The Time is Now for Brokers to Offer PEO Services

Quick look: According to a recent report by Avasant, the adoption of HR outsourcing grew 7% from June 2020 to June 2021 – and it’s time for brokers who don’t offer PEO services to begin doing so. Here’s what brokers need to know about the key growth drivers for HR outsourcing, and how to select the right PEO partner to boost their business.

Professional employer organizations (PEOs) have been around for decades – but there has never been a better time than now for brokers to offer their services. From June 2020 to June 2021, human resources outsourcing (HRO) adoption grew by an astounding 7%, and North America is paving the way with over 50% contribution to overall HR outsourcing revenue.

HR is becoming a cornerstone of an integrated talent strategy, and robust PEO services can help brokers grow and retain their book of business and create additional value. Avasant, a leading management consulting firm, recently published a report called “Global Hire-to-Retire Business Process Transformation 2021-22 RadarView™” which unearths how PEO is evolving to meet the challenges of today’s labor market. Let’s explore the four key growth drivers documented in the report – and how selecting the right PEO partner can help brokers strengthen their business.

1. Digital transformation

As the world becomes increasingly digitized, so does the HR industry. HR platform adoption continues to rise, enabling the digital transformation of many departmental processes for virtually any business.

While over 32% of enterprises of all sizes plan to enhance their existing HR platforms between January 2021 and June 2022, modular solutions and usage-based software-as-a-service (SaaS) models are making leading-edge technology a feasible option for small- and medium-sized businesses (SMBs) in particular. These solutions and models offer a lower total cost of ownership, enabling more SMBs to adopt the latest platforms.

2. Growing compliance concerns

The COVID-19 pandemic caused a large portion of employees to suddenly work from home. There has been an ongoing uptick in the number of dispersed workforces, and with that rise comes more compliance hurdles. With employees spread throughout various regions, employers must constantly track federal, state, and local policy updates to ensure compliance.

The risk associated with any location “falling through the cracks” is immense, and it can provide enormous relief for SMBs to rely on a PEO’s risk and compliance experts to cross all the T’s and dot all the I’s. Allowing a PEO to manage risk and compliance promises a simplified, comprehensive process for employers. Instead of either tasking one office with managing all compliance (a nearly impossible and likely unexpected feat) or hoping each satellite office is proactively managing its risk, a PEO can expertly handle it all – from one place.

3. Employee experience

The labor market is the tightest it’s been in years, and to remain competitive, employers are turning to PEOs to help them create the best possible employee experience.

Today’s top talent wants several things:

• Convenience: Employees are used to getting what they want, when they want it in their personal lives and now expect the same at work. The intuitive self-service HR platforms available from a PEO help boost employee engagement by providing an improved employee experience. The right platform should provide real-time information and the ability for employees to view paystubs, enroll in benefits, manage PTO, adjust tax and personal information, and access how-to guides, training modules, and live chat support.
• Flexibility: The last few years have opened many employees’ eyes to what a healthier work-life balance can look like. In addition to some workers now preferring a hybrid schedule, many people work on a part-time basis – in fact, in 2021 42 million workers were employed part-time. To accommodate the large part-time workforce, the report states that employers should lean on HR outsourcing to provide them with scheduling tools and messaging solutions.
• Tailored benefits: The best employee benefits aren’t one-size-fits-all. Today’s top talent seeks flexible, multigenerational benefits, including health insurance, 401(k) retirement plans, student loan reimbursement, pet insurance, mental health and wellness tools, and more – all of which can be provided by the right PEO.
• A rewarding workplace: It should go without saying that employees want a fulfilling career. In particular, Avasant reports several current key workforce expectations, including professional development opportunities, high levels of job satisfaction and employee engagement, and the ability to provide feedback and suggestions to managers and business leaders. Reskilling and upskilling opportunities are especially vital – according to the report, 94% of business leaders expect employees to learn new skills on the job by 2025, compared to 65% in 2018.

4. Ongoing pandemic woes

The COVID-19 pandemic clearly touched every aspect of business operations and has created HR challenges across the board, from talent retention and business continuity to the need for flexible operations, employee benefits, and learning opportunities.

To ensure employers conquer these challenges, they are choosing best-of-breed PEOs to outsource their end-to-end HR functions. Leaning on a PEO’s expertise not only helps SMBs fully recover from the COVID-19 pandemic but remain prepared for any future unexpected events, as well.

Which PEO is right for you?

According to the National Association of Professional Employer Organizations (NAPEO), in the U.S. there are 487 that employ 4 million worksite employees. With so many PEOs to choose from, how should a broker decide which one to partner with? Below is a checklist of key features to look for when searching for the ideal PEO:

• Service-oriented approach: “Big-box” PEO providers are increasingly moving to call centers and leaving their clients stuck in endless phone trees. As a broker, your reputation is on the line, and recommending services with a personalized touch is essential. Look for a PEO that has a full team of dedicated HR professionals readily available to manage, support, and proactively address your clients’ daily, seasonal, and unexpected HR needs. Don’t leave your clients waiting on the other end of a call queue.
• Modern technology: Today’s SMB leaders are on the go and working from multiple devices, especially following the pandemic. The ideal PEO partner should have an HR platform designed for the work anywhere world that enables clients to securely manage critical HR tasks from anywhere, on any device, and at any time.
• Full-service portfolio: The list of HR functions that clients are looking to outsource continues to grow and the right PEO should be able to handle it all. Look for a partner that offers a full range of services, including HR guidance, payroll and tax administration, recruiting and talent management, employee benefit services, and risk and compliance expertise. Do you have clients who want to outsource their entire HR workload? A PEO that provides a fully managed, concierge-style service like ExtensisHR’s PEO Premier® may be what they need.
• Broker-centric business model: No one wants to partner with a business that simultaneously is trying to scoop deals away from them. The ultimate PEO partner should have a broker-centric philosophy and help you win new business, earn recurring revenue, compete against direct-selling PEOs, and protect your book of business.
• Highly accredited: Any PEO can talk the talk, but it’s critical to check certifications. In the U.S., there are three major PEO certifications: IRS Certified PEO (CPEO), ESAC Accreditation, and Certification Institute (CI) for Workers’ Compensation and Risk Management. The best PEOs have all three – but be wary, only 1% of PEOs achieve this, so research and choose wisely.

If you’re looking to offer high-quality, personalized PEO services to your clients, ExtensisHR is just what you’re searching for. Contact our experts today to learn more about how we can help grow your business.