For employers, every dollar counts when it comes to saving money on business expenses. That includes employee benefits such as health insurance and payroll administration fees. A good PEO (Professional Employer Organization) acts as a business partner to your company and assumes the majority of employer-related HR responsibilities such as payroll administration, employee benefits and compliance issues. By hiring a PEO, the employer gains freedom to focus on revenue-driving activities that help their business grow. Below, we’ve listed a few areas where PEO’s step in and cut costs.
As a co-employer to its clients, a PEO can save employers money by offering affordable and comprehensive benefits to employees that include everything from health insurance to flexible spending accounts. PEO’s are designed to pool all of their clients together (including all of their client’s employees) in order to receive well-reduced costs on top employee benefits such as health insurance. SourcePointe, for example, pools together our 300 clients in order to negotiate affordable health insurance rates from carriers such as Blue Cross Blue Shield. Employers are then able to choose a plan, based on those rates, that best fit their budget and company size. The following include specific employee benefits for which PEO’s can help cut the costs for employers.
- Health Insurance is one of the most important benefits a company can offer. Based on a National Survey of Employer-Sponsored Health Plans from Mercer, the average total health benefit cost per employee rose 3.6% in 2018. The same research states that we should expect a 4% rise in 2019. That’s why hiring a PEO is important when it comes to cutting costs. As a co-employer to its clients, a PEO can save employers money by offering affordable and comprehensive benefits to employees. That includes medical, dental and vision coverage.
- 401K offerings can be one of the lesser-known benefits of hiring a PEO. A typical PEO invests in a multiple employer 401K, which allows companies to jump in without having to pay start-up costs. On average, a start-up cost to offer 401K plans for one organization can reach over $3,000 dollars. Because a PEO combines the assets of multiple companies, that cost is reduced to around $600. It’s important to note that even though each client of a PEO is under a multiple employer plan, each employer has their own individual plan specific to their organization.
In addition to being more affordable, these benefits packages can save employers time. Organizations that develop their own employee benefits packages have to tackle administrative tasks such as enrollment, negotiations, and COBRA administration. A PEO takes care of those responsibilities, and more, so that the employer can spend more time on big picture things and less time in an HR role.
Outside of employee benefits packages, day-to-day operations such as payroll administration and on-boarding new employees can cost employers unnecessary resources. According to Glassdoor, the average cost per hire is $4,000 dollars. That money could be spent on valuable resources to help your company grow. A PEO steps in and reduces these expenses.
- Payroll. Managing payroll takes time and money. Employers can save on both by hiring a PEO to assume the responsibilities of payroll administration and management. A PEO will automate the payroll process for you and even handle your withholdings, distribute W-2 end of year wage statements and track PTO.
- Recruitment. Because a PEO is a team of licensed HR experts, it can help move along the process of bringing on new hires. For example, SourcePointe administers background check screenings, coordinates new employee on-boarding and manages the E-verify process. All of which can be time-consuming and expensive for employers.
Overall, a PEO is there to save the company money and help internal processes run in a more efficient and effective way. If you have any questions on how hiring a PEO will affect your day-to-day operations or general administration, we’d be happy to chat with you.
We can help.
Running a business is costly, and employers need to save money where they can. That’s why hiring a PEO is important for companies that struggle finding a comprehensive employee benefits package on their own or who spend unnecessary time completing HR tasks. Because a PEO acts as a co-employer to its clients, it can pool assets from multiple companies in order to receive reduced costs on benefits such as health insurance. We’re here to help your business grow by providing cost-effective solutions and taking on the burden of HR responsibilities such as payroll administration and other non-revenue driving tasks. And because we are always up-to-date on recent compliance regulations and workplace laws, we’ll make sure your company never falls behind competitors.
At SourcePointe, we utilize our industry-experience to provide you with a multitude of customizable HR services, support, and solutions. All so your business can do one thing – more business. We’ll provide tailor-made solutions that fit your company’s needs while providing a solid return on your investment that pays off immediately – and for many years after that.Back to Insights