How a PEO Can Improve Turnover Rates

The numbers don’t lie: According to a recent survey, 51% of employees in the US are looking for a new job. Another analysis showed that turnover can cost employers 150% of an employee’s salary—or more. That means retention and turnover can be make-or-break factors in the success of small and growing businesses. But what can your company do about them? 

One effective solution that has gained popularity is partnering with a Professional Employer Organization (PEO). PEOs offer a range of services that can help businesses manage HR tasks, leading to happier, more satisfied employees and ultimately, lower turnover rates. (In fact, turnover rates for PEO clients can be up to 14 percentage points lower per year when compared to other companies.) In this article, we'll explore how a PEO can improve turnover rates and provide significant benefits to your organization.

Understanding PEOs and Their Services

So what exactly is a PEO? A Professional Employer Organization (PEO) is a firm that provides comprehensive HR services to businesses. By partnering with a PEO, companies can outsource various HR functions such as payroll, employee benefits, compliance, and risk management. This allows business owners and managers to focus on their core operations while the PEO handles the complexities of HR administration. In short: They take work off your plate so you can be an even more effective leader. 

Key PEO Services That Impact Turnover

PEOs offer a variety of services that can directly influence employee turnover rates:

1. Payroll and Tax Administration: PEOs manage payroll processing and ensure compliance with tax regulations, reducing the risk of errors and easing the administrative burden on your team.

2. Employee Benefits: By leveraging a PEO, companies can offer competitive benefits packages that may be otherwise unaffordable for small businesses.

3. Compliance Support: PEOs stay up-to-date on labor laws and regulations, helping companies avoid costly compliance issues.

4. Risk Management: PEOs provide guidance on workplace safety and help implement risk management strategies to protect your employees and your business.

The Connection Between PEOs and Turnover Rates

Improved Employee Benefits

Benefits are more than just perks. One of the primary reasons employees leave a company is dissatisfaction with the benefits package offered. By pooling employees from multiple companies, PEOs can take advantage of greater bargaining power with insurance providers. This enables PEOs to offer more comprehensive and cost-effective benefits packages that attract and retain top talent.

Streamlined HR Processes

Administrative tasks are critically important for businesses. At the same time, they can also be time-consuming and complicated, leading to frustration and dissatisfaction among employees. This can lower morale and also increase the likelihood of errors. By outsourcing HR functions to a PEO, businesses can streamline their processes, improve accuracy, and ensure timely payments and benefits administration. This reduces the administrative burden on employees, allowing them to focus on their roles while also increasing overall job satisfaction.

Enhanced Compliance and Risk Management

Compliance with labor laws and regulations is crucial for maintaining a positive work environment, but keeping up with new rules is no easy task. PEOs have experts who stay informed about changes in legislation and ensure that your business remains compliant. This not only protects your company from potential legal issues but also fosters a sense of security among employees, reassuring them that their rights are being respected.

Access to Professional Development and Training

Learning and growth are essential elements of employee satisfaction. PEOs often provide access to training and development programs that help employees enhance their skills and advance their careers. This investment in growth shows that your company values its employees and is committed to their long-term success. Employees are more likely to stay with a company that supports their professional development, leading to reduced turnover rates.

Choosing the Right PEO for Your Business

When considering a PEO, it's important to find the right fit for your business. Here are some factors to consider when selecting a PEO:

1. Industry Expertise: Choose a PEO with experience in your industry to ensure they understand the unique challenges and requirements of your business.

2. Service Offerings: Make sure the PEO offers services that align with your company's needs, such as payroll, benefits, compliance, and risk management.

3. Reputation and References: Research the PEO's reputation and ask for references from other businesses that have used their services.

4. Cost and Contracts: Evaluate the PEO's pricing structure and contract terms to ensure they fit within your budget and align with your business goals.

Partnering Up

Partnering with a PEO can be a game-changer for businesses looking to improve turnover rates and employee retention. By outsourcing HR functions, companies can offer better benefits, streamline processes, ensure compliance, and provide professional development opportunities. In turn, this creates a positive work environment that attracts and retains top talent. 

When selecting a PEO, it's essential to consider factors such as industry expertise, service offerings, reputation, and cost. By making the right choice, your business can enjoy the many benefits of a PEO partnership and achieve long-term success.

Justworks Can Help

Not all PEOs are built the same. From payroll and benefits to compliance and HR, Justworks PEO gives you the tools you need to optimize employee retention and reduce turnover. Our platform is as powerful as it is easy to use, so you can spend less time on paperwork and more time building—and retaining—the best team for your business. Get started today to learn how Justworks can help you manage employee turnover rates and much more.