Taking care of the business of running a business is not always the top priority for executives as they navigate through the challenging terrain toward growth and increased profitability. Yet, without a strong internal structure, even the best laid plans can crumble.

With labor costs typically the largest expenditure a business has, along with complex employee related matters such as personnel management, health care and benefits, workers’ compensation, payroll, taxes and compliance, executives are recognizing the increasing value that informed professionals managing a working infrastructure for Human Resources bring.

Businesses have such a resource available to them - Professional Employer Organizations (PEOs). PEOs partner with their client companies to provide integrated services which often more cost-effectively manage the critical human resource responsibilities and employer risk. PEOs offer clients and their employees the services and expertise of a full human resources department. Few, if any, small businesses can afford a full-time staff consisting of an accountant, a human resources professional, a lawyer, a risk manager, a benefits manager and a manager of information services. PEOs offer all this expertise to clients.

And PEOs aren’t just for small businesses any more. With larger organizations relying more and more on outsourcing as part of their strategic plans, PEOs have grown with this trend.

Many PEOs have expanded services in response to the needs of larger employee groups. PEOs partnering with groups of 100–350 employees and more are offering everything from more and varied healthcare, benefits and 401K options to customized web-based employee data bases; allowing access to total labor cost, detailed employee information and customized reports at the click of a button. Traditionally, smaller (2-50 employee groups) and start-ups were the clientele of PEOs, but now with enhanced offerings and flexible services, the PEO is an appealing option to larger companies.

John Warren, executive director of Central New York Services, a multiservice, nonprofit agency, says his decision to outsource human resources came down to money and power.

“It would be extremely costly for an agency our size (approximately 100 full time employees) to have an in-house personnel department that could deliver all the same services. Our management team still has frontline responsibility for our staff. I have to be attentive to all the human resources activity; I just don’t have time to do it,” he said. Warren estimates that 90 percent of his time is now directly channeled into the business. “Without outsourcing these activities, I’d be lucky to spend 50 percent of my time actually running the company,” he added.

It is estimated that 2-3 million Americans are currently involved with a PEO arrangement. PEOs are operating in every state and in most industries. Client groups contracting with local PEOs range from two to 300 employees.

For additional information on Professional Employer Organizations visit www.NAPEO.org, the website for the National Association of Professional Employer Organizations.

(Rita Tarolli Fenton is a Professional Employment Consultant for Staff Leasing. For more information on PEOs or related topics, she can be reached at 315-641-3600.)