Results of a recent study by National Association of Professional Employer Organizations (NAPEO) were so dramatic that organization president and CEO Pat Cleary was hesitant to release them. “Some of the data was so extremely positive that it seemed too good to be true. We worried people might think it wasn’t legitimate,” he says.

But it was. NAPEO has been commissioning research reports conducted by an independent economist on the PEO industry for the past five years. Today there are between 780 and 980 PEOs providing services to between 156,000 and 180,000 SMBs. Recently, the association has also begun conducting focus groups of SMB owners to gauge awareness of PEOs by those not currently using them and satisfaction levels among those who are.

“You can understand how someone might think this is all just too good to be true, and we see that among some non-PEO users in the focus groups,” Cleary says. “But by the end of the sessions, after listening to their peers who are PEO users talk about the positive effects it’s had on their businesses--about how it lets them divert resources from nonrevenue generating functions like HR and refocus those resources on core competencies--most of them change their way of thinking.

Comprehensive solutions for HR needs

PEOs provide SMBs with comprehensive solutions for all their human resources (HR) needs, including payroll, benefits, tax administration, regulatory compliance assistance, and other HR-related functions. By taking those responsibilities off the plates of small business owners, 

PEOs allow them to devote more energy and resources to boosting productivity, increasing revenues and profits, and focusing on their core mission.