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Size does Matter

According to NAPEO, the average PEO client has 19 employees. However we find the sweet spot for the Professional Employer Organization industry is anywhere from 10-100 employees. These are 5 major reasons why the PEO value proposition works well for this sized companies:

• For a company with less than 100 employees, hiring a full-time, competent HR professional can be too costly to justify ($60k-110k per year). PEOs provide small businesses with access to SHRM certified HR consultants to guide with company policies, strategy, and HR compliance. Companies can rest assured they’re in compliance with all Federal and State regulations for a fraction of the costs.

• Companies with more than 100 employees begin entering the size range where economies of scale work in their favor when purchasing health insurance, workers comp insurance, and many other HR related expenditures; the need for a PEO’s buying power is mitigated in this case.

• When a company has less than 10 employees they may struggle  to find a PEO that will accept them on their group health insurance policy. Certain PEOs are more flexible in this regard, and will provide the full range of services for companies with less than 10 employees, but it will limit the options in the market. Check out our case study of how we helped a newly funded startup company win big with a PEO.

•  If a company has less than 10 employees Human Resources may not be a prioritized initiave for the company, so the need for outsourcing HR isn’t yet realized.

• Many of our clients utilize a PEO primarily to save money, companies with less than 10 employees are less likely to be investing in Human Resources services, tools, and benefits. The marginalized savings per employee is typically less for smaller companes when compared to larger companies that are already spending major dollars on payroll services, 401(k) services, HRIS systems, EPLI insurance, and other various HR expenditures.