An Inside Look at Professional Employment Organizations

The PEO industry comprises agencies mainly engaged in providing human resources and human resource management services to staff client businesses. Establishments in this industry operate in a co-employment aspect with client businesses or organizations. They are specialized in performing a wide range of human resource and personnel management duties, such as payroll accounting, payroll tax return preparation, benefits administration, recruiting, and managing labor relations.

Employee leasing agencies -- sometimes known as HR outsourcers -- typically acquire and lease back some or all of the employees of their clients and serve as the ad hoc employer of the leased employees for use in payroll, benefits, and other related purposes. Professional employer organizations generally exercise varying degrees of decision-making relating to their human resource or personnel management role, but do not have management accountability for the work of their clients' operations with regard to strategic planning, or profitability. A PEO is extremely cost-effective, in the long run, and eliminates much of the day-to-day "bureaucracy" of being a business owner.