CAN HUMAN RESOURCES DRIVE REVENUE? RETHINKING THE STRATEGIC VALUE OF PEOS

One of the most enticing things about the PEO value proposition is the inherent cost savings attached to hiring an entire HR Department for a small fraction of the price of an a la carte team of professionals. How then do our client partners optimize the PEO relationship to actually enable revenue, not just save money? The value proposition in benefits, onboarding, payroll and HR consulting services is just the cherry on top of the profitability influence of the PEO model.

THE NEEDS ANALYSIS

The first step in effectively contributing to revenue generation is performing a needs analysis of staffing and HR gaps with key stakeholders during the business development process. This is a much deeper dive than analyzing insurance demographics or asking for the workers’ compensation premium cost. Sales teams should specific questions like these.

Human Resources: How are you placing job ads? What systems are you using to accomplish your HRIS functions and how much does that cost? What does your HR person spend most of their day doing? If your managers could spend 20% less time on HR and 20% more time growing the business, what would that mean for revenue?

Benefits: Do you lose candidates because of benefits? What is your 401(k) strategy? Who answers employee benefit questions? How much time does your company spend on open enrollment?

Compliance: When was your handbook last updated? Who created your handbook? How confident are you that it contains policies that serve to reduce your risk? How do you keep up with employment law changes? Have you had a wage and hour complaint? How do you deal with unemployment claims? Who represents you in unemployment hearings? How would you handle an EEOC complaint? Are managers trained on harassment? What mechanism do you use to comply with employee anti-harassment training protocols?

The answers our prospects present to these questions, and the assistance we as the PEO can offer them to hire better, comply with regulatory agencies and administer benefits smarter and more efficiently, are what not only reduce overhead but ultimately drive revenue for our small and mid-sized business partners.

HR CAN HELP DRIVE BUSINESS PERFORMANCE

Business leaders are savvy about the importance of financial metrics like revenue, profit margins, customer retention and operational efficiency. What is behind every one of those metrics? People.

Perhaps no industry is better positioned to elevate HR to a source of revenue generation than PEOs.

By combining our expertise across compliance, payroll, benefits, recruiting, compensation, employee relations, performance management and leadership development, we can bring the perspective to aid our clients in providing their employees with the tools they need to be satisfied with their work and driven to succeed.

Employees design products, serve customers, solve problems, innovate processes and build company culture. When organizations attract, develop and retain high-performing employees, the business performs better.

Not only does reducing employee turnover decrease recruiting and training costs, but it also preserves institutional knowledge. Clients and customers like the familiarity of a representative they know can help them, know will get back to them, and know their direct line will lead to a friendly voice. Customers are much less likely to change vendors or offices if they have developed a relationship with their provider.

A succinct and professional employee onboarding process accelerates time-to-productivity for new hires. This onboarding efficiency is particularly impactful to small and mid-sized businesses who may not otherwise have that step of the new hire process on lock.

Performance management aligns employee efforts with company goals, and hitting company goals increases the company’s earnings.

Competitive compensation strategies improve recruiting success and reduce vacancies that slow production or sales. Partnering with a PEO who can run and analyze salary surveys for their clients takes the time and guesswork out of properly paying employees their value. It can further lead to reduced turnover (see first point here).

When the PEO offers their clients measurable financial returns, we are offering so much more than simple HR initiatives and cost saving measures.

SUPPORTING CLIENT MANAGERS

The best employees are supported by the best managers. The quality of frontline leadership influences all their direct reports. Unfortunately, especially in smaller organizations, many high-performing individual contributors wind up being promoted into management roles without being provided leadership training. It’s difficult to quantify how much investing in manager development will produce returns to employers, but we can certainly speculate.

This is an area where PEOs can provide tremendous value to our small to mid-sized clients. We can do so through coaching, performance appraisal training, conflict resolution skill guidance and manager education. Having an online platform to provide management trainings, as well as an in-house manager coaching expert, provides resources that would otherwise be inaccessible if not incredibly costly to potential and actual PEO clients.

SETTING THE COMPLIANCE FOUNDATION

One of the PEOs superpowers is helping our clients navigate employment laws, wage and hour regulations, ACA and Section 125 compliance, workplace investigations, and risk management.

While compliance remains essential, it by no means defines the HR function.

Compliance is the building’s foundation. Without it, the structure becomes unstable. We’ve seen this play out at businesses who lack that foundation, where employee discontent and confusion morph into litigation.

Though a solid foundation alone doesn’t generate revenue, the lack of one can certainly hurt the bottom line.

Once compliance risks are controlled, organizations can shift attention toward strategic initiatives that improve productivity, strengthen culture, and accelerate growth.

THE PEO ADVANTAGE

Working across hundreds of client organizations allows PEO professionals to identify trends, benchmark best practices and recommend proven strategies that individual businesses may never discover independently. The access we have to improvement strategies for our business partners is right there in front of us, by observing and learning from our current and former clients and by partnering with true vendor partners who can elevate businesses and eliminate non-revenue generating activities.

For PEOs, that represents the greatest opportunity of all—not merely helping clients stay compliant but also helping them build organizations where people and business performance grow together. In an increasingly competitive labor market, the businesses that treat HR as a strategic investment rather than an administrative necessity will be the ones best positioned to outperform their competitors.

By combining HR expertise with strategic business insight, PEOs can help organizations leverage their people strategy to achieve measurable business outcomes.