In a recent article, we explored the pros and cons of hiring a PEO to collaborate with your business on administrative and HR-oriented tasks. If you’re still considering hiring a PEO or have some valid misgivings about how hiring a PEO might slow down the hiring process or impact your company’s morale, culture, or sense of autonomy, you’ve come to the right place.
Hiring a PEO is a delicate decision in that it promises to potentially alleviate HR and administrative stressors, but risks alienating in-house employees, sacrificing institutional knowledge, and estranging you and your staff from important decision-making processes. Before hiring a PEO, you should thoroughly investigate the benefits and downsides and hold candid conversations with your employees and staff to consider their perspectives on such a partnership. We’re here to help you make an informed decision, especially in evaluating the effect of a PEO on hiring processes and human resources more broadly.
How PEOs Cause HR Logjams and Impact Company Culture
Once a deal is inked between your business and a PEO, they are fundamentally a “co-employer,” - one that immediately de-centralizes and redefines major aspects of your business operations. Though there are sometimes clear short-term benefits to this outsourcing of responsibilities, the decision tends to have a strong and not-so-desirable impact on HR and administrative cohesion. Here are some common issues you can expect to encounter:
- Compliance Headaches – One aspect of a PEO’s work is to monitor and guarantee legal compliance based on their own rules and standards. HR decisions that were once made “in-house” are now heavily influenced or even dictated by the PEO. With regard to hiring and termination processes, this means that your PEO must be involved/present for all hiring and termination meetings and ensure adherence to compliance standards.
- PEO as Interloper – Let’s face it. Even a sterling/top-tier PEO doesn’t possess the same insights that you do about your existing staff and culture. Workforces and staff can and should be synergistic, but hiring, onboarding, or terminating new personnel through a “third party” can easily create issues within a small or medium-sized business, reducing cohesion and “mechanizing” processes that require a softer approach.
- Priorities - A PEO frequently has multiple clients and it’s possible that when communication about hiring or termination is most pressing, they won’t be as available, concerned, or responsive as needed. In general, with a PEO partnership, there’s always the inherent risk of misaligned or miscommunicated needs, values, and priorities.
- Simple Requests turn Kafka-esque – We hate (or love) to bring Franz into the equation here, but imagine this scenario: You need to confirm that one of your employees has signed a particular document related to HR or you simply need a quick copy of a document that is related to administration, HR, taxes, or benefits. Acquiring this information should take seconds using a cloud-based or online document storage system. Alas, with a PEO partnership, you must contact the PEO first, who then serves as an intermediary “archivist,” pulling said files (quickly, lackadaisically, or otherwise) from their host of client folders to deliver these documents to you one at a time, possibly in separate or delayed communications. No thanks!
- Onboarding Woes – According to research conducted by the consulting company O.C. Tanner, “Up to 20 percent of turnover takes place in the first 45 days.” This is a figure that doesn’t account or segment for issues in turnover associated with PEO partnerships. With a PEO partnership, your company’s new employee is onboarded by the PEO you’ve chosen, meaning that the entire “timbre” of interactions, welcomes, briefings, introductions, and interviews is essentially out of your control. This can lead not only to confusion or frustration on the part of the new employee, but also a skewed sense of your company culture and the environment an employee is “signing up for” in a permanent way.
As you can see, hiring a PEO not only risks slowing down your hiring process; it also threatens to negatively impact existing company culture, contribute to employee turnover, make simple exchanges needlessly complex, and generate misalignments in values between your business and the PEO.
So, what’s the path forward if you’re looking for help with your HR and administrative needs, but hope to retain and even enhance your company culture? Fortunately, our recruiting and onboarding solutions blend personal consultation with tailor-made technologies designed to simplify, automate, and streamline your hiring processes. You stay in the “driver’s seat,” with an eye to the mission, vision, and values of your organization.
In turn, we’ll offer invested, concrete help through our Recruiting and Onboard Solutions and Payroll management system, both of which can grant you the tools and guidance you need to keep your operations cohesive, in-house, and easily accessible for all of your daily needs.
Ready to explore how to simplify and expedite your hiring processes? Contact us today so we can start our collaboration.
