HOW THE RIGHT HCM TECHNOLOGY CAN ELEVATE EMPLOYEE EXPERIENCE AND DRIVE PEO GROWTH

People talk a lot about employee experience (EX). Everyone agrees it matters, but few can articulate why — or how to impact it. Sometimes that talk is so vague EX feels like just another tired HR buzzword. And many businesses, including PEOs, struggle to connect the dots between EX and real business outcomes.

But what if we told you that EX — as part of your Human Capital Management (HCM) offering — could be the key to unlocking growth, engagement, and retention for your customers — and your PEO?

We are in a competitive and volatile labor market. Employees are worth more, and they expect a better experience — from onboarding to performance management, pay transparency to career development.

That is not just a client-side concern. The experience employees have at work impacts your PEO’s ability to retain clients, build stronger service offerings, and stand out in an increasingly crowded market. It is no secret that PEOs charge a premium for delivering high-touch HR services, but those services only hold value if they align with the evolving expectations of today’s workforce.

The right HCM technology can bridge that gap, delivering seamless, personalized, and impactful experiences that keep employees engaged and businesses growing. PEOs that embrace HCM technology to enhance EX can move beyond transactional payroll and employer-related compliance to offer services that build deeper, more meaningful partnerships with their clients.

Suddenly EX goes from a vague concept into a tangible strategic advantage, driving higher employee retention, client loyalty, and revenue growth — a strategy that is going untapped by most PEOs.

EMPLOYEE EXPERIENCE: MORE THAN JUST ENGAGEMENT

What exactly is EX? In a nutshell, it is the sum of every single interaction an employee has with their workplace — from the moment they apply for a job to the day they leave.

That can feel so big it is hard to get a handle on it, which is why many people think of EX as a soft metric. But for PEOs, EX is far from abstract. It shows up in predictable, essential ways that employees engage with their organization, especially around things that matter most to them: pay, benefits, and job-based performance or career advancement opportunities.

HCM is one of the most critical and frequent touchpoints between employees and their workplace. Employees who have a positive experience with their HCM tools are more engaged, more productive, more likely to stay, and more focused on customers. In fact, according to our 2024 report, Pendulum of Opportunity: A Research Study on ASO, PEO and PSP Expansion and Evolution Amid Dramatic Employer-Employee Dynamics, a whopping 90% of employees say the experience they receive at work affects the experience they deliver to customers.

HCM TECHNOLOGY AS A GROWTH LEVER FOR PEOS

According to our 2024 research, the top business challenge for PEOs this year is acquiring new clients. Offering HCM solutions that prioritize employee experience (EX) not only enhances the appeal to prospective clients—whose decisions are influenced by their own and their employees’ needs—but also strengthens retention and expansion opportunities within existing client relationships. However, despite the proven benefits of value-added HCM services, many PEOs are not fully leveraging these technologies to improve EX.

Our research also indicates that 80% of PEOs refrain from using the full suite of tools provided by their HCM vendors, while 67% hesitate to implement predictive analytics and engagement solutions—leaving significant opportunities for client revenue expansion untapped.

The danger of underutilizing HCM technology is twofold: First, PEOs risk missing opportunities to differentiate themselves in a crowded market. Second, they fail to strengthen the loyalty of both employees and clients, which leaves them vulnerable to higher turnover and lost revenue. In a world where businesses are hungry for solutions that keep employees engaged and productive, standing still is not an option.

CHOOSING THE RIGHT HCM TECHNOLOGY FOR LONG-TERM SUCCESS

With the right platform, PEOs can help their clients shift from transactional payroll and HR to meaningful employee interactions that build that kind of loyalty and satisfaction. HCM technology helps employers build a better EX through self-service tools that empower employees to pursue and engage with learning and career development resources, data driven insights, and communications tools that meet employees where they are.

Of course, not all HCM platforms are created equal. PEOs that want to deliver a great EX need to ensure their technology partner has properly invested in both technology and development — to deliver not only those essential must-have tools but also next-generation tools that align themselves with the anticipated future needs of employers and their employees.

Here is what to look for.

TABLE STAKES: MUST-HAVE FEATURES

• Intuitive Self-Service Tools: Consumer-grade access to schedules, benefits enrollment, pay stubs, and time-off requests via mobile apps.
• Comprehensive Payroll Management: Timely, accurate payroll processing with easy access to pay slips and tax documents.
• Integrated Benefits Administration: Seamless management of health insurance, retirement plans, and other benefits options, ensuring easy enrollment and visibility.
• Onboarding Automation: Tools that streamline and personalize the new hire experience, helping employees feel engaged from day one.
• Performance and Learning Management Systems (LMS): Platforms to track performance goals, offer feedback, and facilitate professional development through e-learning.
• Compliance Tools: Features to ensure clients remain compliant with employment laws and regulations, reducing risks for both PEOs and their clients.

UPPING THE ANTE: NEXT-GEN TOOLS TO STAY AHEAD

• AI-Based Virtual Assistants: Virtual assistants that respond to employee inquiries about PTO, payroll, and benefits, saving HR teams time while providing instant support.
• Predictive Analytics: Tools that anticipate workforce trends—like flight risk or burnout—based on historical data, empowering PEOs and their clients to act proactively.
• Sentiment Analysis Tools: AI tools that analyze employee feedback from surveys, emails, and chat systems to provide real-time insights into engagement and satisfaction.
• Workforce Planning and Forecasting Models: Predict staffing needs based on seasonality, historical trends, or business growth, ensuring clients are always staffed appropriately.
• Employee Well-Being Platforms: Apps offering mental health support, financial wellness programs, and personalized well-being recommendations to foster employee retention.
• Automation for Routine Processes: Automating payroll, compliance tracking, and time-off approvals to enhance efficiency and allow HR to focus on strategic initiatives.

ELEVATE EX AND UNLOCK GROWTH

The future of work is here, and the expectations of employees and employers alike are evolving rapidly. It is time for PEOs to move beyond transactional payroll and compliance and take a more proactive approach to guiding their clients to the solutions and services that will allow their employees to find that level of engagement and satisfaction they are seeking today.