If you’re finding it hard to get your head around the intricate world of human resources, you’re not the only one. If you’re looking to outsource the HR component of your business, you’ll probably come across some complicated abbreviations that you simply can’t make sense of. If this article, we break down all the different types of outsourced HR services and compare them to how Australia PEO services work, to help you determine the right fit for your business.

Professional Employer Organisation (PEO): What does it mean? 

According to the US leader for Professional Employment Organisation industry news NAPEO, “A professional employer organization (PEO) provides comprehensive HR solutions for small and mid-size businesses. Payroll, benefits, HR, tax administration, and regulatory compliance assistance are some of the many services PEO companies provide to growing businesses across the country.”

What this means for you is that by partnering with Australia PEO, you’re given the power to outsource many of your human resource functions such as employment liability, visa management, payroll and compliance. In addition to this, by jumping into Australia PEO’s pool of employees, you’ll take advantage of some really valuable economies of scale when it comes to group fee structures for insurance, compliance and so on.

One important thing to remember is that when you onboard Australia PEO as your partner in employment, we become an extension to your business and we maintain this by engaging with your management team to address complicated HR related matters as part of the team.

PEO vs. ASO

An ASO or an Administrative Service Offering is generally used by service business who require assistance in deploying certain administrative functions such as employee benefits, payroll, HR Management, workers compensation and safety programs. By partnering with an ASO, you retain the power to select your own vendors and your ASO providers works with them directly.

The most obvious difference between an ASO and Australia PEO services is that an ASO manages the existing relationship with different vendors and a PEO selects the vendors that best suit their client base collectively. What this means for ASO is that you’re not benefiting from volume pricing for benefits as you would with Australia PEO. PEOs are also partly liable for things like compliance whereas ASOs do not.

PEO vs. HRO

HROs or Human Resources Outsourcing Organisations act as an external supplier or sub-contractor for certain human resource functions.

Also known as BPO or Business Process Outsourcing, “traditionally only been available to larger organizations; however, many outsourcers are bringing this model to the mid-market. Like an ASO, an employer remains the ‘employer of record’ in this type of arrangement,” according to Centripetal Consulting.

The primary difference between a PEO and an HRO are not all that different from those with ASOs. That is, ASOs and HROs together deal with the management of HR-related options chosen by you and that you’re not guided on. If you go with a PEO, you no longer have to hire an ASO or HRO.

PEO vs. Employee Leasing

A PEO actually achieves the same functions as an employee leasing firm. In fact, “employee leasing” is the term that was used to describe PEOs in the past, before Professional Employment Organisations was adopted to make the co-employment relationship PEOs like Australia PEO offer more clear. Our job as Australia’s top PEO agency is to not find new candidates for your job openings but to become joint co-employers.

PEO vs. Staffing Companies

Staffing agencies or firms assist companies in finding and hiring employees for their job openings. Also called recruitment agencies, they advertise and scout for prospective candidates for a company’s job listing. They take on the responsibility of taking preliminary interviews with candidates, to make your job of hiring much simpler.

Recruitment agencies help you up to the point of when a contract with a new employee is signed and do not take part in employee management, payroll and any of the ongoing tasks of a PEO. Typically, however, a recruitment agency must forfeit their fee if the employee they recruited for a client’s position does not reach their review period. On the other side of the spectrum, the work of a PEO starts at the time the contract is signed and continues through the entire period the business runs.

It’s common for organisations to work with recruitment companies in conjunction with a PEO as both look after separate parts of the employment cycle.

If you would like to see more information about partnering with a PEO like Australia PEO services, speak to someone from our friendly team by clicking here.