Does a PEO replace your business’s HR department?

Explore how your HR department and PEO work together to create the most effective HR solutions


PEOs, or professional employer organizations, are an outsourced and off-site human resources (HR) department. PEOs provide cost-effective HR, payroll services, workers’ compensation, and benefits administration services to small and medium-sized businesses through a co-employment partnership.  


While PEOs do provide a variety of HR-related services, it’s important to note that a PEO is not designed to entirely replace or take over all of the functions of an HR manager or HR department. 


Continue reading to learn what responsibilities a PEO assists with and how your HR department and a PEO work together.



What does a PEO do for businesses? 

There are many benefits to your business partnering with a PEO that go beyond what an internal HR department alone can offer. 


PEOs share a certain level of liability with your business, meaning that it is in the PEO’s best interest to remain compliant because if they do not, their business will face direct consequences as well. This concept is called co-employment. 


Co-employment allows PEOs to have combined bargaining and buying power of all of their client businesses. This means that many PEOs can provide your business’s employees with access to high-quality insurance for themselves and their families including HMO, POS, and PPO plan options. Typically, PEO client businesses work with licensed brokers to discuss benefits packages that are best suited for your business.


Overall, this access to high-quality benefits will make your businesses more competitive in new talent searches as well as keeping your current employees happy.



Learn more:

The benefits of partnering with a PEO for human resources



What will a PEO not do for my business?

Many business owners tend to think that PEOs take over all functions of an HR department, but that is typically not the case. 


PEOs generally do not take over the daily human resources operations of your business. Your PEO can provide your business with HR assistance, such as coaching, training, and providing recommended solutions.


Your business’s PEO partner will also not hire or fire employees. This task remains a responsibility of the business’s HR department. PEOs may be able to assist in certain aspects of these situations, such as the onboarding and offboarding process for employees. 



How will my HR department and PEO work together?

Businesses must still manage their employees themselves. However, the benefit of partnering with a PEO is that your business’s HR department may be unaware of how to handle certain employee issues, and a PEO can empower your HR employees on how to best handle the issue.


However, if your business does not have a dedicated HR manager or HR department, you likely have an office manager, or similar employee, that handles some HR-related tasks. Office managers typically need help in this area, and this is where a PEO comes in to help your business as well.



Looking for a PEO in the Orlando area?

PER has provided outsourced HR services to small and mid-sized businesses across Central Florida for over 25 years.


When we partner with your business, we reduce your HR burden to allow you more time to manage the operational aspects that your business continues to have complete control of, such as employee performance, recruiting efforts and ensuring a safe and lawful work environment.


As part of our comprehensive services, we offer payroll management, human resources, benefits administration, workers’ compensation, and more. 



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