The Ultimate Cheat Sheet On Choosing A PEO

In this article, we provide the ultimate cheat sheet on choosing a PEO:

  •  What type of questions you should ask your PEO
  •  Several keys to choose your PEO


One of the main reasons why professional employer organizations or PEO are making a buzz lately is because of their cost-effectiveness while maintaining efficiency in dealing with human resources. A PEO is said to be the greatest employment solution when you are looking for someone who can deal with the entire HR work of your company or when you are just looking for someone who can supplement the current workforce you have. There are certain services that are specifically offered by PEOs that can address a company’s need without compromising the costs and without jeopardizing productivity.

When you are in a PEO arrangement, what normally happens is that you enter into an “Employee’s Dispatching Agreement” with a PEO where you give authority to a PEO to act as the employer of record for your company’s employee.

It takes away the weight of most administrative and human resource tasks from you so you can focus on developing your business and have it grow. This is significantly helpful especially when you feel the need of putting up a business in a foreign country like China.

Since China has a different set of laws that might be unfamiliar to you, it is in your best interest that you work with a PEO in China because they know the drill in the country and they can handle human resources better since they are familiar with the rules and regulations.

If you are planning to work with a PEO service provider, here are a couple of questions you need to ask to make the best decision to come into an arrangement with them.

What will I pay for?

There are a couple of ways that PEOs will charge you for their services but the two most common ways are a percentage of the total payroll or as a flat per-employee-per-year fee scheme. Either way, the exact amount will be determined depending on the type of service package that you would be availing of. It is a good idea to look at the service packages in detail so you know what you’re getting into.

What kind of services will I get?

As we’ve said above, the PEO will act as the employer of record on behalf of your company. When you have a workforce in China, the PEO is responsible do the payroll and statutory benefits administration. At all times, the PEO needs to answer all the queries that both Chinese and foreign employees will have regarding their employment.

Is there a particular technology you would provide?

These PEO companies focus on driving the human resources of a business so it is expected that they already have a system in place to make the workflow smoother. Be inquisitive about programs and software so you only purchase the ones that you really need.

Is there development training for the employees?

The PEO pretty much acts as your company’s HR and their services are not just limited to payroll and benefits administration. If your company is very particular about the culture of collaborative work and the constant growth of your employees, then you may want to discuss this part further with your PEO service provider.

Are there employee benefit plans?

People who are looking for jobs, especially those who are really fit for it, do not just want a paycheck. They want a company that will give them the best employee benefits without charging too high. Benefits such as health insurance, savings plans, wellness programs, and life insurance are just some of the most popular benefits that these employees are looking for. The good thing about PEOs is that they know a workaround to this situation where they can provide top-notch benefits to your employees at low rates.

How reputable are you?

Nothing is worse than getting into business with a scammer. Before you even sign that contract, you should make sure that you have done a thorough background check of the PEO you are looking at. Setting up a business overseas is a big thing and you don’t want a PEO company to jeopardize your whole business. Ask about their tenure in the industry and ask about other clients they’ve worked with. Ask these clients about feedbacks and testimonies so you can decide whether it is a wise decision to work with that PEO service provider.

Now that you know what type of questions you should ask your PEO, it is time to rewind back a little and discuss some of the points you need to consider when you are choosing a PEO.

1. The financial stability and security of the PEO

PEO companies that are well-funded are most likely good candidates. Because the investment put in these companies are higher, this must mean that the company does a great job at whatever kind of work they are doing.

2. Their commitment to satisfy customers

Nothing is more frustrating than hiring a PEO provider that doesn’t meet your demands. To avoid this, you should be able to determine first what kind of services you actually need for your business and then go out and look for the right PEO service providers that can offer services that will address these needs. It is also important to check how far these PEO companies are willing to go to be able to serve you. If they support you in any way they can to meet your demands, this is a sign of dedication and you would immediately know that they are a keeper. HROne has completed a successful hiring strategy guide for SME’s in China.

3. The benefit plan options they have

To keep employees motivated and retained in your company, you need to be able to provide the benefits that they will enjoy. PEO will have benefit plan options that they can incorporate into your business at low rates. This is a win-win situation for both you and your employees. Make sure that the benefit plan options that the PEO provider offers will meet the demands of the employees when it comes to benefits. You can do research or a survey at what type of benefits most of your employees will want. Based on that, you will then have an idea of what to discuss with your PEO provider and you won’t end up wasting money on unnecessary benefit plans.

4. The way they are funded

While having the PEO provide the employees the benefit plan options in behalf of your company is a good thing, it is still best to know how these companies get the funding so they can have the ability to offer these benefits at low rates. You don’t want a PEO provider to be funded by an illegal entity. This is such a hassle and you’ll find out that you have actually spent more than saving costs at the end of the day.


5. References.

While most of these PEO providers can be found online, it would still be a much better idea if you try and check on the PEO provider that was recommended to you by a colleague. This way, you know that the PEO provider is trusted since a trusted friend acted as a reference on their behalf and you know a way to confirm that your colleagues can attest to the type of service that the PEO company provides.

In conclusion, this cheat sheet gives you an overview of what you should be considering before you sign an agreement with a PEO. We believe that it all really boils down to making sure that everything is in place and that you have confirmed everything you needed to know about the PEO service provider. Having everything from this list marked and checked, you’ll be able to carry on with your work without worrying about a thing or two when you start to put up your business offshore under the supervision of the PEO company you have chosen.

Remember that choosing a PEO is all about the vision and looking into the long-term goals of your company. If you are pretty sure that the PEO can help you find stability and success for your company, then it is time to place your signature on the dotted line.

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