Sunny Ray sits down with Bradley Stroud of StroudLink to explain when handling HR in-house stops being the best use of a business owner's time. Stroud, a broker who has worked with professional employer organizations for 30 years, defines a PEO as an all-in-one provider for the labor side of a business, covering payroll, workers' comp, benefits, HR, compliance, and risk management. He explains the co-employer relationship, in which the owner keeps full control while the PEO acts as employer of record and takes on tax and claim liabilities. The conversation covers the pain points that push owners to look at a PEO, such as rising health insurance renewals and workers' comp costs, how a PEO compares with an in-house HR person or separate payroll vendors, and how it helps with multi-state hiring, growing compliance demands, and mobile onboarding. Stroud also describes how he compares a company's current costs with PEO proposals to judge whether the switch is worth it, and shares how listeners can reach him.
A 30-year PEO broker explains how outsourcing HR, payroll, and benefits can cut costs while owners keep full control of their business.
What is a PEO, and what does it handle day to day?
PEO stands for professional employer organization. I think of it as a one-stop shop for the labor side of your business. It covers payroll, workers' comp, benefits, and HR, plus government compliance, risk management, and everything from recruiting to terminations. The goal is to take care of the non-revenue, most expensive part of the business so the owner can focus on revenue.
Do business owners lose control when they use a PEO?
Absolutely not. It becomes a co-employer relationship. You stay the on-site employer with full custody and control, including hiring, firing, and setting wages. The PEO is the employer of record, so your employees move onto the PEO's federal ID number. That shifts liabilities like taxes, unemployment claims, and workers' comp claims to me as the PEO.
What kinds of problems usually prompt that first PEO conversation?
Usually there is a pain point, and right now it is often health insurance, with renewals jumping 10, 20, even 30 percent a year. Blue and gray collar companies come for workers' comp, where we can save 50 to 60 percent and remove deposits and audits. Others are simply overwhelmed, like an office manager juggling payroll and HR without expertise.
How does a PEO differ from hiring an in-house HR person?
Most in-house HR people are not certified. They are an office manager wearing another hat. Mid to large PEOs have certified HR experts and even in-house attorneys, so you get help with everything from proper hiring and discipline to benefits questions and training. A single internal person rarely has that depth, and a PEO delivers it at a fraction of the cost.
How is a PEO different from using separate payroll and benefits providers?
First, you get one invoice instead of tracking a provider for each service. The bigger difference is the co-employer relationship. With a payroll service there is none, so your employees stay on your FEIN and you carry all the responsibility. With a PEO, much of that burden is unloaded, which takes pressure off the employer.
How can a PEO help when a company hires in new states?
Some PEOs are regional and others cover all 50 states, and as a broker I know who fits whom. A small construction company may need only a regional PEO. A software company hiring remotely needs a national one already familiar with state, county, and municipal rules. You just say you are hiring in a new state, and onboarding is electronic.
How do you measure whether a PEO is worth the cost?
I build out what a company is spending now to do it in house, then compare that with PEO proposals. About 85 to 90 percent of the time there are substantial savings. I can often save 40 to 50 percent on health insurance and 50 percent on workers' comp, and that more than offsets the PEO cost. Better benefits also help attract and keep talent.
What does onboarding a new employee look like with a PEO?
It is very easy now. When we hired another plumber at my second business, we notified our PEO and they immediately sent him a text and message. He clicked it and signed up on his phone, completing his I-9, W-4, and payroll information. The whole point is to make business life easier, not more complicated.
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