| October 2011 | HR Wisdom |
Volume II Issue 10 | |||
Rise of the PEO: How businesses are finding strength in numbers during a down economy |
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The economy is still hurting. All around the country, even businesses that had the capital to withstand, or the wherewithal to foresee the fiscal crisis thus far, are starting to feel a serious pinch to their bottom line. As Congress and the President continue to wrestle with various methods of trying to improve the situation, business owners have seen increasing despair that the proverbial light at the end of the tunnel will soon appear.Necessity remains the mother of invention, however, and now, she is mother to innovation, as well. Small and medium-sized businesses have been innovating to find new ways to withstand the economic downturn, and one of these methods of innovation is in joining forces with other businesses who may even have been competitors at one point. The Professional Employer Organization (PEO) model of business allows business owners to outsource a major source of revenue drain to a third party at a fraction of the cost of managing the paperwork, regulations and resources on their own. Business owners are finding that where they spend a great deal of time managing payrolls, taxes and employment issues, or pay an overworked employee to do the job, they could work with a PEO to get the same job accomplished for less time and money. Working with a PEO also allows a business owner to comply with the new healthcare regulations coming down the pipeline in the next year, which will require many businesses to either offer  healthcare to their employees or pay a fine. Where a business could not before afford to get a compliant health plan for their employees, by banding together with other businesses that use the services of a PEO, the PEO is able to offer all of them a share in a larger group plan at a lower price.
The old adage that there is safety in numbers holds most true when there is danger lurking ready to take down the individuals. Businesses that cluster around a competent PEO to handle their human resources, payroll and taxes, find that they are able to shift time and revenue away from those tasks. This allows them to focus on other, more critical business-saving needs such as advertising or hiring needed employees to maintain excellent service.A shrinking economy causes damage to all businesses and eventually most employees. What small and medium-sized businesses have been discovering is that it is their leaner competitors who fare better and are more able to withstand the economic downturn. The ability to shift the burden of part of the business to another competent organization makes sense and allows for a pooling of some resources to tap into those areas where there is strength in numbers. The light at the end of the tunnel may not be brightly glimmering just yet, but the common-sense measure of strength in numbers is serving to carry thousands of business owners forward to that next, new day. |
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