How to Evaluate If a PEO is Right for Your Company

Choosing to work with an HR partner or PEO is a pivotal decision for any company aiming to streamline HR processes, enhance compliance, and offer quality employee benefits.

With the right partner, you can reduce administrative overhead, mitigate risk, and unlock opportunities for growth. The key lies in finding a PEO that aligns with your business’s needs and goals.

In this post, we will walk you through how your company can choose a PEO that will elevate your business, providing you with actionable tips and warning signs to watch out for so you can be confident in your partnership.

How to Choose the Right PEO

When evaluating a PEO, the process should be both strategic and thorough. Here are some steps to identify a partner that fits your organization.

1. Evaluate Your Business Needs and Goals

Before searching for a PEO, define your company’s specific pain points and objectives.

• Are you looking for better employee benefits to attract and retain talent?

• Do you need assistance in staying compliant with complex labor laws?

• Are your payroll and administrative tasks eating up too much time?

Outline your company’s struggles, whether they’re with HR, compliance, payroll, benefits, and scalability. HR is rarely your first thought when going into business, so evaluating your needs will likely include being aware that you don’t know the full scope of your HR needs. What drives many owners is a passion for their industry, and the extensive HR need comes as a surprise.

2. Review the PEO's Track Record

A PEO with a proven history of success is a safer option than one with little experience. The longer they’ve operated, the more of an opportunity they would have had to develop their expertise and reputation. Looking (or asking) for testimonials or case studies gives you an idea of what industries they can service. Check for certifications like Certified PEO (CPEO) status, which demonstrate reliability and compliance with industry standards.

3. Understand Service Offerings

A good PEO should provide more than just basic HR support. Look for a provider that offers comprehensive services, including but not limited to:

• Payroll administration and tax compliance

• Compliance management (local, state, and federal laws)

• Employee onboarding tools

• Health, retirement, and wellness benefits

Additionally, ensure their solutions can be tailored to your industry or unique operational needs. A quality PEO partner can tailor their service offerings to your company’s needs, so you will pay only for services you need and use while also having the option to expand services as your company grows.

4. Request References

Ask the PEO for references from current or former clients, especially companies in similar industries or of comparable size to yours. Speaking to other businesses can offer vital insights into the PEO’s reliability, customer service quality, and impact on operational efficiency. Ask detailed questions about the services and what the company needs from the PEO to get an accurate idea of what working with them will be like.

5. Assess Technology Capabilities

Modern HR technology is critical in today’s business landscape. Evaluate the PEO’s tools for payroll processing, time tracking, employee management, and benefits administration. Access to comprehensive technology through the PEO is a critical way of improving your employee experiences. Ask the PEO how their technology integrates with your existing systems and if they prioritize platforms that are user-friendly and accessible, with robust reporting capabilities.

6. Examine Cost Structure

Transparent pricing is essential when choosing a PEO. Ensure they clearly outline all costs, including setup, monthly, or per-employee fees. Watch out for hidden fees or overly complicated pricing models that could strain your budget.

7. Check Legal and Compliance Expertise

Employment regulations are complex and constantly evolving. A reliable PEO should have deep expertise in local, state, and federal laws to help your business stay compliant. Ask how they handle audits, tax filings, and employee disputes to mitigate risks effectively.

Signs of a Good PEO Partner

A successful PEO partnership hinges on a few key qualities. Here are attributes to look for in your ideal PEO partner:

• Proactive Communication: They keep you informed, provide timely updates, and offer clear lines of support.

• Customized Solutions: A great PEO prioritizes your unique needs rather than offering a one-size-fits-all approach.

• Accreditations and Professionalism: Certifications like ESAC and CPEO are markers of a professional and dependable organization.

• Clear Value Proposition: The PEO should be able to demonstrate how they’ll enhance efficiency and employee satisfaction while reducing your workload.

Red Flags to Avoid

Not all PEOs are created equal; some may hinder your business rather than help. Watch out for these warning signs during your evaluation process:

• Lack of Transparency: If the PEO hesitates to share clear service agreements or pricing details, it’s a red flag. Transparency is crucial for trust and effective collaboration.

• Outdated or Poor Technology: Limit your risk of frustration by avoiding PEOs with clunky or outdated systems that could slow down your operations.

• Negative Client Feedback: If multiple past clients report poor service quality, unresponsiveness, or unmet promises – steer clear.

• Compliance Issues: A PEO with a poor track record for legal or regulatory compliance could put your company at serious risk.

Partner with a Credible PEO Like ABO

When choosing a PEO, credibility, adaptability, and support are critical factors. That’s why companies across industries trust ABO as their go-to partner. From payroll and compliance to employee benefits, ABO delivers comprehensive services tailored to businesses of all sizes with a user-friendly platform that makes managing HR and payroll a seamless process.

Reach out to ABO today to learn more about how they can help streamline and grow your business functions!