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Outsource Human Resources and Meet Your New PEO

Stocks in this article: ADP

One big plus for small-business employees is that they can access benefits through a PEO they might not otherwise be offered. A company of 10 or 20 employees might not be able to offer health care options to its workers, but a PEO, which is legally considered an "employer" for thousands of employees at different companies, can provide a wider range of health care options and better pricing. The same goes for retirement plans and other benefits. A PEO therefore, might help a small company attract a higher caliber of worker because they can offer a more competitive benefits package.

For many small-business owners, PEOs take away the headache of "people management" and free them up to focus on operations. Issues of workplace liability and federal regulations are all handled by someone else with expertise in those areas. But just as a PEO takes on certain responsibilities, they are granted certain rights. As co-employers, they are allowed to hire, fire and reassign employees as necessary. A small-business owner that brings in a PEO must be prepared to give up a certain amount of control and autonomy.

Businesses with only a handful of employees might not need such comprehensive services. They can get along just fine by outsourcing payroll and benefits without needing a daily, onsite human resources presence.

But what about when a crisis erupts? When a disgruntled employee threatens to bring a discrimination lawsuit or when you need help hiring a manager or just need advice on how to handle performance reviews? Specialized human resource consulting companies are available on a retainer or on an as-needed basis for specific projects.

Human-resources consultants can also be brought aboard for more strategic, long-term projects, such as helping craft job descriptions and advise on salaries; offering training and team-building programs to employees; recruiting employees for positions that require specialized expertise; and crafting onboarding programs that ease new employees into the workplace.

Once a business starts hiring, it takes on a whole variety of risks, regulations and potential headaches that can distract from an owner from his or her core mission. The wide variety of human-resources options allow small-business owner to craft an outsourcing solution that works best for them and for the long-term health of their company.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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