Professional Employer Organizations: Getting From Operational to Strategic

When it comes to HR, most small businesses reach a point of reckoning. They finally realize they can’t wing it anymore, whether that be with accidental HR people or inadequate technology — or, for the latter, none at all beyond email, perhaps a shared drive, and standard-issue spreadsheet software. (Believe us when we say, even well past the second decade of the 21st century, we still see it all in the interviews 3Sixty Insights conducts with users….)

Reaching their senses, small businesses eventually seek structure for all the complexities and red tape associated with the management of the employment of people. This is when they may call up the services of a typical professional employer organization. Most of the time, these employers are stretched as far as they could possibly be, and they just want something, and fast.

Most PEOs are designed to solve for this need. And many small businesses find themselves satisfied with the solution. And this is all well and good.

Under the weight of unmanageable operational HR and turning to the typical PEO, however, small businesses unnecessarily hamstring themselves when it comes to growing into a larger company and getting thoughtful about HR in order to develop their people in the future. In the parlance of 3Sixty Insights, these growing businesses are solving only for concrete human capital management. In the welcome epiphany telling them they must outsource their HCM immediately, they impede their ability to get to a more strategic place vis-à-vis their people, and they do so by failing to see and act on all the potential upside awaiting them if they were to aim for something higher.

Why is this?

The typical PEO isn’t geared to handle strategic HCM — a.k.a. abstract HCM, the other half of the concrete-and-abstract concept 3Sixty Insights developed to describe and distinguish tactical work in HCM vs. the strategic, organizational vision that calls on a sophisticated approach to HCM.

For small businesses to win in the war to hire, develop and retain the talent they need to beat their competition in today’s world of work, they must chase maturity in their HCM at all times. Their efforts benefit from a PEO able to consult with them deeply on their people leadership. In the parlance of Insperity, itself a PEO, this is the distinction of PEO level of care.

This is about a PEO that has the expertise to help small businesses approach their HCM strategically. It involves thinking of HCM not just as an operational, tactical necessity, but capable of inspiring talent to contribute the discretionary effort that produces innovation at every level and area of the business. It means a PEO capable not only of taking operational HR off a growing employer’s plate and mitigating risk, but also of gaining and retaining the trust of a client’s C-suite to help conceptualize and execute on their organizational strategy wherever it intersects with the company’s people.

Anyone interested in learning more should read the research note that 3Sixty Insights developed in collaboration with Insperity: “The Professional Employer Organization: Operational Solution and Strategic Partner for HR Departments in the Midmarket.” Chockful of testimonials from Insperity customers and wisdom from the company’s own subject matter experts, it explores how the right PEO can be a valuable, strategic asset to both HR and organizational leadership during the critical time when an employer grows to enter the midmarket.

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