Whether you’re just starting out or have years of experience in the industry, staying competitive means staying informed. One area gaining serious traction in recent years? Professional Employer Organizations, or PEOs. These co-employment solutions are no longer niche—they’re now a go-to option for small and mid-sized businesses looking to simplify operations, reduce costs, and offer competitive benefits without the overhead.
As a broker, understanding what a PEO is, how it works, and when it makes sense for your clients can open new doors—for your clients and your commissions. Here’s what you need to know.
What is a PEO?
A Professional Employer Organization (PEO) is a firm that partners with small and mid-sized businesses to handle essential back-office functions—like payroll, HR, tax administration, workers’ comp, and employee benefits. Through a co-employment model, a PEO shares certain employer responsibilities with your client while helping them offload administrative burdens.
A decade ago, Professional Employer Organizations (PEOs) were relatively unknown. However, awareness of PEOs among business owners and decision-makers is up significantly – with a 44% increase since 2018.
What’s the reason? Employers are increasingly looking to outsource human resources, payroll management, and, often, other functions like taxes and compliance, Workers’ Compensation, and employee benefits and health insurance administration. A PEO can be especially attractive to your mid-sized and small business clients.
How Does a PEO Work?
With a PEO, your client’s staff become co-employees of the PEO. While they can hand-off many of their back-office administrative work, your clients are still in charge of employees’ day-to-day work and tasks related to hiring and operations. However, they no longer have to manage benefits, payroll, taxes, compliance, and the like. A PEO can dramatically reduce their administrative headaches.
Group Size Considerations for PEO
A PEO solution is a great option for employers of varied sizes, but the true wheelhouse for PEO benefits is groups with 30-60 employees.
PEO Advantages for Clients
Using a PEO can save your clients time – and, often, money, too. Employers get one invoice each month for all provided services, reduced administration (no reconciling multiple insurer bills monthly), no direct payments to different vendors for benefits and payroll, better rates for insurance benefits (composite vs. age-banded for employers with more employees), access to multiple providers without multiple carrier contracts), and Ancillary benefits administration is included with Medical (with no additional client work required).
PEO Advantages for Brokers
There are many PEO advantages for you, too. Having another tool in your toolbelt offers you the opportunity to attract new clients and earn new commissions. It streamlines your clients’ experience and administration – giving you back time to build your book and earn added commissions through other sales. Your earnings potential is good, with reduced efforts on your part.
Signs Suggesting a PEO Need
Think about whether you’ve had conversations with or calls from clients with questions like those below. These could signal a PEO might be right for your clients.
• “Hi, Ms. Broker. Do you know of any reliable payroll processing systems? I just hit 30 employees and I’m tired of tracking payroll on spreadsheets!”
• “Hi, Mr. Broker. Do you know of any companies that offer HR support? I just hit 50 employees, and I need help with ACA and HRIS management. I don’t want to hire a full-time HR Director yet.”
• “Hi, broker. My Workers’ Comp renewal rate is insane, and I might go insane too if I have to endure another year-end workers’ comp audit. Any suggestions?”
If your clients are asking about PEOs, don’t risk losing business to a competitor. Partner with us, expand your portfolio, and be able to address more clients’ needs.
Word & Brown Is Here to Help!
Implementing a PEO solution for your clients could give them – and you – the flexibility you need, the services clients want, and the savings you are both seeking. We have a roster of PEO options for you and your clients to consider. Plus, we can help you tackle clients’ questions and concerns up front, navigating a path to a PEO that’s right for each client’s goals, group size, and circumstances.
If your client is already affiliated with a PEO, is facing a rate increase at renewal, and is looking to get out, we will help you investigate viable options for replacement coverage and get help finding a new payroll vendor, compliance resource, etc., if needed. We’ll help you open the door to new business and increased commissions.
Reach out to me, Brandon Humphrey, our PEO expert, or your Word & Brown rep. We’re eager to discuss whether a certified PEO might be a good fit for one or more of your clients.
To learn more about PEOs and how they differ from an Administrative Services Organization (ASO), read our prior blog, Helping Clients Understand ASO and PEO Differences..
