PEOs Looking to Adapt to a Changing Landscape with New Services
Professional employer organizations (PEOs) have offered a fairly consistent menu of services over the years. But as the employment landscape has changed, so has the need for PEOs to adapt. According to a recent survey released at the NAPEO Annual Conference, PEOs are beginning to adapt with new services.
The survey reveals that a variety of human resource providers, including PEOs and payroll companies, are diversifying their suite of services and software solutions. One area of particular interest is leveraging artificial intelligence (AI) for better benchmarking and predictive analytics.
Technology Comes to the PEO
It is difficult to read the survey data and not come to the conclusion that companies in the PEO space are focusing squarely on bringing new technologies into what they do. The survey says that the top two technology priorities for PEOs moving forward are investing in predictive analytics and benchmarking. Both can be effectively powered by AI.
AI-powered predictive analytics helps PEOs better understand HR trends in both the short and long terms. By anticipating what might be coming months from now, a PEO can better tailor its services to meet client needs. Services that clients do not even know they could use can be strategically introduced to keep a PEO ahead of the game.
As for benchmarking, it is all about market insights. PEOs need to be able to measure what they are doing against market demands. They must know what works and what doesn’t. AI-powered benchmarking establishes a baseline and then continually monitors KPIs to make sure an organization stays on track.
A Good Opportunity for Brokers
According to Investopedia, the typical PEO works for small companies that have an average of 19 employees. Few PEOs take on clients with 10 or fewer employees while 80 employees tend to be the maximum. Small businesses likely to benefit from PEO services represent a fantastic opportunity for benefits brokers to expand their book of business.
Brokers mainly concentrate on products like health insurance, disability insurance, and retirement plans. But as HR becomes more complicated and diverse, there is growing demand for better administrative services. That falls right in line with what PEOs do.
A broker looking to start pushing PEO services can obviously go it alone. A better option would be to hook up with the general agency that maximizes a broker’s access to PEO products. BenefitMall is one such agency. They say that with more than 700 PEO service providers to choose from, knowing exactly which ones to look at can be difficult. Working with a general agency can certainly make life easier on a broker.
The Wave of the Future
So many PEO providers are evidence that embracing the co-employment models they represent is not abnormal. Small businesses that partner with PEOs are not outliers. But as PEOs embrace AI and other digital technologies, will the current PEO landscape expand to include larger companies? Could technology driven PEO services be the wave of the future?
As a co-employment arrangement, working with a PEO certainly has its advantages. A PEO handles all sorts of HR and administrative tasks but leaves day-to-day business operations to the client. It could be the perfect arrangement for larger companies at which management wants to focus on core products and services while leaving HR to specialists.
One thing we know is that PEOs are looking to expand their services to adapt to a changing employment landscape. It also appears that AI will be at the forefront of that adaptation. Where it all leads is anyone’s guess, but it will be fun to watch.