NAPEO
PEOs that focus only on payroll and compliance risk losing clients in a competitive market. Clients are looking for more than the basics; they need real solutions to their biggest workforce challenges.
A successful PEO is built on agility, accountability, and proactive client engagement. By combining personalized service with technology-driven efficiency, fostering a culture of continuous improvement, and anticipating client needs before they arise, PEOs can build lasting partnerships and drive business growth in an evolving marketplace.
PEOs exist to provide reliability and security for their clients. But once a data breach occurs, that trust erodes quickly. Research shows that 68% of clients switch providers after a security incident.
Even though D.C. might be friendly confines for the PEO community in the new year, that doesn’t mean 2025 will be a cakewalk for businesses. State lawmakers and regulators will pick up the slack. They’ll continue to create a patchwork of legal compliance measures – and PEOs will be caught in the middle.
A major area of the growing digital world that SMBs need to prioritize is cybersecurity as they adopt new technologies. This includes implementing robust security measures to protect against cyber threats, regular training for employees on cybersecurity best practices, and ensuring compliance with data protection regulations.
If operational engagement is the goal, “micro-frictions” are its subtle enemies. These small, persistent irritations—tedious passwords, delayed responses, unclear steps—quietly say, “We didn’t consider your experience.”
For PEOs, establishing a VEBA presents an excellent opportunity to increase their service offerings, improve tax efficiency, and create a competitive advantage in the marketplace.
When we apply the principle of the feedback loop in the proper way, with purpose, it can be a powerful tool with limitless applications in this complex business we are in.
Often, it’s client operational efficiencies, the “soft dollar savings”, that are never quantified in a black and white proposal, where external Influencers shine. The client trusts the external influencer more than the PEO salesperson to objectively validate and quantify investments in the PEO administration fees.
As AI transforms the business landscape, PEOs are uniquely positioned to assist small businesses in navigating this technological revolution. They can provide guidance on AI-related HR practices, help with training and development programs focused on AI skills, and offer insights into how AI can enhance various aspects of workforce management.
Nearshoring to Canada and partnering with PEOs offers U.S. companies a range of benefits, from lower healthcare costs and cultural alignment to advantageous time zones and currency savings. The combination of these factors creates a compelling case for considering Canada as a strategic expansion destination.
The workforce landscape is undergoing a profound transformation. Remote and hybrid work arrangements are here to stay, and employers who embrace these trends will be better positioned to attract and retain top talent.
The many compliance obligations for a PEO require partnering with an external or third-party accounting firm. The question is what exactly should an external accountant be responsible for?
PEOs that adopt strong corporate sustainability initiatives as part of their business model have incredible opportunities for increased sales and corporate value.
What key performance indicators (KPIs) determine the success or failure of a PEO’s accounting department? Timely and accurate numbers are definitely at the forefront. The PEO space can be a dynamic environment to operate in. The risk and margins are ever-changing and keeping our finger on the pulse is imperative to our success.
In summary, the symbiotic relationship between sales and finance is the backbone of organizational success. Alignment between sales and finance is crucial to any organization but as outlined above, is heightened in the PEO environment.
In summary, control of a PEO’s workers’ compensation cost, and overall profitability of a PEO company’s operations hinges on astute management of critical areas such as claims administration, subrogation, SIU, risk management programs and nurse case management.
When I’m performing due diligence on a target company, especially in the PEO space, there are common areas that sellers miss. Below are the top five most missed opportunities for sellers, counting down to the most commonly missed opportunity.
The benefits of EWA extend to both employees and employers in many ways. EWA provides employees with greater control over their finances, enabling them to access their earnings when needed most. This flexibility empowers individuals to navigate financial challenges with confidence, whether it’s covering unexpected expenses or managing cash flow between pay periods.
Achieving success in M&A transactions within the PEO sector requires a comprehensive and disciplined approach that encompasses multiple critical elements. By integrating the foregoing elements into their M&A strategies and execution plans, acquirers can navigate the complexities of the PEO sector with confidence and realize the full potential of their investments.
In the evolving realm of PEOs, the adoption of strategic tax solutions marks a pivotal advancement in serving small and medium-sized businesses (SMBs). This innovative approach to better serve their clients not only boosts the value provided to SMB clients by enhancing their financial performance and compliance, but it also further solidifies PEOs as essential and indispensable partners.
The success of PEOs in navigating the complexities of expansion often benefits from the guidance of a knowledgeable consultant. Here are key areas where a consultant can offer valuable assistance.
