Myths, Pros, & Cons Of Working With A PEO

By: Neal Collins

There’s a lot of information—and misinformation—about professional employment organizations (PEOs) floating around online. Unfortunately for small and midsize businesses who need help managing HR matters, it can be hard to tell the difference between what’s true and what’s not. (In fact, we recently received an email making some outlandish claims about PEOs that really frustrated us, because the message simply wasn’t fact-based!)

Today, let’s set the record straight on the perceived pros and cons of using a PEO, and what you can really expect from partnering with a firm like GenesisHR.

Pros & Cons Of Using A PEO: Our Take

Debunking The Myths Of Working With A PEO

Myth #1: “It takes a lot of work to make a change to a PEO, so I won’t even start the process.”

This is one of the classics—it consistently shows up on professional employer organization pro/con lists. We’ve had prospects tell us they’ve been with PEOs before and are hesitant to do it again because of the administrative work and hidden fees involved with transferring.

If this is your biggest concern, we understand. We can’t speak for other PEOs, but GenesisHR clients experience a seamless and simple implementation process. We bring our costs to the forefront when we’re reviewing proposals with you so you’re never surprised when you review your invoice. We’re also actively involved with all aspects of PEO implementation, so you don’t feel overwhelmed and your employees feel well-supported.

New to PEOs? Start here with our comprehensive guide: Everything you need to know about PEOs.

Myth #2: “We won’t be happy with the overall service of your PEO.”

PEO competitors claim you’re unlikely to get timely responses, your payroll may not be processed accurately, and you won’t get a say in choosing your benefit plans—all false claims that we are happy to debunk. We can only speak for our own PEO, but at GenesisHR:

• We strive to respond the same day to our clients, and provide unmatched service with a personal touch. We are real people who know your company—you’re more than a client number.
• We take tremendous pride in ensuring that payroll is processed accurately. Our team is made up of experts with 10+ years of experience, and their key performance metric is accuracy.
• We offer several health insurance products plus a bevy of other plans for you to choose from. (You can read more about PEOs and health insurance in myth #7, below.)

Myth #3: “The PEO will make all of our decisions for us.”

The PEO doesn’t want to manage your business. From our perspective at GenesisHR, we want to provide appropriate advice and guidance around employment relationships. At the end of the day, it is you who makes employment, promotion, and management decisions—all of which are always under your control in a partnership with GenesisHR. As your PEO, we’ll administer payroll, your benefits and health insurance, your 401k plan, and more. When we make business recommendations about things like compliance, HR best practices and policies, and benefit strategies, you are made fully aware of the options and the pros and cons of each.

Myth #4: “A PEO is going to change the way we do things.”

We recently had a question from a prospect who was concerned about whether or not we’d change their process of performance reviews and pay raises if they partnered with us. The answer to this question was no—if you have a process that works for you, you should continue it! As your PEO, we have no interest in making changes to processes that are compliant and work well for your organization. But if your organization doesn’t have a process and would like help defining one, or if there are areas you’d like to improve, you could engage your PEO to assist.

Myth #5: “We need extra help with complex HR issues a PEO can’t provide.”

If your company is attempting to make sense of the complexities of employment law, partnering with a PEO actually makes far more sense than doing it on your own. PEO HR business partners like GenesisHR are highly credentialed. Given the co-employment relationship, it is incumbent that the client and the PEO make sense of complex employment law, and our team of experts does just that.

Plus, PEO risk sharing means compliance is as important to us as it is to you. Other service models (like that of an ASO) leave clients “holding the bag” since the ASO has no skin in the game.

Myth #6: “Hiring a PEO is expensive.”

When compared to hiring a single HR employee, partnering with a PEO is not expensive: You get the breadth of expertise of our entire company of experts in the areas of HR, payroll, and benefits—something a single hire just can’t match.

And you can’t reasonably compare the investment of hiring a PEO like GenesisHR to the expense of hiring a payroll company—it would be like comparing apples and oranges. A payroll company only manages payroll. GenesisHR works alongside you to do so much more, everything from benefits and 401k plan administration, onboarding, performance management, training, HR compliance, and yes, even payroll and tax reconciliation.

Myth #7: “Our insurance carrier could change anytime, on the whim of our PEO.”

Health insurance is a huge line item for your business’ budget, so it is important for you to understand the philosophy of the PEO you partner with when it comes to insurance offerings.

• Do they have a history of changing carriers?
• Do they offer a stable array of plans?
• What is their track record with carriers?

By asking these questions, you’ll gain a better understanding about what the PEO is likely to do.

A similar question we hear is, “Will my PEO change to a different carrier in a couple of years without my having a say in it?” The same principles apply here: Ask lots of questions when considering PEOs, and if your business has a certain need, you will want to investigate how each PEO will handle it.

At GenesisHR, our approach to health insurance is a core part of our company’s strategy. We know how disruptive changing carriers can be for employers and employees, and our strategy is to offer a stable platform with the best partners in the market. (This is not always the case with other PEOs, whose strategy may be to go with the lowest price. If consistency and stability are important to you and your employees, make sure you’re considering a PEO like GenesisHR.)

Get the facts about our PEO.

Unfortunately, you can’t trust everything you read online about PEOs—the pros and cons are often more nuanced than they seem. If you are interested in partnering with a PEO but you still have questions and concerns, we’d love the opportunity to speak with you and help address those issues. Get in touch today and learn the truth about a co-employment relationship with GenesisHR—and the benefits it can bring to your company.