The professional employer organization establishes a co-employment relationship with its client companies. In this legal relationship, the duties of the employer are divided between the employer of the worksite (client) and the employer of the record (PEO). The employer of the worksite is what you usually attribute an “employer” to be; she or he is the authority over culture, brand, quality, responsibility for hiring, firing, onsite supervision and all strategic aspects of the business while Impact assumes the responsibility for the record – the source of the wage.
In the partnership, the professional employer organization will take on employer obligations that are mapped out in the service agreement. This allows the PEO to take care of your company’s payroll, recruitment, benefits, insurance, etc. Anything that takes up time removing you from driving revenue.
Most Small and Mid-Size Businesses (SMBs) are overwhelmed with many tools, processes, and partners meet their businesses administrative needs. Most things go smoothly, employees don’t complain, they haven’t been sued, they haven’t been fined for being out of compliance, etc. The area where SMBs display the most dissatisfaction with their current approach is the time it takes to manage mundane tasks such as running payroll, answering employee questions about PTO or benefits, open-enrollment, etc.
When a company gets started, the first thing they need is payroll. The owner usually evaluates a few solutions and then starts using payroll software. From there, they may realize they need some sort of time tracking solution. So again, the owner evaluates a solution, chooses one and starts using it. That process extends at each step of growth, adding in benefits, HR tracking, hiring and more. Each time, the owner looks for a point solution to solve his or her immediate challenge. So what does that mean?
1. They are spending valuable time and resources away from the reason they initially started their company.
2. Point solutions almost definitely do not connect with each other, and that means that the ability to understand data and gain insight across all the different HR technology is virtually impossible.
3. If they want to change systems for one of their areas, it could disrupt their entire fragile apple cart of systems and data.
4. And forget about getting true strategic HR advice. Without a holistic system that can provide insight across all the necessary HR touchpoints that a true strategic professional can leverage, they are almost definitely just going to get point advice on one topic. Clearly, this approach is shortsighted and will hamper company efficiency and growth.
How much time do you spend working "in" your business when you could be working "on" it? How much money are you spending on independent systems and resources to answer questions and keep you in compliance? Where could you take your business if you had a partner to deal with all of your non-revenue producing tasks and admin duties?
You are the employer of the worksite. The PEO is the EOR (Employer of Record) meaning the PEO focuses on compliance and record-keeping as the keeper of the "record." The PEO supports your needs, but you alone control your culture, your brand, your quality, your connection, your engagement. Most employees are more concerned with their pay being on time and accurate more than what routing and account number is on the check. Think of the PEO as your support team.