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PEO Models: Service vs. Technology-First Approach



When choosing a Professional Employer Organization (PEO) model, businesses must weigh a multitude of factors, including cost, user experience, scalability, and the unique demands of their industry.


Here, we'll explore the cost implications and other nuances associated with Service-First and Technology-First PEO models.


The Service-First PEO Model


Characteristics

  • Emphasizes personalized service and human interaction.

  • Prioritizes the human aspect of HR, addressing intricate concerns through human dialogue. Direct email, phone, or onsite meeting.


Cost Implications

  • Typically more expensive due to the high-touch, bespoke nature of the service.

  • Costs range from $100 to $300 per employee per month.


When is it Suitable?

  • If you envision a representative coming to your warehouse, clad in safety gear and equipped with a checklist, only a service-first company will suffice.

  • If in-person open enrollment meetings are a non-negotiable requirement for your company, you should lean towards a service-first PEO.


What is a Service-First Company?

  • They will assign an HR Business Partner (HRBP) to your account.

  • They prioritize onsite or in-person interactions, such as attending open enrollment meetings, safety walkthroughs, and quarterly check-ins.


The Technology-First PEO Model


Characteristics

  • Focuses on providing technological solutions for HR management.

  • Emphasizes workflow automation, self-service, and standardization of process.


Cost Implications

  • Generally more affordable due to its emphasis on automation and standardized solutions.

  • Costs typically lie between $55 and $120 per employee per month, which amounts to almost 33% to 50% of the cost of service-based PEO providers.


When is it Not Suitable?

  • If your expectation is a high degree of personalized, on-site service.

  • Businesses lacking in tech-savviness or infrastructure where employees do not have easy access to mobile phones, the internet, or computers.


What is a Technology-First Company?

  • Their primary aim is to make HR processes so intuitive that in-person interactions are redundant, saving both time and money.

  • They offer competitive pricing, often 30% to 50% cheaper in terms of administrative fees for PEO/ ASO services.

  • Their service model revolves around APIs and system workflows, enabling automation of routine tasks associated with the employee lifecycle.


Who Benefits Most from a Tech-First Company?

  • Experienced HR professionals overseeing a growing workforce but with budgetary constraints on hiring more HR administrators.

  • Senior executives such as CFOs and COOs, especially in tech companies, who prioritize operational streamlining.

  • HR Consultants advising multiple clients, appreciating the ease and scalability of the platform.


Who Might Struggle?

  • Less experienced HR professionals; without a clear understanding of HR problems, the technology can sometimes amplify these issues.

  • Individuals who are not tech-savvy.

  • In scenarios where open enrollments are manually done and then transposed to a tech platform, it can result in errors. This not only frustrates both parties but can compromise the liability protection typically provided by a PEO.


Final Thoughts


The decision between a Service-First and Technology-First PEO model goes beyond cost; it's about alignment with a company's operational culture, technological readiness, and HR demands.


By meticulously evaluating both models and understanding their implications, businesses can select a PEO model that seamlessly integrates with their operations and provides maximal value.



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