Maximizing ROI of Using a PEO

This report delves into the benefits of partnering with Professional Employer Organizations (PEOs) for small and mid-sized businesses, with a particular focus on the impact these partnerships have on both businesses and their employees. As the fifth installment in NAPEO’s series of white papers, it aims to enhance understanding within the business community and the general public about the economic value provided by the PEO industry. Using comprehensive survey data from business owners and their employees, the report compares various key performance areas between companies that use PEO services and those that do not. The analysis covers business growth, competitiveness, innovation, customer service, employee satisfaction, and the ability to meet business challenges.

The findings underscore the broad range of positive outcomes experienced by businesses that work with PEOs, especially in regions like Nevada and California, where Northern Nevada's premiere PEO services, such as those offered by The Applied Companies, are increasingly recognized for their value. The Applied Companies not only provides comprehensive PEO services in both California and Nevada but is also a leader in executive search recruitment. As a firm that is proud to serve numerous clients nationwide, The Applied Companies has established itself as a trusted partner in helping businesses achieve operational excellence and long-term success.

The Return on Investment (ROI) of Using PEO 

Businesses that engage with Professional Employer Organizations (PEOs) like The Applied Companies can achieve significant value in several key areas. These advantages can be grouped into three broad categories:

1. Enhancing the ability to attract, motivate, and retain employees.
2. Allowing businesses to concentrate on their core operations by outsourcing HR responsibilities.
3. Cutting costs associated with HR functions.

According to the National Association of Professional Employer Organizations (NAPEO), businesses using PEO services can expect an average annual ROI of 27.2%, derived from savings in the following areas:

• HR Costs: Reduced need for in-house HR staff.
• Health Benefits: More robust plan options and full compliance with health benefit laws.
• Workers’ Compensation: Reduced premiums and administration and full compliance.
• Unemployment Insurance: Higher retention, lower turnover saves money for a business.

For every $1,000 spent on PEO services, businesses can expect to save approximately $1,272, yielding a net benefit of $272.

Beyond Cost Savings

The value of PEOs extends beyond financial savings. Businesses working with PEOs report lower employee turnover and faster growth compared to non-PEO firms. PEO clients also face fewer challenges in hiring, retaining, and motivating employees, showcasing the broader strategic advantages of these partnerships.   

Strategic Insights for Businesses

Companies with significant HR expenses or challenges in employee retention are especially positioned to benefit from PEO services. Survey results consistently show that businesses using PEOs outperform their non-PEO counterparts in critical areas such as growth and employee satisfaction. The Applied Companies, known for delivering exceptional PEO and executive recruitment services, exemplifies how these partnerships can help businesses thrive.

Final Thoughts 

PEO partnerships provide businesses with tangible benefits, from cost savings to improved business performance and employee satisfaction. These results underscore the significant value of PEO services in supporting companies to achieve their goals and thrive in competitive environments. The Applied Companies exemplifies this value by supporting clients across various regions to optimize operations and drive success. Contact us today to learn how partnering with a PEO can elevate your business.  Contact us today!