LOOKING BACK TO MOVE FORWARD: INSIGHTS FROM 2025

It was another thrill ride of a year in the PEO industry! If we don’t glance in the rear view mirror occasionally, we can lose sight of the best path forward. Come reflect with me, won’t you, on a few highlights from the unique journey that was our year.

THE WORKFORCE SPLIT IS WIDENING: A WAKE-UP CALL FOR PEOS

The workplace has become a petri dish of the broader societal divides we see in politics, culture, and social media. From generational clashes to differing views on diversity, remote work, and ethics, today’s PEOs and their HR Professionals are navigating a more divided employee environment than ever before.

The pandemic, social justice movements, and geopolitical instability have all amplified personal beliefs, which has seeped into the workplace. What was once a casual disagreement can now escalate into conflict, impacting team cohesion and productivity.

But why? And what are our HR teams supposed to do, factoring in free speech, state protected law, and off duty conduct?

The HR department’s role is evolving. It’s no longer just about enforcing policies—it’s about fostering empathy, psychological safety, and inclusive dialogue. Leaders must be trained to manage conflict constructively, and organizations must actively create environments where different perspectives can coexist without fear or friction, while focusing on productivity and work itself.

Understanding that our client’s workplace can be divisive isn’t cause for despair—it’s a call to action. PEOs can help clients by reviewing their social media policies, being the Switzerland we rely on, and by staying on top of topics and trends so that we can, with relevance, help navigate turbulence when it erupts at our clients (or, gasp, at our own shops).

AI FEARS, FUMBLES, AND FREEDOM IN THE WORKPLACE

Artificial intelligence (AI) is often met with apprehension, particularly around the idea that it may replace human jobs and that it reeks of artificiality. Does this fear overlook the true potential of AI as a tool to enhance rather than eliminate human jobs? Let’s turn our attention to the Golden Book, “Tractor Mac,” for a direct comparison. A few years ago I was shuffling through a “Litte Free Library” for books for my son, (and for me if we’re being honest). My son saw a picture of a horse on the cover of a “Little Golden Book”, titled “Tractor Mac”, by Billy Steers. The cover shows an absolutely terrified horse, with a friendly but roguish seeming tractor beaming back and barreling towards him. The story showcases Sibley, a hard-working horse on Stony Meadow Farm who feels replaced by the new tractor, Mac. The farm kids, once so smitten with Sibley, turn their attention and affection towards the red, shiny, and infinitely more productive Tractor Mac, leaving Sibley feeling despondent and worthless. Good news, though, Sibley and Tractor Mac become great buddies after the former rescues the machine from a muddy field. When was this book written, you ask? 1999. Prophetic? Perhaps, though we can point to transportation innovation, industrial revolution, and countless other innovations that have changed the landscape of the workplace that preceded its release.

So how did we, as PEOs help prepare our clients and ourselves for Tractor Mac? These tips come straight from the horses’ mouths (our actual AI partners who help us create efficient communication):

Lean Into Assistive Intelligence, Not Artificial Intelligence. Words matter. Position AI as a copilot that reduces busywork and elevates the role of your employees. Rather than working on repetitive, mundane tasks, they can focus on more strategic projects and relationship building.

Send A Clear Message: Efficiency Over Headcount Cuts. Say it plainly and repeat it. The aim is to prevent incremental hires as you grow, not replace current team members. Tie gains to Service-Level Agreements, improving work/life balance, backlog burndown, and quality instead of staffing reductions.

Start With Early Adopters and Innovators. Give your tinkerers early access, tight goals, and fast feedback loops. Share their wins with short demos and simple metrics to build momentum with the broader team.

Start Small, Then Compound. If your team is not using ChatGPT, start there. Overtime, start to add more sophistication like workflow automation or response drafting.

Make Adoption Easy By Default. Put tools where people already work. Pin as default browser tabs or bookmarks. Even better, choose solutions that already integrate with your existing tool and don’t require employees to go out of their way.

I would add that it is imperative that your clients understand if they are using AI (and they are using AI, whether or not they acknowledge the full extent), they should, with your help or a qualified employment law attorney’s assistance, develop a policy for their employee handbook to outline the company’s policy on use of AI in the workplace. Ensure that use of ChatGPT either removes any client or employee names, or PHI or HIPPA related information, or use their “Temporary Chat” feature. Alternately, use another AI platform. Help clients to understand that they shouldn’t assume all employees embrace, or disdain, or understand how to benefit from, AI.

THE THING WE ARE STILL TALKING ABOUT – OFFICE VS. HOME

If you feel the excruciating bilious debate about in-office versus remote work should be curtains, keep in mind for your workers, and for the PEO’s client’s employees, it is very much still lights on (whether those bulbs are fluorescent or dimmed). Though employers could argue that during times of high unemployment, workers’ preferences are outweighed by their necessity to earn a paycheck, about 40% of workers say they’d accept a pay cut of at least 5% to keep their remote job, according to a recent study by researchers at Harvard University, Johns Hopkins University and the University of Illinois at Urbana-Champaign. Another nearly 10% would trade at least 20% of their salaries to preserve telework, said researchers, who polled more than 2,000 workers.

How do we help ourselves and our clients understand what this means in terms of negotiating with prospective candidates for employment? While many employees value the flexibility, reduced commute times, and work-life balance that working from home offers, some business owners believe that in-office presence fosters better collaboration, innovation, and company culture. The tension is also fueled by the business costs of empty office spaces and the desire for a sense of control by management, leading to policies that can backfire and reduce employee satisfaction, making finding a universally preferable approach a near impossibility.

It is important to remind clients that the best approach should hinge on attracting and retaining talent and opening our minds to the realities of our current workforce’s desires.  Mandatory return-to-office policies can negatively impact employee satisfaction and lead to higher turnover. The most effective solutions are often tailored to a company’s unique business needs and the specific roles within it, rather than applying a one-size-fits-all approach. PEO client advisors should note that being transparent with workers about the “why” of your office, hybrid, or remote philosophy is key, and understanding the evolving nature of our work and employee’s ever-increasing yearn for work life balance is paramount to their employee satisfaction and to their business’s overall success.