How do PEOs affect employee retention rates?

High employee retention is one of the goals and priorities of most business owners. Once you’ve hired and trained employees, you want to avoid unexpected departures. You want committed employees who will remain loyal and help grow your business. Employee turnover can be quite costly.

On average, the cost of hiring a new employee can be 1.2 to 1.5 times higher than the former employee’s base salary.

Now more than ever, we’re in an “employee” marketplace. Employees want an environment where they feel like they belong. They are looking for quality management and personal development. Against this backdrop, it’s important for small and mid-sized businesses to find better ways to improve employee retention rates.

One such opportunity is to partner with a Professional Employer Organization (PEO). A PEO is a company that allows you to outsource employee management tasks through a co-employment agreement. They allow you to streamline and simplify most administrative and HR operations. Companies that work with PEOs can reduce employee turnover by 15%.

Here are five keyways a PEO can help your business improve employee retention.

Offering a More Attractive Benefits Package

A competitive employee benefits package is one of the major reasons companies partnering with a PEO have higher employee retention rates. Using economies of scale, a PEO can provide better benefits packages for your employees than your small or mid-sized business can. By pooling together employees from all its clients, a PEO will provide higher quality packages with far-ranging perks and less severe out-of-pocket expenses.

If, for instance, a PEO can buy insurance for 2,000+ employees, even small businesses with 5 employees will have access to benefits that are accessible to some of the top companies. Also, a PEO will likely offer employees more choice over different benefits packages. This means happier employees who’ll be more inclined to stay for the long term.

Handling Payroll Processing

As your co-employer, the PEO will handle payroll on your behalf, ensuring that your employees are paid on time. This is very important for employees because errors and late payments can be disruptive to them. Morale is important to productivity and employee retention rates. If you’re struggling to process payroll, file payroll taxes on time, or follow employee-related laws, you’re not focusing on other important aspects of your business.

With late payments or violation of laws, your staff could worry that your business is in financial trouble, prompting them to look for another position. A PEO will handle the time-consuming payroll processing tasks, saving you time and ensuring your business stays compliant.

Providing HR Support

Sometimes, it can be difficult to recognize issues within your company. Still, employees appreciate it when their grievances are heard and when problems are solved on time. A PEO can act as a mediator and neutral party when disputes and grievances arise, between employees and between management and employees. This can help make sure that small issues are resolved before they snowball into bigger ones that could have a serious negative impact on employee morale.

Through handbooks, retraining, coaching, and proactive strategies, a PEO can help improve communication and protect your business from fines, claims, and penalties. You’ll be able to focus on retention strategies and more sustainable growth.

Improve Your Employee Retention Rates with Vested HR

If competitiveness, employee retention, and profitability are areas you’d like to see improvement in at your company, consider partnering with Vested HR. We provide comprehensive PEO services to small and medium-sized businesses in Florida. Our services include benefits administration, HR management, payroll processing, compliance and safety, and more.

Our PEO solutions reduce risk, allow you to focus more time on growing your business, and provide the best possible workplace environment for your team. This helps you retain top talent and keep your team strong. Contact us today to schedule a free consultation. Our PEO experts will talk to you about how we can help your business improve its employee retention rates.