From the time your business starts, it’s subject to regulations and needs fulfilled by Human Resources – regardless of whether you have a full internal team or handle it amongst your top executives.

PEOs are crucial HR partners who can help businesses streamline their HR by outsourcing crucial tasks like payroll processing, benefits administration, and safety management. But once you know your business needs HR support, it only begins the process of finding out which PEO is best for you.

When researching PEOs, you might encounter a PEO broker – which acts as an intermediary to help you find a PEO that fits your needs. While the promise is enticing, do these entities actually provide a better means of getting PEO support?

In this article, we'll explore the role of PEO brokers and shed light on whether they are an asset to your company

What is a PEO Broker?

A PEO broker is an intermediary who, for a typically undisclosed commission, helps you find a PEO to fit your specific needs. They handle the assessment, research, quotations, negotiations, and implementation, all to help you find the best PEO services.

This all sounds very convenient, but companies must be mindful of the fine print with these broker arrangements. After all, you're not looking for a broker – you're looking for a valuable long-term partnership with a PEO.

Why PEO Brokers May Not Be the Best Option

If PEO brokers are selling efficiency and cost savings, they may not be the best option for several reasons:

Cost Implications

Engaging a PEO broker can muddy the cost efficiency you expect from directly engaging a PEO. The additional fee charged by the broker can either be a flat rate or a percentage of your cost savings in the first year, which can be considerable. That can offset the cost savings that make PEOs a worthy investment.

Reduced Control

By inserting a broker between you and the PEO, you're essentially adding a layer of separation that may weaken your control over the partnership. Direct communication is essential for strong business relationships, and an unnecessary intermediary can cause delays and miscommunication.

Limited Options

PEO brokers often work with a handful of PEOs, steering you towards options within their network. This limited selection might not cater to the full spectrum of your company's needs.

Lack of Transparency

Transparency is the bedrock of trust; without it, business partnerships can falter. Engaging a PEO through a broker might obscure the pricing structure and services offered, making it hard for you to evaluate the true value of the deal.

Potential Conflict of Interest

Beneath the surface of the broker's sales pitch lies the potential for a conflict of interest. Are they recommending a PEO because it's the best for you or because it yields them the highest commission? Such uncertainty raises a red flag on the impartiality of the broker's advice.

Traits of Good PEO Brokers

Not all PEO brokers should be painted with the same brush. There are instances where employing a broker could be a sound choice, provided they possess these key traits:

Demonstrable Trustworthiness

Seek evidence of a brokerage firm's trustworthiness. Do they have a track record of successful matches, and more importantly, do they have satisfied clients who can vouch for their services? If they have a track record of satisfied clients, it indicates that they are good to work with.

A Diverse Portfolio

A broker's value is in their range of options. If a broker represents several PEOs across various industries and company sizes, they can offer truly tailored solutions providing HR compliance and other benefits, rather than a pre-packaged deal.

Ethical Commission Structures

Some brokers' commission structures are more transparent and ethical than others. Are they upfront about their commissions, and do they disclose any potential conflicts of interest? These are the questions you should not shy away from asking.

Find Direct PEO Solutions

While the idea of having someone else manage your HR can sound appealing, it’s important to consider the implications of going through a broker. Instead, businesses should consider bypassing these go-betweens and engage directly with PEOs.

Direct engagement means direct control and decision-making, leading to more transparent and potentially more beneficial partnerships. If you're in the market for PEO services, reach out directly. Assess whether the PEOs you're considering can fulfill your payroll processing, compliance, workers comp and safety programs, and risk mitigation without the need for an intermediary.

The allure of quick solutions offered by PEO brokers may come with unseen drawbacks. For businesses that truly seek to harness the power of a PEO, the wiser path might be the one that leads directly to the PEO's door. With the world of HR services evolving rapidly, direct engagement with integrated HR and risk management solutions providers like Easeworks can offer businesses the streamlined services they need without the presence of a broker.