The employees within an organization tend to have the power to either make or break a company. Organizations that experience high turnover rates may be exposed to greater financial risk, while those that prioritize employee retention show promising results of growth over time. Unfortunately, for many SMBs, this can be difficult to do. Startups lack the attractive infrastructure and benefits offered by big companies, which can make it difficult to retain top talent. To help you stay afloat in an increasingly competitive environment, consider the ways a PEO can help you reduce employee turnover and thrive in your industry.
A professional employer organization (PEO) is a type of organization that provides comprehensive human resource services for small- to medium-size businesses. They allow you to work with a team of HR experts that help you handle your different administrative and HR responsibilities. PEOs always review federal, state and local employment laws and regulations to help SMBs stay compliant. This allows SMBs to spend more time focusing on advancing their business’ bottom line without having to expend valuable resources.
Throughout the course of 2021, about 47.4 million Americans voluntarily quit their jobs.1 Some companies struggled to stay afloat as many realized the cost of replacing employees. In addition to the time and energy required to find new talent, employee turnover can end up costing businesses in time and resources. According to NAPEO, small businesses that work with a PEO grow 7% to 9% faster, have employee turnover that is 10% to 14% lower, and are 50% less likely to go out of business (individual results may vary).2 While bad hires can sometimes happen, there are ways you can help reduce your risk and improve employee experience.
There are several beneficial reasons to partner with a PEO, but one of the most notable of these is a potential reduction in employee turnover. To understand why this occurs, consider the following:
Most reputable PEOs will provide some degree of assistance to the recruitment process. This can help you reduce the risk of bad hires, while simultaneously attracting the talent you need to achieve your business’ goals. Through the use of HR experts, PEOs can provide you with guidance throughout the hiring process. Usually, this includes things like advising on the application and interview process. Although the final hiring decision is still ultimately up to you, PEOs can help guide you in the right direction for your needs and reduce the risk of bad hires.
Partnering with a PEO also helps you provide access to ongoing professional development to your employees. PEOs tend to have a high number of resources available to help with furthering skillset, improving productivity and ultimately enhancing the employee experience. This development can be applied to all levels of your workforce. From training new hires to successfully adapt to their positions to training and development for managers and HR staff.
As a small business owner, it can be difficult to find a good balance between benefits and affordability. However, since PEOs partner with multiple small- to medium-size businesses, they may be able to access big company benefits, which may usually be out of reach. Thanks to a PEO’s advantage of scale, your employees may be able to access and enroll in attractive benefits. Since benefits tend to be one of the most important factors in employee experience and satisfaction, this can help you retain your workforce and attract high-quality candidates.
In addition to traditional coverage options for health insurance and retirement planning, many PEOs can provide your employees access to benefits for spouses, families and even pets. You may be able to ask your PEO about benefits prior to starting your partnership. By partnering with a PEO there is a chance PEOs may provide your employees with access to benefits that will keep them happy. Good benefits show your employees that you’re committed to their wellbeing, which in turn may help increase retention rates.
SMBs typically have smaller teams for HR—sometimes only one person handling the entire workforce. Partnering with a PEO won’t replace your team of HR specialists. Instead, the PEO’s team of HR professionals work with your current infrastructure to provide added support and ongoing help with your long-term strategic vision. This way, you gain added support and additional development without having to employ a growing internal HR team. It’s important to understand that PEOs usually don’t act as a replacement for your HR department, but their experience and understanding of industry-specific needs can help you optimize efficiency.
When you work with a team of HR experts, you not only get added support, but you also gain the confidence that you’re aware of changing laws and regulations. This can include things like strategic HR, proper payroll processing, benefits packages and more. This will help you stay proactive against penalties and other potentially problematic instances.
Although staying compliant may not seem like something that would affect your employees, it can and often does. When companies take the time and effort to stay within employment laws and treat their employees fairly, they may be rewarded with higher rates of employee retention.
Company culture is another important aspect of employee retention. Although you don’t need to make every employee feel like they’re working with their best friend, they should be comfortable with their co-workers and management team. Unfortunately, high turnover can create a negative work environment where employees are uncomfortable and may feel concerned that the company is not stable.
Luckily, a PEO can help you create a more cohesive overall culture for your employees to thrive in. With the beneficial training tools that PEOs provide, such as DEI training and a learning & developmental portal, your workforce can become more engaged and invested in the overall company. This helps foster a more inclusive culture that people are proud to be a part of. Your clients or customers will notice this, which also has a positive impact on overall profit and return on investment.
We live in an increasingly inter-connected society that’s becoming more reliant on technology. A PEO can help you capitalize on this, as they provide access to HR technology for payroll processing, time management and performance. This helps simplify your administrative duties while also positively impacting the employee experience. Although many PEOs may have varying forms of HR technology, they’re usually more evolved than those that you’d use in house.
All of these factors and more can help you create a better employee experience. Your workforce will feel more appreciated and valued when they’re given access to benefits, plenty of support and responsive HR communication. When your employees have a better experience, they tend to stick around to enjoy it. This helps improve retention rates and reduce the cost of employee turnover, which carries a high price tag. Although there are several other ways you can strengthen employee experience, working with a PEO streamlines the process and helps care for your team.
If you’ve never considered it before, now is the time to take action. Working with a team of expert HR consultants in a professional employer organization can help you gain the flexibility and resources you need to manage your business while supporting your workforce. This may help reduce employee turnover and it may also facilitate organizational growth over the years. To help, TriNet offers comprehensive human capital consulting solutions for assistance in handling your toughest HR needs. Through the combination of expert HR guidance, risk mitigation strategies and headache-free payroll processing, you’ll enjoy access to HR consultants who understand how to overcome issues while supporting a strong employee retention rate. Contact us today to learn more.