We haven’t had any internal human resources functions for as long as I can remember.

Years ago, we outsourced everything related to dealing with benefits, including the following:

• Health insurance,
• Retirement plans,
• Life and disability insurance, and
• Workers compensation insurance.

How a PEO Works

When we onboard new employees, we hook them up with our professional employer organization (PEO), and it takes care of things. It deals with all the enrollment forms, drug testing, tax documents, etc.

We don’t deal with the payroll tax forms, the annual retirement plan tax returns, or much of anything else.

Our role is to interview and hire good people and let our PEO know how much to pay them. It takes care of the rest and even counsels us when we’re facing a hiring mistake and need to let someone go.

Is the PEO perfect?

Probably not.

Is it better than what we were doing when we handled it all in-house?

Yep.

Our PEO gets things right and, in the rare event that it screws up, it takes responsibility for the error. It has been a very good ride for us.

Why I’m Thinking about PEOs

We’re in the midst of moving from one company to another. We’re just getting started with the transition, which becomes effective January 1. So far, so good.

The new company will shift our 401(K) money over to a new plan, transition our employees to new insurance, and train us on its software for inputting payroll (which is handled by our outsourced bookkeeper). It’ll provide our employees with a host of benefits we couldn’t offer if we were doing this on our own because of its ability to aggregate employees from a range of businesses.

The company is giving us big firm benefits in a small firm.

Am I a fan?

You bet. I really like being able to let someone else take care of all the details so we can focus on our core function: providing excellent legal representation to clients.

Are There Disadvantages to Using a PEO?

You can certainly find articles, mostly from the competition, espousing the advantages of managing your benefits on your own.

We haven’t had any issues with the PEO concept except one. By going with a PEO, we lose the ability to shop each component of our benefits package individually. For instance, we might have great health insurance with the PEO but a mediocre dental plan. We can’t go look for a better dental plan: we’re stuck with what the PEO offers. We’re dealing with that issue now by switching PEOs. Switching PEOs required some effort on our part, but certainly no more effort than going back to the market each year to evaluate our health insurance. Making any change is challenging, but moving from one PEO to another isn’t especially difficult, and given the full-service nature of their programs, they make it generally pretty easy.

If you’re in the midst of looking at benefits for next year and haven’t considered the PEO option, it’s worth exploring. We’ve been happy PEO customers for a long time.