ASO or PEO: what best suits your organisation?
If you’re considering outsourcing your HR needs, you may have noticed there are a number of organisation styles that resemble each other in your research. Two such common styles of outsourced HR operations are administrative services organisations (ASO) and professional employer organisations (PEO). Some PEOs like Australia PEO Pty Limited offer both PEO services and ASO services, depending on client’s individual needs. However, the majority of outsourced HR services offer either PEO or ASO exclusively. For this reason, it’s important to do your research on prospective suppliers of outsourced HR, so you know what they offer and what they don’t.
In order to identify which style of outsourced HR will work best for your business, it’s important to understand what services they offer.
What is an ASO?
An administrative service operation (ASO) is primarily used in the service business landscape, whereby service companies outsource the bulk of all administrative functions, including payroll, visa management, workers compensation and safety programs to their chosen ASO. In this type of partnership, SMEs have one ASO provider to work with that manages the vendors you as a business owner decides to work with.
What is a PEO?
Australia PEO gives business owners the ability to outsource a number of their HR requirements, co-own employment liability, and in many cases gain economies of scale to offer employees a more cost-effective and valuable benefits package. In choosing our PEO offering, we become extensions of your business, rather than a doer of tasks, as would be the case if you were to select our ASO offering. We work alongside your management team to overcome complicated human resource related functions.
We at Australia PEO services offer the following to our clients on both an ASO and PEO basis:
- Payroll management: employment contracts, payroll calculations, superannuation, entitlements, compliance and expenses
- Human Resources support: we assist in maximising the performance of your staff so you can meet your strategic objectives
- Immigration and visa management: We act as an advisory in helping achieve the best outcome for everyone in your organisation, whelp obtain long term and temporary business-related visa quickly, keep you updated on progress and offer ongoing visa support.
When you partner with Australia PEO, whether you choose to select your suppliers or not, we assume the above responsibilities and provide you human resource expertise so that you can concentrate on the elements of your business that matter the most.
How does an ASO differ from a PEO?
- ASO manages your chosen vendors, PEOs choose them for you
In a typical ASO partnership, we’ll ask that you choose your own vendors to work with but in a PEO partnership these vendors are chosen for you. Either solution comes with it’s benefits and downsides depending on your companies’ individual needs.
To begin with, PEOs partner with a number of vendors who can offer discounted prices for premium insurance packages. We have the expertise to know exactly what to look for when it comes to company insurance plans and can identify the red flags when we see them.
At Australia PEO, we are constantly comparing plans and are fluent in the language of corporate insurance. Entrusting us to decide the best and most cost-effective insurance provider means you’re getting the best bang for your buck and you’re eliminating the chance of surprises down the track. We will also manage the Worker’s Compensation and select the category that best suits your business.
On the other hand, you might find that you’re capable of getting some excellent plan pricing and would like to stick to your current supplier after you onboard an outsourced HR supplier. You control maintain functional control over your HR processes but you also benefit from administrative and back office support from us at the same time.
- PEOs benefit from economies of scale and ASOs don’t
When you partner with us on an ASO basis and you’re required to pick your own vendors, you’re not benefiting from volume pricing as you would with Australia PEO, but you stay in control of who your suppliers are. No one knows your business better than you do, so you might find that having the ability to tailor certain aspects of licensing and insurance deals to better suit your business model.
When you partner with Australia PEO on PEO terms, you’re included in our clientele pool. We select your policies and get the best price for your plans because we also manage the same packages for a number of our clients. We take our entire portfolio of clients to an insurance provider and reap benefits based on a larger group of staff to then achieve a better unit price.
- PEOs share your risk when it comes to liability and compliance.
As is typical in a PEO agreement, we partner on a co-sharing basis so we share a portion of an employer’s liability. We have a vested interest in maintaining compliance with our clients. Because of this incurred risk, we take the necessary steps to coach our employers in compliance to avoid the risk of trouble down the track.
While Australia PEO takes on less responsibility in an ASO partnership, we work on a consultancy basis and you’ll be given the necessary information by a team of experts to eliminate risk down the track.
How does an ASO differ from a PEO?
When you reach a point where you’re ready to take the leap in deciding partner with a PEO on an ASO or PEO basis, there are certain factors that can help you decide which way to go.
- Write down all the challenges you’re facing in your day to day HR environment that you want your partner to take care of. See if a PEOs capabilities and function offerings line up with your challenges, or whether an ASO partnership might be better suited. If you want to decide the vendors to go with, then perhaps an ASO partnership is better suited for your business. If you’re comfortable with entrusting Australia PEO with the vendors we select on your behalf, then we might be a good option for you.
- Make sure your prospective HR outsourcing supplier has the right credentials to comply with regulations. Australia PEO are APSCO certified, so you can rest assured we comply with all necessary legal requirements.
- Look at the team’s experience in their field. Request a review of their turnover rates, whether they’re relationships-centric and the amount of time they’ve been in business. At Australia PEO we work to a model of complete transparency to ensure our customers are at ease when choosing to partner with us.
- Understand how your prospective partner chooses their vendors and suppliers, so you know they go with the right companies for the right reasons.
At the end of the day, choosing whether to go with Australia PEO on ASO or PEO terms comes down to your individual company needs. If you’re still unsure as to whether a PEO or ASO agreement is the right fit for your business, speak to someone from our friendly team.
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