Statistical Analysis of PEO Clients

Gathering big data and analyzing this data has become the norm in today’s business world. The info that we gather from big data can give us clues on how to improve our organizations. A study done surrounding businesses using PEOs and not using PEOs sheds some light on the statistically proven benefit of using a professional employer organization.

A Quick Background on the Study

“PEOs: Good for Businesses and Their Employees” is a study conducted by NAPEO. NAPEO is an organization that supports professional employer organizations by providing information on the latest information on regulatory laws, daily operations info, and marketing. This study was conducted in order to provide insights on the effects that having a PEO has on a business. 101 businesses were analyzed in this study.

The Benefits of Using a PEO by the Numbers

Almost every business owner is concerned with the growth of their business and PEOs make that easier for their clients. Annual median revenue growth for PEO clients is twice that of companies that do not use the same services. The projected growth for firms using is 40 percent higher than other firms not utilizing a PEO. Without having to worry about cumbersome HR functions organizations are more streamlined and able to focus on growing their core business.

Firms are not only growing more quickly when partnering with a PEO, they are also becoming more profitable with on average being 16 percent more profitable than their non PEO using counterparts. Improving profitability and growing is a key factor in the overall success of a business.

It also seems that business owners are much less concerned with problems when using a PEO as well. Hiring employees is only rated as a moderate or major concern in 45% of PEO clients vs 70% of non PEO clients. This likely stems from the PEO assisting in the onboarding process, making sure their clients don’t miss any crucial legal steps. Increasing revenue also concerned only 70% of PEO clients compared to 90% of other firms. PEOs enable their clients to spend more time on their core business and worry less about getting everything done in addition to increasing revenues.

Advantages for Employees by the Numbers

Businesses with employees who have a better view of management or the organization as a whole tend to perform better and attract even better talent. Fostering a quality work environment is important for retaining top talent and reducing employee turnover which will in turn lead to greater workplace efficiency.

Employees of PEO clients report significantly higher scores on key measures related to employee satisfaction and confidence in company management:

• Levels of employee engagement (+5)
• Intention to stay with their current employer until retirement (+8)
• Belief that employer is taking the right steps to be competitive (+8)
• Trust that employer is supporting employees in delivering excellent customer service (+7)
• Confidence in employer’s approach to growing the company (+5)

Compared to employees working in businesses that are not PEO clients, employees working in businesses that are PEO clients are significantly more likely to report that their employer:

• Demonstrates a commitment to them as employees (average response was +8 percentage points higher)
• Has good hiring practices (+8)
• Has good HR policies and practices (+5)
• Does a good job of designing employees’ jobs (+4)
• Provides employees with good training and development opportunities (+4)

Overall, Employee turnover was found to be 14% lower in organizations that use PEOs. Good employees are hard to find and even reducing turnover by 14% can make a big impact on your organization.

Business Owner’s View on PEOs

The real measure of PEO success with a business comes from the owners themselves and their opinion of the relationship. 98 percent of business owners who work with a PEO say they are satisfied and would recommend to someone else starting or already operating a business. This likely stems from the fact that while working with a PEO 70% of business owners experienced a growth in business revenue and a 66% experienced a growth in profitability.

The combination of reduced employee turnover, increased retention, increased profitability, and increased revenues for business owners makes partnering with a PEO a pretty obvious choice. But why isn’t every company using a PEO? The PEO solution typically works best for companies between 2 and 2000 employees, which leaves a lot of firms out. This doesn’t mean that a PEO won’t be a great solution for the companies outside of that range they are just found less often. The PEO industry is also growing steadily at about 8% per year indicating that more and more people are beginning to find value in a professional employer organization

Still Have Questions About PEOs?

If you still have questions or want to learn more about PEOs, feel free to reach out to one of our qualified representatives and they will fill you in on any information regarding getting started or basic info. Call us today using the number at the top of the screen or click the contact us button on the dashboard!