The Future of PEOs: 5 Trends Every Broker Should Watch

Quick look: Advancements in technology and constant changes in the workplace mean brokers must be on alert when it comes to emerging industry trends. With Q4 right around the corner, it’s already time to focus on strategies for the year ahead and which PEO updates deserve the most focus.

Engaging a professional employer organization (PEO) was once its own rising trend, though it has become more of a need versus want in recent years. In 2023, the National Association of Professional Employer Organizations (NAPEO) reported PEO awareness had risen 44% since 2018, and 33% of decision-makers reported using a PEO in 2022, reflecting a nine-percent increase year over year.

With steep competition to secure top-level talent and a growing reliance on outsourcing in order to scale effectively, brokers have found an advantage in connecting their small- and medium-sized business (SMB) clients with a PEO partner. The accessibility to Fortune 500-level benefits as part of comprehensive HR and benefit services keeps SMBs on par with larger corporations with regard to recruiting and retaining the talent they need to grow.

Though PEO partnerships have transitioned into becoming more of an industry norm, there are new trends brokers should watch out for heading into 2025. Here are five to keep on the radar, as well as a look at how ExtensisHR remains an impactful part of keeping brokers and their clients in the know and on the right path.

1. Advanced analytics integration

Although being aware of the latest industry trends is helpful, not all will apply or provide equal value. Therefore, it’s also essential to review internal data to drive strategy. PEOs which provide easily accessible metrics help SMBs leverage HR as a growth driver.

Several of the main HR metrics include employee satisfaction rate, cost per employee, and employee performance, among others. Having this data readily available allows SMBs to make informed decisions based on insights from their own workforce trends and evaluate where improvements can be made to help streamline operations and enhance productivity.

Additionally, the use of predictive modeling is being used to anticipate future HR needs, such as hiring trends and employee attrition, allowing businesses to plan proactively. ExtensisHR’s Work Anywhere® platform includes HRCloud, Knowledge & Learning Cloud, Performance Cloud, and Time & Labor Cloud, all of which grant SMBs the ability to customize reports and functions to consolidate workflows, build HR sustainability, and more.

2. Niche market growth

PEOs are equipped to help SMBs with their HR and benefit needs, allowing business leaders to focus on their bottom line and reach their growth goals. However, the demand is becoming more niche.

PEOs specializing in multiple markets are part of a growing trend as they can customize solutions to address specific industries’ challenges and regulations. As a PEO partner, ExtensisHR supports over 20 unique verticals, including financial technology, nonprofits, and charter schools, all of which require tailored services and support.

Furthermore, as remote work has increased, PEOs are expanding services internationally to accommodate companies with global workforces. In addition to industry-specific laws, there are also compliance and hiring best practices to follow with regard to operating in a foreign country, which calls for the expertise and experience of a dedicated team of HR professionals.

3. Sustainability and corporate social responsibility (CSR)

Sustainability in the workforce is now a deciding factor for both employees and customers. An IBM report found nearly 70% of workers say they’re more likely to accept a job at an environmentally sustainable organization, and customers seek out companies which align with their own values.

Therefore, PEOs are addressing CSR through modern business practices such as the reduction of paper usage and offering remote work opportunities. They are also helping SMB clients plan and implement sustainability initiatives and programs. Whether this includes conservation efforts, company volunteering, or another socially conscious activity, CSR has impacted the HR industry and become a top priority for businesses.

4. Increased customization of PEO services

Brokers and their clients favor customized PEO services over cookie-cutter solutions. SMBs, in particular, require personalized attention when curating competitive yet affordable benefit packages and implementing HR strategies.

Their continued growth requires a PEO partner with room for flexibility. As SMBs expand their workforce and enter new markets, HR and benefit services must reflect these changes to help contain costs and maintain relevance for employees.

5. Enhanced compliance and risk management

The complexities of maintaining compliance and risk management in the workplace require a full-time effort. With continual changes to labor laws and tax regulations, understanding and implementing these rules in a timely manner can be challenging for SMB leaders to tackle alone.

With a PEO partner, broker clients can rest assured they receive full support to navigate local, state, and federal regulations. Moreover, as data breach activity becomes increasingly common, connecting with a PEO focused on advanced cybersecurity measures is important to protect sensitive client information.

As an extra measure of security, ExtensisHR is now certified by the EU/U.S. Data Privacy Network (DPF) to streamline and safeguard data transfers from the European Economic Area as it expands PEO services to a global market. The self-certification further illustrates the commitment to protecting client information and instilling trust in the services provided.

Fueling business growth with ExtensisHR

SMBs now rely on their brokers for guidance on managing benefits but also with staying on top of industry trends and developing business strategies. With the addition of a PEO partner like ExtensisHR, HR can become a meaningful part of achieving growth goals.

Outsourcing HR and benefit services alleviates the administrative burden for SMBs and allows brokers to set themselves apart from the competition. Though a results-driven, full-service PEO solution delivered with a people-first approach will never go out of style, ExtensisHR will also ensure brokers and their clients stay on top of the latest trends.

Explore the benefits of working with ExtensisHR to help preserve and grow your book of business. Contact our team today.