A professional employer organization, or PEO as it is most commonly known, is a popular solution for many businesses looking at expanding into the global marketplace. A PEO offers a number of advantages, most notably the extra efficiency afforded to the company that comes from handing over all HR functions to a third-party. A PEO can also help supplement your existing HR department, by providing extra services related to overseas recruitment. This helps to reduce costs and boost efficiency.
Hiring a PEO means handing over control of certain tasks, such as hiring and firing employees. The PEO becomes the Employer of Record in that country. It’s commonly done in countries like Thailand and China, where different laws and regulations apply, which a foreign-owned business might not be familiar with. However, PEOs are a useful solution in any overseas country where you want to set up a business presence.
Even in a country such as Canada, HR might not be the same, and a PEO is better placed to handle your employment needs. This article from GlobalizationPedia covers working with a Canada PEO/EOR in more detail. It also highlights the top three PEO providers for Canada and other countries.
First and foremost, you want a PEO with a functional presence in the country where you are planning to have a business presence. For example, if you want to open a branch office in Vietnam, look for a global PEO that can act as the employer of record in Vietnam. A PEO will have to be on the ground to deal with inquiries and handle all concerns, with both employees and the various government departments.
Next, check what fees the PEO charges. Some PEOs charge a percentage of the total payroll whereas others charge a flat fee per employee. For smaller companies, a fee per employee may work out to be a more economical solution.
Find out what services the PEO can provide. Do they only handle recruitment, or can they manage your payroll, employee benefits, and other admin tasks, too? It’s also worth asking whether the PEO can offer ongoing staff training if the continual growth of your employees is important to your corporate brand.
Large PEO companies can do everything for you, using their own systems. This makes your life easier, but make sure you’re not paying for services you don’t actually need.
How reputable is the PEO company? For obvious reasons, it is better to work with a company that has a good reputation, as your business reputation hinges on how efficient and effective they are. It’s usually better to use a PEO company recommended to you by a work colleague or mentor, but do your own due diligence checks too.
Finally, look at the financial security of the company. Generally speaking, larger companies are more secure from a financial perspective, and therefore less likely to collapse and leave you in a bind.
Consider all of the above when choosing a PEO company to work with, as an effective PEO partner can make a huge difference to your business’s long-term success in the global marketplace.
