Professional Employer Organizations (PEO)
These products won a Top Rated award for having excellent customer satisfaction ratings. The list is based purely on reviews; there is no paid placement, and analyst opinions do not influence the rankings. Read more about the Top Rated criteria.
TriNet provides small and medium size businesses (SMBs) with full-service HR and payroll solutions tailored by industry. TriNet also offers specialized services through client access to HR representatives for advice and notifications on impactful regulatory changes.
Rippling helps companies manage Payroll, Benefits, HR, and IT in one platform. It brings employee systems and data together, and helps automate busy work. The vendor states that, for example, that with onboarding, Rippling users can just click a button and in 90 seconds set up…
ADP TotalSource is a professional employer organization (PEO) that provides strategic HR outsourcing. It includes services and technology to manage employee benefits, payroll, compliance, risk management, safety, and recruiting. Users have access to an online portal for things like…
Insperity’s complete PEO services provide the scalable infrastructure needed to eliminate inefficiencies, control expenses and reduce risks to help sustain profitability. The Insperity PEO solution combines personalized service and HR technology, aiming to maximize the effectiveness…
Globalization Partners headquartered in Boston offers GoGlobal, a technology platform that designed to present a secure, easy-to-use interface to review personnel information, documents, and payroll transactions. GoGlobal is designed with security in mind, allowing the administrator…
Acumen International is a Global Employer of Record (EOR)/PEO service provider. The service helps large companies and SMEs to hire global workforce and get an expedited, ‘express’ global footprint all over the world without the need to register their own business entities. Acumen…
Remote empowers companies of all sizes to employ global teams. Remote takes care of international payroll, benefits, taxes, and compliance. Remote fully owns local legal entities in all covered countries and a proprietary network of in-country payroll providers, accountants, labor…
What are Professional Employer Organizations?
Professional Employer Organizations (PEOs) are HR service providers that outsource most or nearly all of a business’s HR functions. They offer organizations a combination of HR software and professional services, such as payroll processing and tax compliance assistance. PEOs are primarily used by small to midsized businesses. Their goal is often to be able to manage the full employee lifecycle administration at a company through the PEO’s software platform and services.
PEO’s function primarily as co-employers of clients’ employees. More specifically, PEOs will often be the “employer of record,” primarily for tax and benefits purposes, but also to share a range of employer responsibilities with the client company. These responsibilities range from administrative tasks, like payroll processing, to material provisions like benefits options and coverage.
PEOs provide several key benefits for smaller organizations. They reduce the need for larger in-house human resources teams. PEOs can often offer better benefits options to employees at smaller companies by leveraging economies of scale across many small businesses that collectively work with the PEO.
PEOs vs. HR Management Software
PEOs and HR management software platforms can look very similar and overlap in many technical areas. For instance, they both provide the software tools for conducting and managing a business’s HR processes. However, HR management software leaves the HR administration and management processes themselves to companies’ internal HR personnel. In contrast, PEOs go a step further by outsourcing and automating many, or most, of those processes entirely. However, PEOs are less likely to have some of the strategic HR tools, like specialized performance management tools.
PEOs may be more expensive than HR management software as single budgetary line item. However, PEOs argue that the additional costs are offset by the reduction in in-house HR costs a company shoulders with a standalone HR management system.
PEO Features and Capabilities
There are common capabilities and offerings across all PEOs. While PEOs may specialize in certain areas, they should have at least a presence in most or all of these capabilities:
Benefits administration (401k, health insurance, etc.)
Tax Administration and Filing
Leave and Attendance Management
HR Expertise and Consulting
HR Regulatory Compliance
When comparing different professional employer organizations, consider these factors:
Benefits offerings: How competitive is each providers’ benefits options? This is one of the prime advantages of working with a PEO, but the details of what each PEO offers can vary. Companies should pay particular attention to the likely needs of their current and future workforces, as different benefits plans will be more or less competitive depending on those workforce demographics.
Pricing: PEOs can range in pricing from 3% to 15%+ of a company’s gross payroll. Given the outsourced costs around insurance and benefits coverage, the annual costs are also likely to change year over year. Companies should bay attention not only to the up-front costs, but also how pricing and costs have changed annually.
HR Expertise: Smaller organizations in particular benefit from the outsourced expertise and knowledge that PEOs offer. Understanding how high quality and up-to-date a PEO’s expertise and support staff are is crucial information. Consider reviewers’ experiences leverage an organization’s HR expertise for the best insights into comparing PEO’s in this area.
PEO pricing is usually on a per-employee basis, either by pay period, month, or year. While most PEOs don’t publicly disclose standard pricing, most estimates place PEO pricing on a per-employee basis from $900-$1,500/employee/year. Some PEOs also offer pricing as a percentage of gross payroll, often from 3%-15% of payroll at the higher end.