Selling a company is not a spontaneous decision; it’s a strategic move that requires thorough preparation. Many business owners underestimate the time and effort involved in this phase of the process. This underestimation can significantly impact the ultimate value of your company.
For years, the PEO industry has empowered businesses of all sizes to navigate HR complexities. However, in today’s dynamic market, organizations are ever evolving, and PEOs are not an exception. As companies adapt to technological disruptions, a global market, and other challenges, professional employer organizations are also changing to meet their clients’ needs.
As we delve into the artificial intelligence era, there’s one pressing question in all our minds—what does the future hold for PEOs?
AI is not the only factor that is going to revolutionize the industry; changing workforce demographics, regulatory landscapes, and sustainability are some of the several factors that can influence the industry. These factors are not challenges; they can unlock opportunities for growth and innovation.
TECHNOLOGY
Technology integration is one of the trends that is here to stay. AI, data analytics, and machine learning can transform a business into a tech-driven superpower. How can PEOs leverage these tools to streamline their operations? PEOs can:
AI-powered algorithms can also help small businesses find PEOs with just a few clicks. Depending on a business’s size, industry, and needs, AI-enabled platforms can link them to the ideal PEOs for them.
DIGITAL MARKETING
Thanks to digitalization, marketing has evolved from a product/service-centric approach to a customer-centric approach. If used effectively, digital media platforms can help PEOs personalize their marketing efforts and reach a wider target audience with minimal effort.
The integration of AI, machine learning, and data analytics into marketing makes it easier for PEOs to find small businesses that precisely match their ideal customer profile (ICP). Through AI-enabled platforms, PEOs can identify qualified leads in just a few clicks. They can also generate a quote within minutes and increase their conversion rates.
From email campaigns to social media marketing, the PEO of tomorrow needs to have a holistic marketing approach to become an industry leader.
CHANGING WORKFORCE
A study by Glassdoor revealed that, in early 2024, Gen Z will replace Baby Boomers as the largest generation in the full-time workforce. How is this change relevant to PEOs? With a changing workforce comes new demands. For instance, the four-day workweek has gained overwhelming support from the younger generations. Understanding the workforce’s needs will help PEOs improve employee engagement and retention.
REMOTE AND HYBRID WORK
The COVID-19 pandemic accelerated the adoption of remote and hybrid work. It’s been three years since the pandemic, and remote work is still popular among employees. From virtual onboarding and training programs to digital collaboration platforms, PEOs can play a crucial role in helping businesses navigate the complexities of remote work. Providing innovative solutions for managing distributed global teams effectively could make a PEO indispensable to their clients.
GIG ECONOMY
The gig economy is another workforce shift that needs to be on a PEO’s radar. Statista research projects that 50.9% of the total US workforce will be freelancers in 2027. PEOs can expand their reach and add value to this growing segment of the workforce.
GLOBAL TEAMS
With the world becoming a global market, organizations have employees working from different parts of the globe. Modifying their services to manage international employees, and ensure compliance in various countries can expand a PEO’s scope and help them scale up.
REGULATORY COMPLEXITY
Employment, data privacy, and compliance laws are constantly changing. PEOs, with their expertise in HR compliance, are well-positioned to help businesses navigate this complex regulatory landscape. Staying ahead of legislative changes and providing tailored compliance solutions is crucial for a PEO’s success.
CYBERSECURITY AND DATA PRIVACY
We live in a digital age where businesses need to modify their processes to comply with data privacy laws. Since PEOs have sensitive HR data, investing in secure technology infrastructure is essential to building trust and maintaining compliance.
SUSTAINABILITY AND SOCIAL RESPONSIBILITY
Sustainability and social responsibility are being embraced by several businesses to play their part in building a better future. PEOs could implement sustainable practices through paperless HR practices, employee well-being initiatives, and contributing to local communities.
CLIENT-CENTRIC OPERATIONS
Most businesses prefer customized solutions, rather than a cookie-cutter approach. Modern PEOs partner with their clients to understand their unique needs and industry trends and offer services that align with their strategic goals.
Effective communication and transparency in pricing are also major factors in strengthening client relationships.
The future of work is fluid and unpredictable. PEOs need to be agile and adaptable, readily responding to evolving regulations, workforce trends, and client needs. Continuous learning and innovation could help us stay ahead of the curve.
As businesses manage the complexities of the modern workplace, PEOs will continue to serve as their trusted partners. Embracing digital transformation, adapting to remote work environments, and fostering a culture of innovation play a major role in the industry’s growth.
Understanding and adapting to these trends is essential to not just survive, but to thrive in an ever-changing landscape. It can also assist us in shaping the future of work and redefining the HR landscape for years to come.
