Using a PEO After the Pandemic
Quick Look: NAPEO reports how greatly PEO clients benefited during the pandemic in comparison to other small businesses. Now, a company’s “return to normal” means adapting to the ever-evolving landscape, which may look quite different than it did pre-2020. Fortunately, with great disruption comes great change. And statistics have shown the value of a PEO partnership as a steady foundation to guide businesses through their own transformation and growth, pandemic or not.
In 2020, six months into the pandemic, the National Association of Professional Employer Organizations (NAPEO) published a whitepaper exploring how PEO clients were faring during the initial stages of the COVID-19 pandemic. With changes occurring at a rapid rate, the organization then followed up with an analysis a year later. The data is impressive, and the message is clear: working with a PEO company is more important now than ever.
As small- and medium-sized businesses (SMB) employers continue to rebound from the hard hit of the pandemic, a PEO company is the solution many may be looking for—yet didn’t know they needed. So, how have things changed from the early months of the pandemic to now? And what can be expected as we head into the future?
Assessing both analyses show how much the industry has evolved and grown. Let’s take a closer look and see what the numbers have to say.
119% of PEO Clients Were More Likely to Receive PPP Loans
The burdens of the pandemic left many in need of funding to keep afloat. The term on everyone’s lips: Paycheck Protection Program or PPP. Nearly all SMB leaders were tackling the complexities of PPP loan applications, compliance, and approvals. The ones who sought out help were often funded more. NAPEO data revealed PEO clients were 119% more likely to have received PPP loans than other small businesses.
In the first allocation, PPP loans were available during a fairly short window of time. It left businesses scrambling to navigate the application process alone, while also trying to maintain their regular day-to-day operations. Taking advantage of partnering with a PEO company offered a much-needed, comprehensive resource to meet the deadline on time. Namely, it helped SMB leaders by gathering necessary documentation and ensuring compliance with changing federal guidelines, which qualified them for the relief.
91% of SMBs Were Less Likely to Temporarily Close
The 2020 NAPEO overview also showed PEO clients were far less likely to have to temporarily close during the pandemic compared to other small businesses. The analysis reflected the ability of a business to stay open was based on its adjustment to new circumstances and constant changing requirements in terms of maintaining public health, safety, and other factors.
PEOs were put to the test during these chaotic times. They were able to navigate these complexities and keep businesses up to date with the requirements from a federal, state, and local level. Consequently, by keeping business doors open and PPP loan relief coming in, a greater percentage of companies were able to help keep their employees onboard and their doors open for customers/clients.
72% of PEO Clients Had Reached a Normal Level of Operations
Brokers recommending a PEO company solution to their clients in 2020 saw their efforts rewarded even further headed into 2021. NAPEO’s follow-up analysis published in September of this year showed how much of a positive impact businesses guided by a PEO company experienced compared to other SMB employers. One of the key data points: a “return to normal.”
The recalibration process from the pandemic has taken months for businesses to ease back into. However, as of July 2021, nearly three-quarters of all PEO clients had reached a “normal or better-than-normal” level of operations compared to other small businesses. This is due to the success of hiring practices, access to government support programs, and claiming the employee retention tax credit.
Furthermore, the likelihood of a SMB employer receiving PPP loans in 2021 remained higher when working with a PEO company than those who didn’t. These loans are fully forgivable for businesses using the full amounts for authorized uses. PEOs deftly juggled and navigated HR’s “new normal,” which allowed SMB leaders to find their footing and focus on guiding their businesses forward.
81%+ Employment Growth Rate with the Help of a PEO Company
PEO clients also experienced a higher job growth rate between July 2020 and June 2021 compared to other small businesses. Though, as with the current employee-led market, PEO clients have the same concerns about finding qualified employees. However, it is important to note, this challenge is in part due to PEO-supported businesses experiencing company growth and therefore, having more open positions to fill.
Nevertheless, recruitment and retention are still two key areas SMB leaders will continue to look to PEOs for support. The Great Resignation has clearly shown employees want more than what they worked for in pre-pandemic times. The way things used to be may not be as impactful as they once were. As a result, companies must be proactive in staying competitive.
This includes reassessing salaries and benefits to make them relevant to what today’s workforce wants. High on the list: remote working, flexible schedules, and alignment with employee values. Part of the services offered through a PEO company involves tracking employment trends and analyzing the best solutions for companies to attract and retain the best talent. It’s a comprehensive evaluation of what’s currently working and what needs improvement.
The Way Forward
Though the past two years have been far more challenging than anyone could have ever expected, it also opened the door for new ways of doing things. The pandemic has caused businesses to reassess and rebuild their foundations as they plan for the future. This includes calling on experts for help.
Partnering with a PEO company like ExtensisHR allows SMB leaders to shift the burden of HR and all its associated challenges to a team equipped with the knowledge, resources, and expertise necessary for success. ExtensisHR creates tailored HR solutions based on a company’s real-time needs. Whether it involves responding to a pandemic or shifting recruiting best practices to hire for an employee-led market, the services are aligned with what’s best for growth.
Want to learn more about how a PEO solution can help strengthen your client relationships post-pandemic? Our team of HR professionals are here to help.
