The amount of money a PEO broker can save a company varies based on the size of the company, the scope of services required, and the PEOs being considered. Here are some general insights and statistics:
- Cost Savings on HR Administration:
- Companies can save approximately 35% on HR administration costs by outsourcing these functions to a PEO. This includes savings on payroll processing, benefits administration, and compliance management (NAPEO).
- Employee Benefits:
- PEOs can often provide access to high-quality employee benefits at lower costs due to their ability to pool employees from multiple clients. This can result in savings of up to 20% on health insurance premiums and other benefits compared to what small businesses might be able to negotiate independently (NAPEO) (NAPEO PEO Insider).
- Compliance and Risk Management:
- By ensuring compliance with state and federal regulations, PEOs help companies avoid costly fines and legal fees. The cost savings here can be significant but vary depending on the industry and the specific compliance risks involved (NAPEO).
- Overall Efficiency:
- A study by the National Association of Professional Employer Organizations (NAPEO) found that businesses using PEOs grow 7-9% faster, have 10-14% lower employee turnover, and are 50% less likely to go out of business (NAPEO). These factors contribute to long-term financial stability and growth.
- Broker-Specific Savings:
- PEO brokers help companies by negotiating better rates and terms with PEOs, leveraging their industry knowledge and relationships. While exact savings can vary, brokers often secure discounts and better service packages that a company might not achieve independently.
These savings demonstrate the value of PEO brokers in helping businesses not only manage HR functions more efficiently but also achieve significant financial benefits.