As a business owner, it’s natural to have questions about how partnering with a Professional Employer Organization (PEO) might impact your decision-making authority—especially when it comes to HR policies and employee benefits. One of the most common concerns we hear is: “Will I lose control over key aspects of my business?”
The short answer is no—you retain control. A PEO acts as a strategic partner to help manage administrative tasks, but you continue to make the final decisions. From choosing which benefits to offer, to determining who to hire or offboard, your authority remains intact. The only time a PEO may need to override a decision is in situations involving legal or regulatory compliance—such as when an employee is not authorized to work.
Let’s take a closer look at how control is shared—and maintained—when working with a PEO, particularly in the areas of benefits and HR policies.
What is a PEO?
Before we jump into the specifics, let’s start with a quick overview of what a PEO is. A PEO is a company that provides businesses with comprehensive human resources services, including payroll processing, employee benefits administration, risk management, and compliance support. The PEO enters into a co-employment relationship with the business, meaning the PEO takes on certain HR responsibilities while the business owner continues to oversee day-to-day operations.
In this arrangement, the PEO handles many of the administrative tasks that take up a lot of time and resources, but this doesn’t mean the business owner loses complete control over the company’s workforce or policies. In fact, most businesses still retain substantial control over key aspects of HR and benefits.
Control Over Benefits and HR Policies
Control Over Benefits
When it comes to employee benefits, partnering with a PEO allows your company to offer a competitive benefits package that might otherwise be out of reach. Because PEOs work with many businesses, they can leverage group purchasing power to negotiate better rates on things like health insurance, retirement plans, and wellness programs.
Here’s what control looks like in a PEO partnership when it comes to benefits:
- Choice of Benefits: While the PEO provides pre-negotiated options, you can still choose the best health plan, dental, vision, and retirement options for your employees.
- Customization: You have the freedom to select specific benefits that align with your company’s culture and employee needs.
- Employee Communication: You remain in charge of how benefits are communicated to your team, ensuring that your employees understand what’s available to them.
In other words, your PEO helps you navigate the world of benefits and gives you access to better offerings, but you’re still in the driver’s seat when it comes to making selections for your employees.
Control Over HR Policies
The same goes for HR policies. While a PEO can provide best practice templates for things like employee handbooks, recruitment processes, and performance reviews, the business owner retains the freedom to adapt these templates to fit their company’s values, culture, and goals.
Control over HR policies includes:
- Performance Management: You decide how employees are evaluated, how feedback is provided, and what performance metrics are important for your company.
- Company Culture: The PEO supports your initiatives, but the responsibility for maintaining your company’s unique culture remains with you.
- Recruitment and Hiring: While a PEO may offer recruitment resources, you maintain control over the type of candidates you want to attract and how your hiring process is structured.
- Employee Discipline: You make the final decisions on employee discipline, terminations, and how to manage employee relations in alignment with your company’s values.
A PEO can offer advice based on best practices, helping you streamline HR functions and stay compliant with regulations, but you still have the final say on how to implement these policies. Whether it’s recruiting new talent or fostering employee development, you can maintain the HR policies that reflect your company’s vision while benefiting from the PEO’s guidance.
Areas Where Control May Be Shared or Transferred
Compliance and Legal Aspects
One area where you might share or transfer control is compliance. PEOs are experts in employment law, which means they take on the responsibility of ensuring your business meets all federal and state regulations. This includes handling tax filings, workers’ compensation, OSHA compliance, and other legal requirements.
While you’ll still be informed and kept in the loop, much of the administrative burden associated with compliance is shifted to the PEO. This allows you to focus on running your business while ensuring that your company stays legally compliant without having to dedicate significant time to it.
Payroll Administration
Another key area where control may be shared is payroll. PEOs handle the processing of payroll, tax deductions, and withholdings. This can be a massive relief for business owners who don’t want to worry about the intricacies of payroll taxes, calculations, or filing deadlines.
Though the PEO manages the execution of payroll, businesses still have access to payroll reports, so you can monitor the process and ensure everything is running smoothly. In this case, while the PEO handles the heavy lifting, you maintain oversight and transparency.
The Benefits of Partnering with a PEO
What You Gain
While a PEO does take on some aspects of HR and benefits administration, the benefits you gain can far outweigh the control you share. A PEO provides access to a level of expertise and resources that you might not otherwise be available to small and medium-sized businesses.
Here are some of the biggest advantages of working with a PEO:
- Cost Savings: A PEO’s purchasing power allows you to offer more competitive benefits at a lower cost than you could negotiate alone.
- Compliance Confidence: With a PEO, you can reduce the risk of non-compliance and avoid costly mistakes that could result in penalties.
- Expertise: A PEO brings HR expertise that helps you improve processes, streamline policies, and handle employee relations effectively.
- Time Savings: By offloading payroll and benefits administration, you free up valuable time to focus on business growth.
Most importantly, the partnership frees you up to focus on what matters most—growing your business. A PEO allows you to tap into expert HR services, which can improve employee satisfaction, reduce turnover, and create a more efficient work environment.
Reducing Risk and Complexity
PEOs also help reduce the risks associated with HR and compliance. With ever-changing tax codes, labor laws, and regulations, staying on top of compliance can be overwhelming. By leveraging a PEO’s expertise, you minimize the chance of costly mistakes, such as payroll errors or violations of labor laws, which could otherwise result in penalties for your business.
Retaining Control in Key Areas
While partnering with a PEO means sharing some responsibilities, you can still retain control over key aspects of your business. Stay involved in shaping your company’s culture, selecting employee benefits that fit your team’s needs, and customizing HR policies to align with your business goals. Regularly review performance management systems and ensure they match your long-term objectives. By maintaining clear communication with your PEO, you ensure that your priorities are reflected in the services they provide, allowing you to keep control over what matters most.
Conclusion
Partnering with a PEO doesn’t mean losing control over your company’s benefits and HR policies. It provides the support you need to streamline administrative tasks, reduce risks, and improve efficiency, while still allowing you to make key decisions about your company’s culture, benefits, and HR policies.
SustainableHR PEO & Recruiting helps businesses manage these aspects effectively, offering expert support in payroll, compliance, and benefits, all while ensuring you remain in control of what matters most.
Schedule a consultation today to learn how SustainableHR PEO & Recruiting can help you navigate HR challenges and keep your business running smoothly.
