Key points
- Professional Employer Organizations (PEOs) offer HR services and shoulder responsibility and liability for regulatory compliance.
- PEO platforms are digital tools used by PEOs. They allow direct access to PEO services by employees and management from a computer or phone app.
- PEO platforms can be useful to companies hiring globally, as they offer one system that spans many varied regulatory environments.
- There are some disadvantages to PEO platforms, such as the potential for a data breach and the loss of human touch that a traditional HR department would have.
- In choosing a PEO software platform, businesses need to know exactly what services they are looking for, as platforms offer more range of services and cover various regions.
Professional Employer Organizations (PEOs) outsource administrative Human Resources (HR) functions such as payroll and employee tax processing, benefits administration, onboarding new employees, and ensuring regulatory compliance. For administration purposes, PEOs are a “co-employer”, this means that they also take responsibility and liability for payments, taxes, compliance, and insurance. PEO services can range from just one or two of these functions to that of a full HR department.
PEOs have been around since the 1960s, however, as with all other industries they have grown and changed with globalization and digitization. PEO platforms allow modern PEOs and their clients greater flexibility and options in the modern age. They are not without disadvantages, however, and the complexity of the options they offer can make choosing the right one difficult.
What is a PEO platform?
A PEO platform is a software system used by some PEOs to streamline HR tasks and provide up-to-date data for client businesses. A PEO platform will allow co-employees to view their benefits packages, payments from payroll, and tax statements without having to make a request through management or direct to the PEO. It also allows management a global view of employees in various sectors and locations and keeps track of benefits packages throughout the entire organization. A PEO platform digitizes many PEO functions so that they can be accessed without contacting the PEO directly.
What are the benefits of a PEO platform?
PEO software platforms can especially benefit companies that operate in a variety of different jurisdictions, i.e. different states or countries with varying labor laws and insurance requirements. A platform from a PEO specializing in multinational or multi-state operations can ensure that all administrative paperwork for the various jurisdictions is filled out correctly and that managers have access to this information. It frees up managers and business owners from having to learn every regulation in each area they wish to work in or hire remote workers from.
A related advantage is that PEO software can make it simpler for organizations to find remote staff globally. They are able to hire the best talent from anywhere without having to establish new companies in those regions or wade into complex compliance issues. With the PEO as co-employer, these responsibilities and liabilities are shifted to them; business owners simply track their global workforce through the PEO platform.
PEO platforms also offer advantages for some small businesses just starting out. A small company with just a few employees may not need full PEO services, but they may also not want to devote limited resources to internal HR either. The PEO software makes it easier for the PEO to offer some limited HR services, tailored to what the company needs. Later, as they grow, the client can sign up for more services and keep using the same platform. For more examples of what PEO platforms can offer startups, check out this article by Entrepreneur.
What are the disadvantages of a PEO platform?
Like every digital platform, PEO platforms come along with an increased risk of data breach. Make sure that your PEO software provider meets and exceeds industry-standard security protocols.
With internal HR departments, team members are available to help employees and managers personally when they have a question or issue. With a traditional PEO, there is no longer staff in-house, but the agents of the PEO are available by phone and often can be reached in person at the representative office. In the case of PEO platforms, most of these functions are digital and available via the app or website. The loss of direct interaction may affect some company cultures and should be taken into account.
You can read more about the disadvantages of PEO services, and how you can overcome them in this guide.
How to choose a PEO platform checklist:
1. Compare services at different prices
In comparing PEO platforms, be sure to know exactly what you need and what you don’t. Some PEO platform systems may include services that are unnecessary for your business, others may let you choose a la carte. Survey your team and decide which PEO and PEO software services will be most useful to you and find appropriate PEOs offering those services. Be sure that the PEO offers services catering to your geographic areas (both now and in the future) and has packages suitable for your labor market.
2. Check online reviews
Today it is possible to find customer reviews for nearly every business sector and PEO platforms are no different. Keep in mind though that other businesses may have different needs than your own and what is major positive or negative point for them may be less consequential for you and your team.
3. Compare prices
PEO platform pricing will typically only be available by request. Once you’ve decided exactly what services are important to you, and which PEOs offering those services have the best online reviews, obtain a quote from each and decide which provider will best suit your needs and your budget.
Choosing a PEO platform — our take
There is no one-size-fits-all PEO platform: The best PEO platform for your business will depend on your service needs, your industry and your budget. For example, some PEO platforms offer a complete HR offering (see, for example, Rippling), while some providers offer an embedded infrastructure for use by other PEOs (such as Worklio and PrismHR).
To find out more about which PEO platform might be for you, see our guide to the best PEO software in 2023.
FAQ
The purpose of a PEO platform is to digitize many PEO services and make them accessible to clients and co-employees without the need to contact the PEO office.
Many functions of a Human Resources Information System (HRIS) are also covered by a PEO platform. In a way, a PEO platform is a proprietary HRIS that comes bundled along with the other PEO services. Both will assist in processing payroll, employee taxes, and administering benefits policies. Unlike an HRIS, however, a PEO software platform comes along with the customer service and administrative services of the PEO. It should also be more helpful in processing insurance claims and providing details on insurance policies, as the insurance is issued by the PEO. Finally, a PEO platform is different because the PEO is assuming liability for the co-employees.
