Debunking 3 Misconceptions of PEOs

Mar 22, 2017

Debunking 3 Misconceptions of PEOs

The PEO industry has been around for over 30 years. However, if you’re not familiar with what a PEO does, one may assume that they are expensive and unnecessary to a small business. After all, as a small business employer, you’re trying to maintain the budget while at the same time work to retain your employees and improve operational productivity.

PEOs can actually bring a number of benefits to small businesses. This blog provides the three most common misconceptions of PEOs and provides details as to what to consider when partnering with a PEO.

3 Misconceptions

Loss of control

Outsourcing any service can be a cause of concern to internal employees, especially when your HR benefits are on the line. However, a good PEO does not steal the wheel in this situation, instead they can provide the engine to streamline HR responsibilities. In fact, after you’ve identified your needs and worked with a PEO on a comprehensive benefits portfolio for your organization, a PEO can work to provide the governance to ensure the right activities happen and are done properly.

Employees will not welcome the partnership

Employees often fear the unknown, so communication is key when choosing to work with a PEO. Many employees are used to working with an in-house HR department, so if this is the first time an organization is working with a PEO, it’s important to develop talking points to communicate to employees why a PEO makes sense to the business. Inform employees on what a PEO is and the benefits they have, especially when working with a small business.

Expensive and boxed solutions

It is often assumed that bringing on a PEO means spending excess money. And spending more money means limiting benefit options. However, there are many PEOs that cater to small businesses specifically to work with every budget at any level. The best part about working with a PEO is that they customize HR solutions for what your small business needs, while being knowledgeable and flexible enough to quickly and efficiently modify solutions to best serve your business.

PEO Benefits

One thing to remember is that a PEO is an employer partner. Ultimately a good PEO is working for you, your business, and your employees to best manage the HR administration function.

A PEO can provide following benefits:

  • Administrative offload
  • Health, retirement, and workers’ compensation benefits
  • Talent management services
  • Assistance with federal and state employment laws and regulations
  • Employer liability management
  • Performance management support
  • Access to seasoned HR professionals


A PEO can have a multitude of benefits for your small business, but it is important to partner with a PEO that partners well with your organization. Research a couple different companies and talk with some providers about your needs and budget. Depending on your budget and resources, you may only need a portion of the services they have available.

Diversified Human Resources (DHR) is the leading full-service HR solutions provider based in Arizona, with offices in Denver. Since 1996, DHR has served thousands of Arizona and regional companies with payroll, benefits, HR administration, retirement, and workers compensation solution. Contact us today and learn how easy it is to tailor a plan to upgrade your HR function and improve your bottom line.

Topics: PEO

Todd Miller

Written by Todd Miller

Director of Marketing, DHR

Todd leads DHR’s marketing department and is responsible for overall marketing strategy and execution. With nearly 15 years in the sourcing services and solutions space, Todd provides interesting insight on a variety of topics in this fast-paced and ever-changing industry.

Todd lives in Scottsdale with his two daughters and Collie/Shepard. One is a good boy.

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