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How Staffing Companies and PEOs Work Together to Drive Business Growth

Staffing companies and Professional Employer Organizations (PEOs) both support employers with specialized services to relieve administrative burdens, solve business challenges and fuel business growth. Both PEOs and staffing companies: 

  • Provide payroll, insurance, benefits and HR services for employees shared with other companies
  • Utilize “master” insurance policies to leverage better rates for workers’ compensation insurance and employee benefits
  • Offer HR support and technology tools to lower unemployment rates and mitigate risk

There are many scenarios in which blending the services of a PEO and a staffing company can solve business challenges. The following are just a few examples:

  • Startup companies typically struggle to ramp up and maintain staffing levels as they evolve. They also work on tight budgets, which makes finding affordable workers’ compensation insurance a struggle.

Blended Solution: Staffing companies ease the burden of expanding the workforce by absorbing some employee-related expenses like taxes and insurance. They also help staff quickly and efficiently. A PEO helps new business owners obtain affordable workers’ compensation insurance. With a PEO’s bundled services, employers gain access to a team of HR experts with deep knowledge of employment laws.

  • Growing companies sometimes expand into other states. Managing payroll and HR regulations across state lines, including ever-expanding local municipality regulations, can be difficult.

Blended Solution: Staffing companies help fill a variety of positions across the country. That saves employers time and makes it easier to staff new locations quickly. A PEO can manage the nuances of state-specific payroll and workers’ compensation laws, keeping business owners compliant. PEOs calculate all employment taxes, then remit and report the taxes.

  • Some small and medium-sized business owners may struggle to compete for talent in a tight labor market. Retaining talented employees is just as tough because of a lack of access to affordable employee benefit plans.

Blended Solution: Staffing companies work to find candidates who best fit employer needs based on skills and culture. This custom selection usually means employees are happier and stay longer. Partnering with a PEO allows business clients to offer their employees a full benefits package at an affordable price. Retirement benefits like 401(k), wellness programs and other perks can make a company stand out. PEOs also administer the benefits, which means employers don’t have to handle enrollments, educate employees or field questions.

Staffing Companies and PEOs Defined

A staffing company has different types of employment relationships with employees. In some cases, staffing companies are the sole employer of the employees and assume responsibility for paying them, covering them with workers’ compensation insurance and eliminating unemployment claims liability for employers. Sometimes, staffing companies even offer employees a benefits package (depending on the amount of hours worked per year). In other cases, staffing companies provide employees to employers without becoming their employers at all.

Flexible Staffing Options:

  • Contract hiring (also known as temporary hiring) allows employers to bring employees on short-term without a long-term commitment. In this type of placement, staffing companies assume the responsibility for paying the employees and covering them with workers’ compensation insurance.
  • In a temporary-to-hire situation, employers can bring on employees without the guarantee of regular status employment. They are then able to gauge an employee’s performance, productivity and culture fit for a possible regular status job offer. In this placement scenario, the staffing company retains employer status until the company decides to hire the person. Depending on how many hours an employee works per year, some staffing companies offer employees a benefits package.
  • Permanent placement is a model where employers can essentially outsource the hiring process to a staffing firm for long-term positions. Staffing companies maintain a network of strong, well-qualified candidates and screen them to find the candidate that best meets the individual hiring needs of each employer.

Staffing Services Include:

  • Consulting with employers on position strategies and salary-ranges
  • Recruiting from an expansive talent network
  • Screening candidates
  • Assessing skills
  • Interviewing candidates
  • Completing hiring paperwork

Working with a staffing company saves employers the time it takes to create a hiring strategy, interview candidates and complete new-hire paperwork. It can also reduce turnover time and make the workforce more productive. Hiring a temporary employee saves money because it eliminates, for example, the costs associated with advertising positions or conducting skill assessments.

PEO establishes a co-employment relationship and handles many of the HR responsibilities and administrative burdens of being an employer. Business owners retain control plus direction and management of employees.

PEO Services include:

  • Payroll processing and unemployment taxes
  • Workers’ compensation insurance
  • Employment Practices Liability Insurance
  • Human resources support
  • Employee benefits consulting and management
  • Risk management

PEOs offer guidance on human resource issues and compliance with employment-related laws and regulations. Additionally, PEOs can provide risk management services and safety program guidance. Working with a PEO is much like outsourcing HR or supplementing your existing practice, with a bonus. PEOs have the added benefits of more affordable insurance premiums for workers’ compensation and administration of employee benefit plans.

At FrankCrum, our PEO, staffing company and insurance carrier are all under the same umbrella. That means we offer comprehensive HR and staffing services with flexible and affordable insurance programs. It’s what we refer to as “A Family of Employer Solutions.” 

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