker doesn’t necessarily mean you get the best PEO options. Some brokers require PEOs to pay to be on their “list”
3. Not all PEOs are represented in the options a broker presents.
Using a PEO broker is the quickest way to get quotes, but it doesn’t mean you’re getting the best quotes. It’s helpful to have a broker if you know nothing about PEOs and you don’t have the time or energy to find and investigate your options, but for the added price of the PEO solution due to the broker, you’re better off doing your own research and meeting with PEOs yourself. If you’re unsure about what to look for, use our handy checklist as a starting point. Reputable PEOs will welcome your questions and answer them thoroughly.
4. Brokers present, but don’t follow through on service.
In addition to not necessarily presenting all PEO options available, only brokers present the PEO proposals. Because they are not involved in the PEO’s service delivery, it’s not possible for them to answer all questions you will inevitably have following a proposal conversation. As a PEO, the last thing we want is to have someone else represent us—someone who doesn’t know our business quality, reputation, service level, benefit products, technology platform, etc. It’s simply not a good way to accurately share with you, our potential clients, what it would be like to work together in partnership.
The bottom line on PEO brokers is…
While PEO brokers may know aspects of our industry, they aren’t experts on individual companies, which is why we can’t recommend hiring a broker to choose the best PEO partner for you. The time savings you get from hiring a broker isn’t worth missing out on knowing your potential partners and having in-depth conversations with them about what they bring to the table.The time savings you get from hiring a broker isn’t worth missing out on knowing your potential partners and having in-depth conversations with them about what they bring to the table. Click To Tweet
Your PEO is arguably one of the most important parts of your business. And as the “human” part of the human relations function, part of your PEO selection process should include meeting with them, and determining if you can trust them with the HR side of your business.
So skip the PEO broker, and do your own research instead. And while you’re looking, be sure to add us, GenesisHR, to your list of prospects. We’ll answer all your questions and help you understand if we are the best PEO partner for you. You can learn more about our transparent pricing here, and contact us when you’re ready to talk.