How Will You Increase Your Profit With Co Employment?

December 30, 2011 by  Filed under: Management 

According to the National Association of Professional Employer Organization website, the average number of employees of a company which uses co-employment is 19. But due to increasing operational and administrative demands, more and more companies are becoming interested in partnering with a PEO.

Most business owners want to devote their time, attention, and resources to income-generating activities. Dealing with human resource management takes a big chunk of the business owner’s time. Human resource management entails a lot of complex employee-related activities namely – employee relations, taxes and benefits, payroll activities, timekeeping, accounting, and a lot more. Other activities such as employee training and development, seminar planning, safety and risk management, and collective bargaining are also major responsibilities. With that, business owners opt to transfer these responsibilities to organizations specializing in these human resource management activities. PEOs are organizations specifically designed for that function alone, providing clients with the manpower and the employees necessary. However, the employees are employed “by name” by the PEO they are under.

Aside from helping them focus on what is necessary, what generates their money, profit is increased because costs are controlled by using a small in-house human resource department or none at all. In PEOs, there are experts that will manage and assist everything HR-related. This means that high electricity costs, paperwork and supplies expenses, and other office expenses can be avoided once co employment is considered and applied.

Clients can also save a lot of money on employee insurance and health benefits. If a small company cannot afford to avail a group health benefit or insurance plan for its employees because of the small size, they can go to a PEO and co-employ the workers. PEOs can afford to buy group health benefit and insurance plans for the workers because they provide services to a several number of clients.

So if you are a small- or medium-sized company owner, it is beneficial for you co-employ. Not only does it help you focus on what is important, but it will also help you increase your profit!

With a lot of businesses emerging, and a growing demand for professional employees, some business owners opt to co-employ. But what is co-employment? What makes it special? Is it time for you to enter in one? I’ll give you some quick facts about it.

  • It is a special relationship between a client and a PEO. A PEO, or Professional Employer Organization, is an entity which provides employees to the client, depending on the demands. Co-employing a worker means both the client and the PEO have different responsibilities, be it actual or legal responsibility.
  • Co employment means that the client is referred to as the work site employer. It has the responsibility to direct, supervise, and manage the employee. The job description is actually given by the client. The client also provides the office spaces and many other logistical needs the employee needs in order to perform his or her job. The employee therefore reports to the worksite employer during office hours
  • The PEO, on the other hand, has all the responsibilities regarding human resource management. From the hiring of the employee down to the employee’s termination. In turn, professional employer organizations are called as employers of record. The PEO takes care of the payroll, compensation, employee benefits, risk and safety management, training, and development.
  • What makes co-employment special is that both parties gain from this partnership. Business can outsource the human resource management in the most effective way possible. It also saves them a bundle of money. PEO’s benefit from it by charging the client a certain fee for providing the services. In the year 2009 alone, estimated gross revenues of the PEO industry amounted to $71 billion.
  • Co employment is becoming more and more popular among small to medium-sized enterprises. The industry currently co employs 3 million employees throughout the United States. Many companies have claimed that co employment helps them focus on the money-making side of the business, and in turn, generates them a lot of profit.

Jonathan Rich invites you to visit his website
A PEO is a co-employer of the client business.

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