Expanding Employee Benefits with PEOs
For small businesses, the ability to offer competitive employee benefits is often hindered by high costs and significant administrative burdens. These limitations can severely impact a small company’s ability to attract and retain the top talent necessary for growth and success. Professional Employer Organizations (PEOs) provide a solution to this challenge, enabling small businesses to provide an array of attractive, enterprise-grade benefits that are typically only available to larger corporations.
Offering Comprehensive Benefits at Lower Costs
PEOs leverage their large pooled client base to achieve lower health care costs and better coverage options. This pooling effect allows even very small companies to offer their employees benefits such as:
Large Group Health Plans: Typically offering lower premiums and better coverage than plans available to small individual employers.
Retirement Savings Plans: Including 401(k) plans, which are often cost-prohibitive for small businesses to administer on their own.
Employee Assistance Programs (EAPs): Providing support for personal issues that might affect work performance, such as counseling and referral services.
Disability and Life Insurance: Enhancing the overall benefits package, which can be key in attracting senior talent.
These benefits are critical for small businesses aiming to level the playing field against larger competitors in the battle for talent.
Supporting Employee Utilization and Understanding
Beyond simply offering benefits, PEOs play an essential role in helping employees understand and effectively use their benefits. This is particularly important for small businesses that may not have dedicated HR teams. With the support of a PEO:
Employee Onboarding: PEOs can assist with educating new hires about their benefits options, helping them to make informed choices that fit their needs.
Ongoing Support: Employees have access to help desks or customer service centers managed by the PEO, where they can get answers to questions about their benefits without burdening small business owners or managers.
Annual Enrollments: PEOs facilitate the benefits enrollment process, ensuring employees understand changes in their benefits, new offerings, and how to make changes to their elections.
Impact on Employee Retention
The level of benefits support provided by PEOs also has a direct correlation with employee satisfaction and retention. Businesses that partner with PEOs often experience lower turnover rates due to the increased value employees find in well-managed benefits programs. Studies have shown that businesses rated highly on their benefits offerings experience up to 56% less workforce attrition. By offering better benefits, businesses not only attract quality candidates but also build loyalty with their current employees, creating a more stable and motivated workforce.
Summary
The role of PEOs in employee benefits management is transformative for small businesses. By partnering with a PEO, small businesses can offer a range of desirable benefits typically reserved for larger companies, but at a cost and complexity level that is manageable. This partnership helps small businesses attract and retain talented employees, fostering a more satisfied and productive workforce. The strategic advantage provided by PEOs in managing employee benefits can thus be a critical component in a small business’s path to success and stability.
