Should You Join Up With a PEO? Other Solutions are Available

Perhaps you are a start-up staffing company. Perhaps you want some help in the HR area. And perhaps you want to help your employees by lowering costs.

If so, you may consider choosing to work with Professional Employer Organizations (PEOs) to give employees access to health and retirement benefits, provide them more human resource services and ensure timely tax filing, while taking this work off your shoulders.

Simply put, this is how it works: A PEO enters into a joint agreement with an employer (that would be you) and that allows the PEO to share and manage many employee-related responsibilities and liabilities. This allows you to outsource your human resource functions, such as employee benefits, compensation and payroll administration, workers’ compensation, and employment taxes.

But the main point is, is it good for you? And have you considered other options? Let’s take a look.

Are you thinking long-term? You need to consider whether that could be the case, in terms of signing up with a PEO, and whether it is the way to go.

The Pros

The main reason many companies choose PEOs is to provide benefits to their employees at a lower cost, which we can all agree is a noble goal. Other benefits include less administrative costs, outsourcing compliance and payroll administration, and even outliers like drug testing. As staffing firms realize, outsourcing is a key of their mission, and it seems only natural to turn to a PEO to offset their costs.

The Cons

However, it is important for the company to consider whether working with a PEO will result in long-term gains. The PEO is now in control of companies (and possibly competitors) in the same risk pool, and can often feel pressure to add new clients (regardless of their risk), which can result in increased rates and higher long-term costs.

You also essentially lose control of your people and processes.

And of course, in these days, security is an essential issue. You are obviously sharing your information and that can be jeopardized.

The Better Option

There is an option beyond PEOs, however. At Madison Resources, we offer full-service solutions to these administrative problems. This includes everything from funding to managing payroll to technology to business intelligence to back office support, all of which will help serve your clients better.

As an advantage, for one, you are no longer in a “risk pool.” Indeed, you are a separate client and will always be treated as one. As a staffing entrepreneur, you don’t want to be lumped in with other firms who may not have the same goals and initiatives that you do.

As far as security, we at Madison are “in the cloud” and can guarantee the safety of your data.

Then there is the control issue. Your employees remain your employees, whether they are internal or associates. You’re not handing this valuable resource over to an organization, that, however well-meaning, is not necessarily putting you first.

Plus, at Madison, we scale with you. We’re not a one-size-fits-all. We can grow with you, and we can help you scale back when prudent. This sort of flexibility can be difficult with PEOs.

A final advantage is that you will have experienced staffing veterans helping advise you on every step of your journey. This goes beyond mere business processes and into helping you run your business, and achieve your goals, more effectively.

Are you looking for a better solution?

At Madison Resources, we believe in outsourcing, as we do everything from payroll to technology. We just want you to partner well. If you need advice, contact us today!


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