National PEO Week: Celebrating the Impact of Professional Employer Organizations

Quick look: National PEO Week is observed every third full week of May to recognize the professional employer organization (PEO) industry and the thousands of small businesses it serves. This year, we’re celebrating by spotlighting what PEOs do, why they matter, and how the right one can help both growing companies and brokers reach their goals.

Happy National PEO Week! Each year, the third full week of May serves as a dedicated time to acknowledge the many ways professional employer organizations (PEOs) support hundreds of thousands of small and midsized businesses (SMBs) every day.

For nearly 30 years, ExtensisHR has helped SMBs simplify HR, strengthen employee benefits, stay compliant, and create a better workplace experience. And this week, we’re sharing what makes PEOs so valuable and how to choose the right partner for your needs.

The history of National PEO Week

National PEO Week is a relatively new tradition, but it’s built on decades of industry history. The celebration was established through a collaboration between the National Association of Professional Employer Organizations (NAPEO) and the National Day Calendar, and formally entered into the federal Congressional Record on April 17, 2023.

The timing holds special meaning, as the third week of May coincides with NAPEO’s annual PEO Capitol Summit, where PEO leaders gather on Capitol Hill to advocate on behalf of small businesses.

The PEO model itself has been around for quite some time:

• 1960s: “Employee leasing” concepts first emerged
• 1984: NAPEO was founded to advance the industry’s standards and credibility
• 2014: The Internal Revenue Service (IRS) established the Certified Professional Employer Organization (CPEO) designation

Today, the PEO industry is stronger than ever. According to NAPEO, approximately 500 PEOs operate in the U.S., collectively supporting more than 230,000 SMBs that employ 4.5 million people. And impressively, since 2012, the industry has more than quadrupled in size.

What does a PEO do?

A PEO is a comprehensive HR outsourcing solution that enables SMBs to delegate many of their most time-consuming HR responsibilities. Through a co-employment relationship, the PEO acts as an extension of the company’s internal team, providing access to experienced HR professionals and robust services and technology. Outsourced functions often include:

• HR guidance and support
• Employee benefits administration and management
• Payroll processing
• Tax administration
• Risk and compliance management
• Recruiting and onboarding assistance
• And more

A PEO’s impact: the numbers speak for themselves

NAPEO’s research consistently shows that businesses working with a PEO tend to outperform those that don’t. On average, these companies:

• Grow over twice as fast
• Experience 12% lower employee turnover
• Are 50% less likely to go out of business
• See an average return on investment (ROI) of 27% in cost savings alone

What SMB leaders gain from a PEO relationship

Small business owners wear many hats, often including HR responsibilities. However, from onboarding and open enrollment to workers’ compensation and leave management, these tasks demand significant time and attention and can quietly take time and energy away from more strategic priorities.

A PEO helps relieve that burden by handling critical HR functions and providing expert guidance along the way. Instead of keeping up with changing employment laws, responding to benefits questions, or updating employee handbooks on their own, business leaders have a dedicated team of specialists supporting them every step of the way.

How PEOs help brokers strengthen their books of business

For benefits brokers, partnering with a PEO is an effective way to expand the services they can offer clients. In addition to cost-competitive benefits, PEOs provide expertise in compliance, recruiting, retention, and day-to-day HR administration. This allows brokers to introduce comprehensive HR solutions while maintaining their role as the client’s trusted advisor.

When your clients know they can count on you not just for benefits, but for the HR infrastructure they need at every stage of growth, the relationship deepens naturally. A PEO can meet them where they are, which builds trust and keeps them coming back to you and referring you to others.

Choosing the right type of PEO

National PEO Week is also a great time to consider what you’re looking for in a PEO partner, whether you’re a small business or a broker, and whether you already have a relationship with a PEO or not.

Not all PEOs operate the same way. Some are built for volume, with large client rosters and standardized service models. Others, like ExtensisHR, operate on a boutique model. Here’s what that looks like:

• A multi-layer dedicated team, including an Account Manager, HR Business Partner, and Payroll Specialist
• Customizable benefits packages to meet each business’s specific needs
• An experienced compliance team with expertise in local, state, and federal employment laws
• An ultra-responsive Employee Solution Center for staff-level support that answers calls in under 15 seconds and solves 90% of their cases the same day

Boutique PEOs tend to be the strongest fit for SMBs with roughly 5 to 150 employees that are growing quickly, operate across multiple states, or are seeking a higher level of support.

Celebrating what PEOs make possible

National PEO Week is an opportunity to recognize the important role PEOs play in helping small businesses succeed.

The PEO model has been refined over decades, earned federal recognition, and proven itself through client outcomes. At ExtensisHR, we’re proud to be part of an industry that’s helping small businesses, their employees, and our broker community grow and succeed.