NAPEO Reports PEOs Are a Game Changer for SMB Success
Quick look: As a small business, it can be challenging to manage day-to-day operations while maintaining focus on growth, which is why it’s helpful to partner with a PEO. NAPEO findings have highlighted this advantage in the past, and the story this year is no different with new data showing SMBs are likely to fare much better when working with a PEO than without.
The National Association of Professional Employer Organizations (NAPEO) has historically reported the positive impact PEOs have on small- and medium-sized business (SMB) growth relative to other small businesses working without a PEO. Now, recent research further cements this in three key areas:
- Greater growth rate
- Lower employee turnover rate
- Advanced business resiliency
These are all indicators of long-term success and show how expanding a HR strategy to include a PEO partner can save SMBs significant time, costs, and stress. Here’s a closer look at what the data reflects and why outsourcing HR services should come as a relief to business owners.
PEO customers have a 2x higher growth rate
When compared to non-users, SMBs working with a PEO reportedly grow twice as fast. NAPEO measures this by the employee growth rate, which is 4.3% annually, compared to 1.9% of a group of employers weighted to match a PEO customer size.
By tackling the full-time responsibility of HR and benefit administration and management, PEOs free up time for SMB leaders to focus on other strategic business matters. In addition to employee benefits and HR services, a PEO also offers payroll and risk and compliance management as part of an all-encompassing solution.
However, SMBs should be aware of the differences between partnering with a big-box PEO versus a boutique PEO like ExtensisHR. A big-box PEO typically offers a one-size-fits-all plan, which typically doesn’t apply to what a SMB needs to grow and succeed. Whereas, with ExtensisHR, services can be customized to align with an organization’s growth goals.
PEO customers have a 12% lower employee turnover rate
Employee turnover is costly to any company but is especially detrimental to a small business. According to this year’s NAPEO study, SMBs working with a PEO experience a much lower annual employee turnover rate (12%) compared to non-PEO customers.
This is likely reflective of PEO customers being more alluring to employees since a PEO grants SMBs access to a wider range of cost-effective, competitive benefits. These include not only traditional benefits like healthcare and retirement savings plans but also the exploration of supplemental benefits like life insurance, disability insurance, and mental and financial wellness support.
With multiple generations making up the workforce, it’s important to maintain benefit relevancy for employees or they’re likely to look elsewhere to find a company fit reflective of their current needs.
PEO customers demonstrate greater resilience
With higher growth rates and less employee turnover, it’s no surprise PEO customers are better able to hold steady during economic shifts. Meanwhile, per the NAPEO report, those without a PEO partner are 50% more likely to go out of business.
This analysis takes into account comparing matched pairs of businesses where both PEO and non-PEO customers have three identical characteristics: industry sector, employee size group, and state. And, when diving further into the data, it shows the smallest businesses (those with fewer than 10 employees) benefit most from working with a PEO. Although, organizations with 50-499 employees account for the second highest percentage.
Having a dedicated team of HR professionals at the helm minimizes the costs and risks associated with employment-related issues and creates safer work environments. Plus, there’s time to track benefit trends and gather employee feedback, turning HR into a strategic solution rather than a reactive one.
Benefits of a PEO partner like ExtensisHR
PEOs empower SMBs to focus on other areas of growth without being inhibited by the time constraints of HR and benefit implementation. Among the advantages a PEO like ExtensisHR offers SMBs include:
Fortune 500-level benefits
Creating an attractive compensation package is an important part of a recruiting and retention strategy. Some employees even favor a robust benefits plan over an increase in salary. To stay competitive with larger businesses, a PEO provides SMBs access to premium benefits and a diverse range of providers which can be tailored to meet a company’s unique and changing needs.
Integrated services
Benefits are one part of a comprehensive suite of HR services which also includes payroll and tax administration, talent management, as well as risk and compliance protection. All of these services are equally important in creating business stability and championing next-level growth.
Centralized HR platform
Convenient technology is key to helping SMB leaders manage important HR tasks. With a convenient, centralized tool for administration plus the option of managing key metrics, such as performance, time, and labor, ExtensisHR’s Work Anywhere® platform and mobile app provides remote-friendly access from anywhere at any time.
Credentialed HR professionals
SMB leaders can rely on 25+ years of expertise verified by the industry’s top credentials. As part of the top 1% of PEOs maintaining the high standards set by the IRS, ESAC, and the Certification Institute, ExtensisHR sets a precedent of excellence SMBs can trust.
Dedicated customer support
To complement its full-service PEO solution, ExtensisHR takes a human-centric approach with a dedicated team prioritizing SMB needs. Calls to its Employee Solution Center are answered within 10 seconds, and 95% of inquiries are resolved on the same day.
HR is a complex, fast-paced arena, and having the right support in place can make all the difference. NAPEO has proven business is better when working with a PEO partner, which is why more and more companies are making the shift.
ExtensisHR has the talent and technology to help companies reach their growth goals. Contact us today to learn how our team can serve as a true extension of your company as you advance to the next level.
