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Choosing Between Using an HR Software and Partnering with a PEO: Here's What You Need to Know

Updated: May 17, 2022

Choosing Between Using an HR Software and Partnering with a PEO: Here's What You Need to Know
Choosing Between Using an HR Software and Partnering with a PEO: Here's What You Need to Know

HR functions are integral to the success of your business strategies and the overall growth of your company. After all, every organization is no stronger than the collective strengths of all the talents that make up the organization. Therefore, when it comes to HR services, you'd simply want the best for your company.

But even with this in mind, it can often be a challenge to figure out or choose the best way to go about establishing an effective HR unit, even as your business grows. Some organizations prefer to completely outsource all human resource services, while others seek out a co-employment arrangement with a Professional Employer Organization. Another alternative is buying an all-in-one HR software and hiring an experienced user to manage the software and HR administration.

This article reviews the basic differences between using high-tech HR software and partnering with a PEO to provide HR services for your business. Read on to learn which is best for your business.

Benefits of Using HR Software

With the right HR tools or Human Capital Management (HCM) software, you can manage your business`s day-to-day activities effectively, improve your productivity, and achieve your business goals. You can manage your employees better and run a very efficient business. In fact, implementing the right HR technology allows you to streamline your HR processes towards achieving more goal-oriented results and saving more money.

However, HR software alone is not enough to achieve a well-rounded human resource solution for your company. In most cases, you will still need additional vendors to access good healthcare plans, manage employee issues, recruit, and onboard new employees.

HR software can assist you with functions like payroll management, employee benefits enrollment, staff attendance, and other mundane HR functions, and give you absolute autonomy on how you want to run your HR team. But using HR software may not be sufficient to address all HR-related matters in your business.

Partnering With a PEO Service

When your business collaborates with a Professional Employer Organization, you enter into a co-employment arrangement with the PEO. This means that you share HR liabilities with the organization even while you have access to full HR solutions. This includes payroll services, employee benefits management, recruiting, training, and onboarding of suitable talents to your company, etc,.

A PEO is an HR outsourcing firm that specializes in helping small and medium-sized businesses manage and engage their employees better. In providing HR solutions to other companies, PEOs incorporate high-end HR technologies and experienced users based on the needs of their client companies.

Obviously, partnering with a PEO is a more efficient way to administer HR solutions to your company. A PEO will take care of other liabilities and HR concerns like payroll taxes, sourcing for the best employee health insurance plans, and improving employee satisfaction. Unlike simply buying HR software, working with a PEO is smarter, especially if your business needs to expand in the near future.

A Professional Employer Organization is versed in current employment laws and helps you avoid regulatory sanctions that you may otherwise find difficult to comply with on your own. For instance, running your payroll under the PEO`s Federal Employer Identification Number (FEIN) alone is such a relief. You do not need to worry about the IRS coming for you, as the PEO takes care of payroll taxes. Under the umbrella of a PEO partnership, your company can negotiate better rates for better employee health care benefits and also keep your employees from moving to your competitors.

Compared to running an all-in-one, high-tech HR software — which you probably may not be able to afford yet — the difference is you still need hands-on user participation to run essential HR functionalities. In summary, you need both the software and the intervention of a PEO.

The Best HR Solution for Your Business

Having established the importance of both HR software and PEO services, it may not be a good choice to settle for just HR software, unless your business is still very small and does not need to outsource.

Most PEOs, on the other hand, use the latest HR technologies to provide the best human resource services to your company at no extra cost. So, with a PEO, you can have both — no need to choose. And this is especially the best HR solution for your business if you`re looking to retain the best hands and attract more employees.

Do You Need Help in Choosing the Right PEO?

Now that you have seen how the right HR outsourcing partner can help you move closer to your business goals, the next thing you want to do is to partner with the right PEO. This is a concern because not all PEOs can provide you with optimum HR services. You want to work with a PEO that has a proven record of delivering the best services to their client companies, preferably a CPEO.

A CPEO or a Certified Professional Employee Organization is a PEO that meets all the guidelines set by the United States government under the IRS. The certification program is a voluntary exercise, so not all PEOs have the CPEO designation. At The Mission HR, we can take the burden of finding a reliable PEO service off you. We are a leading partner in the PEO, HR, payroll, and benefits outsourcing marketplace.

The Mission caters to small and medium-sized organizations and government contractors by providing industry-leading HR services. We serve as a trusted partner in integrated human resource compliance, risk management, employee benefits, employment practices liability insurance (EPLI), and payroll processing.


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