Small and medium-sized businesses often find themselves stuck in complicated HR-related management and administration. These complex functions may also keep them from fulfilling their expansion vision. Businesses may also compromise on their operational efficiency and productivity by managing their HR activities on their own. However, for any company, minimizing risks and maximizing their human assets must be the priority to grow. To achieve this, companies are shifting towards co-employment services offered by Professional Employer Organizations (PEOs).
What is Co-Employment?
Co-employment means that two different organizations divide employer responsibilities between themselves. Often, co-employment involves a client business and a Professional Employer Organization (PEO).
Usually, this type of co-employment arises via a client service agreement in which the PEO agrees to become the co-employer or employer of record for its client. In such an arrangement, both the company and the PEO hire the employees. The company manages performance, targets, and control over employee roles. On the other hand, the PEO handles the administrative and compliance tasks associated with the employees.
Co-employment is a common operating model for national PEOs operating in the US.
In summary, the control over the following functions remain with the company:
The PEO takes care of the co-employment tasks related to the backend management of the employee. It includes:
Benefits of Co-Employment
An expanding company that opts for co-employment services can benefit in multiple ways by hiring a PEO as its employer of record. One of the primary benefits of co-employment is that the PEO assumes the company’s legal and administrative responsibilities, freeing it to focus on its expansion. Let’s look at some of the other benefits of co-employment:
Streamlined HR Management of Employees
With a PEO, the company can streamline HR management of employees. As an HR specialist, a PEO enables small and medium-sized enterprises to compete with large organizations in terms of HR quality. It also effectively allows client companies to draw on the economies of scale of a large organization and provide more competitive packages of employee benefits.
Commonly, a PEO can provide the source the following additional employee benefits: