In today’s competitive business landscape, finding ways to reduce costs and increase efficiency is crucial for long-term success. One often overlooked solution is partnering with a Professional Employer Organization (PEO). In this post, I will explore the various ways in which working with a PEO can save your business money.
Hard Dollars: Measurable Cost Reductions
When it comes to saving money, PEOs offer significant cost reductions in two main categories: hard dollars and soft dollars. Let’s start by discussing hard dollars, which are tangible and easily measured.
1. Employee Benefits:
Employee benefits encompass several components, and PEOs can help reduce costs in specific areas:
a. Health Insurance:
Health insurance is often the most significant expense for businesses. PEOs, leveraging their size and economies of scale, negotiate better premiums with insurance carriers.
As a result, clients can enjoy a reduction of up to 30% in health insurance premiums, accompanied by improved coverage, such as lower deductibles, coinsurance, and national coverage. This reduction in premiums also benefits employees who contribute to the premium cost.
b. 401K:
PEOs offer 401k coverage at lower fees compared to individual plans. This enhanced service comes without any additional fees from the PEO, providing additional savings for both employers and employees.
c. Life Insurance and Disability:
Working with a PEO gives you access to guaranteed group life insurance and disability coverage. These benefits can further reduce rates, resulting in increased savings for both employers and employees.
2. Worker’s Compensation:
Worker’s compensation is a primary cost for many companies. While white-collar companies may not notice a significant difference in premiums, industries categorized as higher risk, such as construction and transportation, can benefit greatly.
PEOs specializing in these industries can offer substantial savings on worker’s compensation premiums. Since these premiums are a percentage of salary, reducing the percentage can result in notable savings for employers.
3. State Unemployment:
State unemployment rates can vary depending on the state and employee turnover.
By partnering with a PEO, approximately 21 out of 50 states in the US allow clients to use the PEO’s lower state unemployment rate, resulting in cost reduction for the business.
4. Employment Practices Liability Insurance (EPLI):
EPLI coverage protects businesses from legal expenses related to employee-filed lawsuits alleging discrimination, wrongful termination, harassment, or other wrongful acts.
Many PEOs offer complimentary or discounted EPLI coverage, enabling businesses to save on their current EPLI costs or obtain coverage that was previously unavailable.
Soft Dollars: Time and Resource Savings
In addition to hard dollar savings, PEOs can provide significant savings in soft dollar costs, which are less easily measured but equally valuable.
Human Resources Tasks:
Small business leaders often spend up to 40% of their time handling HR tasks. It’s crucial to consider the value of their time and whether it could be better spent on other business needs, such as growth and outreach.
By partnering with a PEO, businesses can significantly decrease the time spent on HR administrative tasks while ensuring full compliance with HR labor laws.
PEOs handle employee file maintenance, Social Security and I9 verification, and stay up to date with new regulations at local, state, and federal levels. This support allows business owners to focus on core business activities and growth, ultimately maximizing productivity and profitability.
Partnering with a PEO can bring substantial financial benefits to your business. By leveraging the collective purchasing power and expertise of a PEO, you can enjoy cost savings in employee benefits, worker’s compensation, state unemployment, and EPLI.
Additionally, the time and resource savings from outsourcing HR tasks to a PEO can free up valuable business hours, allowing you to focus on strategic initiatives. To find the right PEO for your business, I strongly recommend utilizing a PEO broker’s services, like The Huldisch Group PEO Brokers. Our expertise and assistance come at no cost to you, ensuring you find the most suitable PEO quickly and hassle-free.
To get started on finding the right PEO for your business, fill out the contact form. We’ll be glad to help you streamline your business operations and maximize your cost savings through a PEO partnership.
Remember, the right PEO can save you both time and money, enabling you to build a more efficient and prosperous business.
