PEO Vs. In-House HR: Which Approach Suits Your Business?

Every single business out there has the important task of successfully managing human resources. Handling the process of hiring, managing payroll, complying with the necessary regulations, HR certainly plays a crucial role in the success of your organization, playing a part in its every aspect. Read more about the keys towards the success of HR.

Anyway, once you understand the importance of this, you will be faced with two specific options. The option of hiring a whole in-house HR team, and the option of using PEO services. And, naturally, you should not make random decisions here. Instead, you need to get a clearer understanding of both of these solutions and thus figure out precisely which one could be best for you.

So, that is precisely what we are going to help you do right now. Below I will tell you more about the pros and cons of in-house HR, and then I will do the same for PEO, in an effort to help you understand it better. This way, you should get a clearer idea on what it is that may be right for you, and which solution you should actually go for. In the end, helping you understand which option to choose is the main goal. Let us, thus, start making things clearer for you right away.

The Pros and Cons of In-House HR

In-house HR, as you may have understood it already, refers to the idea of hiring an entire team to manage all the HR functions internally. The team you hire handles everything from recruiting and the actual onboarding process to compliance and benefits management. In short, you have full control over your HR processes. Basically, this is the traditional approach that everyone is used to, but it does require quite some resources, including time and money.

If you’re wondering about money, you may want to get a better understanding about how much in-house vs PEO would cost. And, if you visit PEOcosts.com or another place that can provide you with this piece of info, you’ll be able to get a much clearer idea on the overall costs, and you’ll understand what may be the better option for you. Since, however, you don’t want to decide based on the prices alone, you’re interested in other pros and cons of both of these solutions.

So, there is no denying the fact that the in-house option has quite some benefits. For one thing, it provides you with full control over all your HR decisions and policies. Then, it allows you to easily customize all of your strategies to have them align with your company culture. Of course, there is also the fact that the sensitive employee information will be handled internally, and that you will generally foster closer relationships between the HR staff and the actual employees. And, when you build a great, strong, team, you are sure to contribute to business stability in the long run, as you’ll have a stable organizational structure.

There is, however, no denying the fact that there are cons to this solution as well. For one thing, it can be quite an expensive option, as it requires you to hire an entire in-house team, as well as train them and pay their salaries and benefits. On the other hand, working with a PEO comes at a fraction of the cost, as you’ll see, since you’ll simply be paying for what you need and when you need it.

Another disadvantage of the in-house solution is the fact that hiring smaller teams means agreeing to getting limited expertise. After all, the people you hire may not be familiar with all the policies and all the HR strategies that you could benefit from, and they may lack specialized knowledge regarding hiring in your industry, for example. So, in short, you could easily wind up forming a team that has limited knowledge.

We cannot deny the fact that the above can lead to some compliance mistakes. Then, those compliance mistakes will result in penalties, which is definitely something you’d rather avoid. And, in the end, having your in-house team handle everything, including the administrative tasks, can lead to diverting their attention from other core business tasks, and from strategic initiatives they could be taking.

Understanding PEO

Let us now take the time to help you understand the second solution you have. Basically, I am talking about the idea of hiring a Professional Employer Organization (PEO) to help you handle all of those HR tasks that you may be facing. Basically, a PEO is a third party HR service provider, meaning that we are essentially talking about outsourcing here. Entering into an agreement with these professionals means sharing certain employer responsibilities between one another, while you are the one maintaining control over the day-to-day decisions and operations.

Why is it that you may want to opt for this particular solution? Well, for one thing, it can help you save some money by reducing those expenses that are associated with your in-house team. Then, there’s no fact that you will get the expertise you require, given that a PEO will have seasoned HR professionals ready to provide you with any solutions you may need. All of this will minimize the risk of penalties that you would have to pay if you fail to comply with the regulations. And, of course, all of this will allow you to focus on your core business tasks, while knowing that your HR will be handled successfully and without any issues whatsoever.

How to Decide What Suits You Best

The above should have given you a better idea about the differences between these two options, as well as about the benefits of choosing PEO services. Yet, you may still not be sure which option to choose for you. How can you decide, though?

Well, you can decide after assessing your business needs and check if they align better with an in-house team or a PEO. Then, calculate and compare the costs as well, don’t forget to take scalability into account, and ultimately decide what you may need. Once you make the decision, proceed towards using the solution that you believe could be right for you, and ensure that your HR is handled successfully.