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The 3 Most Important Questions to Ask Before You Choose a PEO

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Questions to ask about a PEOIf you’re looking for solutions to your HR overwhelm, you’ve probably crossed paths with the PEO model. You know generally what a PEO can do, but maybe you’re still asking that basic question: Is a PEO right for my company?

To answer that question, let’s step out of the office for a minute and onto an average car lot—because (believe it or not) buying a car isn’t all that different from shopping for anything else. Even a PEO.

How Buying a Car Is Like Choosing a PEO

Before you buy a car, there are a lot of things you want to consider: gas mileage, vehicle history, tire condition, maintenance history, steering feel, brake performance, and more. You probably also have a list of nonessential extras like heated seats and a built-in DVD player for the kids. Those things are important and you need to check each one off your list before you make a decision.

But when you sit down at the dealer’s desk to talk about a purchase, there are three bottom-line things you want to know:

  • Will this car deliver the results I need?
  • Is it worth the asking price?
  • Was the salesperson effective in giving me the information I needed?

At the end of the day it’s that first question that carries the most weight. We can haggle about price and buyer’s experience, but even the best price won’t make a four-person car large enough to carry an eight-person family.

Buying a car isn’t quite as impactful as outsourcing your HR function to a third party, of course, but those three questions are still the most important things you need to know before you make a decision.

Let’s take a look.

Question #1: Will this PEO deliver the results I need?

Once again, this is the most important of the three questions. Features and service offerings are important, but the bottom line is: will the PEO drive results and value? Will it deliver the ROI you need to justify the expense? Here are just a few ways a PEO can add value and improve ROI for your HR department:

  • Hiring Practices—A PEO will help you integrate effective hiring practices that result in hiring better talent. And talent is the key driver of success for your business. 
  • Safety Procedures—Effective safety strategies and communication processes can prevent injury, reduce workers’ compensation claims, and drive down insurance costs. Your PEO will help you meet compliance guideliness and create a solid safety protocol.
  • HR TechnologyHR technology can improve data tracking and analytics, support employee engagement and retention strategies, and facilitate better record keeping and decision making. Working with a PEO gives you the benefits of an HRIS that can help you avoid penalties, save money, and increase your profit margin--without the cost of purchasing new tech.
  • Scalability—If you’re ready to scale your business, a PEO can provide the support you need to take that next step. No business owner can do everything, especially when your workforce is growing. A PEO may be the logical solution to administrative overwhelm.

Question #2: Is it the right price?

If you have determined that a PEO offers the right solution for your HR administration woes, the next thing you need to know is whether it’s worth the expense. PEOs usually charge either a flat monthly fee per employee or a percentage of payroll. Either way, it’s important to understand how the pricing structure works, and for that you need to see an unbundled quote. Here are some other questions to ask about the PEO quote as you make your decision:

  • Are services offered a la carte?
  • Does the PEO honor FUTA and SUTA caps?
  • Does the PEO require you to use their benefits package?
  • What are the terms of the contract?

Question #3: Does the PEO culture fit my company?

How does the PEO work with clients? Do they pair you up with a consultant you can contact with questions, or will you be speaking with a different representative each time? What is their communication style and does it match yours? What technology do they use? Make a list of questions like these to determine whether the PEO’s work style will be a good fit for your company.

It’s Time to Make the Switch

In future posts, we’ll explore some of these topics in more depth, but for now let’s wrap it up with a quote from John Maxwell:

“You will never change your life until you change something you do daily.”

That's just as true for business as it is for personal goals. Partnering with a PEO may be the change you need to achieve your goals this year. If it is, let us help you take the next step.

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Testimonials! The finest folks on the web have used PEOcompare to guide them in their PEO selection.

"I found PEOcompare and could use their services matching tool as a guideline, choosing wisely what services we wanted for our company. Quickly we received responses from some PEO Companies and selected MyBackOffice within a week. It has been a great relationship and great fit for our business. I would have never found MyBackOffice, so if you need a PEO that is a fit for your business, I suggest  PEOcompare.com."

Jack Trompert, President
Talent 101

"PEOcompare narrowed my search, saving me time & reducing my amount of research.  I had limited staff and a limited budget, I needed a PEO company that could fit my needs. PEOcompare provided a free, easy to use tool with an automated PEO scoring framework that let me control the process.  I chose the companies I wanted information from."

Todd Girard, Owner
Trinity Optical

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