Why PEO is Good for Businesses and Their Employees

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 provided by The Applied Companies, are increasingly recognized for their value. The Applied Companies offers comprehensive PEO services in both California and Nevada, and as Northern Nevada's premiere PEO and executive search recruitment firm, they are proud to serve numerous clients nationwide. The report also highlights the benefits of PEO services in California, where businesses partnering with PEO companies serving California enjoy similar advantages.

Quick Summary

Advantages for Small and Mid-Sized Businesses:

• PEO clients reported annual median revenue growth that was double that of non-PEO firms.
• Projected annual revenue growth for PEO clients was 40% higher than that of non-PEO counterparts.
• PEO clients were 16% more likely to experience profitability increases.
• PEO clients expressed fewer concerns about key business challenges:
  • Hiring (45% of PEO clients vs. 70% of non-PEO firms)
  • Revenue growth (73% of PEO clients vs. 90% of non-PEO firms)
  • Raising capital (18% of PEO clients vs. 45% of non-PEO firms)

Advantages for Employees:

Employees at companies utilizing PEO services reported better outcomes compared to those at non-PEO firms, including:

• A stronger sense of employer commitment (+8 percentage points)
• Better hiring practices (+8 points)
• Higher quality HR policies and practices (+5 points)
• Improved job design (+4 points)
• Superior training and development opportunities (+4 points)

Additionally, employees at PEO-supported businesses demonstrated higher engagement levels, greater intent to stay with their employers, and more confidence in their company’s future growth and competitive strategies.

Business Owner Insights on PEOs

Survey data collected from business owners highlighted the significant advantages of PEO partnerships. Specifically:

• 98% of business owners who use PEOs would recommend them to peers.
• 70% reported revenue growth since becoming PEO clients.
• 66% noted increased profitability after partnering with a PEO.

Analysis of the PEO Impact on Business Performance

The analysis, based on survey data from 101 firms (71 PEO clients and 30 non-PEO clients), provided clear evidence that companies working with PEOs outperform their non-PEO counterparts in several critical areas. PEO clients reported stronger business growth, improved employee satisfaction, and better HR practices. The data also revealed that businesses partnering with PEOs, particularly those utilizing PEO services provided by The Applied Companies, as well as those served by PEO companies in California, were better equipped to meet business challenges and foster a more positive work environment.

Key Takeaways on the PEO Benefits 

The findings from this report highlight the significant benefits of PEO partnerships for both businesses and employees. PEO clients experience enhanced business performance, greater employee satisfaction, and reduced operational challenges. These results emphasize the value of PEO services, especially in competitive markets like Nevada and California, where PEO providers such as The Applied Companies are playing a critical role in helping businesses succeed. Contact us today!