For many small businesses, a professional employer organization (PEO) can be a tremendous asset. With not many people on staff and a thin budget, outsourcing human resources can be a smart strategy. But as a company grows larger, its HRIS, payroll, benefits, and compliance needs become more complex, and it’s vital to have in-house expertise. At that point, a PEO may no longer be the best fit.
Moving away from a PEO is not a simple cakewalk and we completely understand that. There are many moving parts and opportunities for error. As your company prepares to leave your PEO you’ll need a well-thought-out plan to execute – and we’re here to give you the blueprint.
According to industry data, the average size of a PEO client is 19 employees. While each individual company has its own number, 40-50 employees are generally regarded as "critical mass" to trigger a move away from a PEO.
The average business will pay a PEO $900 to $1,500 per employee per year in admin fees, which will drastically decrease once you leave the PEO. A full HR software evaluation will help determine the cost of replacing your PEO’s software platforms, and you’ll need to enlist the services of insurance professionals to obtain pricing on replacement coverage.
The transition does away with the co-employment handcuff and puts more control in the hands of your company. Top decision-makers will have more influence on how employees are hired onboarded, trained, and you’ll have a much more focused approach to managing your company’s second-largest line item – Employee Benefit spend.
Nate McFall is a 16-year Employee Benefits and HR Software sales veteran. He has helped numerous PEO clients, ranging from 25 to over 200 employees in size, to plan and execute their PEO exits from start to finish. Nate currently serves as Flock’s Director of Strategic Accounts, focusing on strategic initiatives with our broker partners as well as our direct client base.