NAPEO Study Reveals Three Key Benefits of Connecting Clients with a PEO
Quick look: Benefit plan research and selection are only part of the role brokers play these days. In an increasingly competitive landscape, business leaders are also looking for strategic advice on how to retain top-level talent, increase benefit participation among employees, and prepare for workplace trends. Keeping pace with changes is challenging, but NAPEO research shows a partnership with a PEO can help to achieve all three.
The National Association of Professional Employer Organizations (NAPEO) frequently releases research indicating the trends and growth of professional employer organizations (PEOs) across the country. For years, PEOs have helped brokers and their small- and medium-sized business (SMB) clients reach accelerated success thanks to the comprehensive HR and benefit services they provide.
What’s new from NAPEO this year are three significant changes which showcase the value of brokers connecting their clients to a PEO partner. In an industry where competition continues to grow, creating this bridge only strengthens the relationship between brokers and SMBs, allowing everyone to thrive.
Survey says a PEO better positions SMBs for long-term success
The NAPEO data can be broken down into three main sections. Each speaks to the advantage of brokers linking up with a PEO partner to better serve their clients.
1. Growth rate more than 2x higher
SMBs using a PEO report a measured growth rate twice as high as businesses without one. From January 1, 2023 to January 1, 2024, it was reported PEOs represented client growth of over 4.3% annually, which was more than double of any other national comparisons available.
The main reason for the growth is likely attributed to SMB leaders’ ability to focus primarily on strategic growth matters while allowing PEOs to handle all HR and benefit-related services. Freeing up time and costs for SMBs has proven significant over the years while also keeping them competitive with larger businesses regarding premium benefit accessibility.
2. Employee turnover rate 12% lower
In the first few years following the pandemic, workforce dynamics had wildly shifted and SMBs across all industries were struggling with maintaining top-level talent. As employee priorities have evolved and modern benefit offerings emerged as an alluring draw, brokers and their SMB clients had to reevaluate which type of benefit plan was best.
One strategy brokers turned to was making the client connection to a PEO partner. A PEO offers Fortune 500-level benefits at affordable costs for SMBs to stay on par with what larger corporations offer. Moreover, a dedicated PEO team looks closely at which benefits are most relevant among employees (and which are going unused) to ensure investments are optimized.
The advantage of outsourcing a full-time focus on benefit strategy is it makes offerings more attractive to current employees and prospective talent, leading to greater job satisfaction and subsequently, a lower employee turnover rate.
3. 50% less likely to go out of business
A PEO partnership has proven to have a significant impact on brokers and their clients, further illustrating both short-term benefits and long-term growth. NAPEO research shows businesses not using a PEO are 50% more likely to go out of business comparable to SMB clients matched with a PEO.
To assess business resilience, NAPEO calculated business survival rates over a three-year period for PEO and non-PEO clients within the same industry, employee size group, and state to make comparisons between organizations as similar as possible. The statistics reflect the positive effect of PEOs across all industries evaluated, though the construction, retail trade, and finance and insurance sectors stand out with the largest difference in survival rates for PEO clients versus those operating without one.
The likely value is in the comprehensive HR and benefit services PEOs offer, which is shown to be significant enough to make or break some businesses. The data shows this is particularly true among organizations with fewer than 10 employees, though the second-highest percentage is businesses with 50-499 employees.
Partnering with a broker-friendly PEO
Though, in the past, a broker-PEO relationship was viewed as more competitive than collaborative, times have changed. When working with a broker-friendly PEO like ExtensisHR, brokers find it complements their efforts by:
Extending the scope of service
In addition to benefits, a PEO partner allows brokers to offer clients an extended list of services, including HR and payroll administration, risk and compliance management, and employee recruiting and retention. With this added industry expertise, experience, and support, it helps broker clients save time and costs while maximizing value.
Differentiation from other brokers
Partnering with a PEO also allows brokers to set themselves apart from the competition. Collaborating with reputable HR professionals strengthens a broker’s reputation and impresses prospects looking for creative solutions. With customized services designed to fit clients’ specific needs, a PEO partner like ExtensisHR also provides dedicated customer service attention to prioritize brokers and their clients as concerns and changes arise.
Strengthening client relationships
Creating sustainability among clients helps to strengthen current relationships and makes it easier for brokers to expand their book of business. By outsourcing cost-effective HR services to experienced PEO professionals, broker clients can potentially save HR and benefit costs, helping them to focus their efforts and investments on other areas of growth.
Additionally, as part of a complete PEO solution, SMBs have access to a centralized HR technology platform which includes reporting options to track time and attendance, performance management, and more.
Introducing a PEO partner has become a strategic way to help brokers deliver an extra advantage to their clients. The research is clear on how beneficial it is in managing employee turnover and keeping businesses on an upward trajectory.
With ExtensisHR’s people-first approach, brokers can feel confident their clients are in good hands in identifying new opportunities and adapting to industry trends.
To learn more about how we can help boost your book of business, contact our team today.
