PEOs and employee retention rates is there a connection? The research says yes. A recent NAPEO study reveals several impressive findings.

PEOs and employee retention rates is there a connection? The research says yes. According to a study by the National Association of Professional Employer Organizations (NAPEO), using PEOs, or professional employer organizations, can help reduce employee turnover by 10 to 14 percent. Companies using PEOs also experience higher satisfaction and intent to stay among employees. In fact, 29 percent of employees at PEO clients responded affirmatively to the question "I expect to work here until I retire," while only 21 percent at non-PEO businesses answered yes to the same question.

Here's why PEOs work and how you can use a PEO to improve HR responsiveness, employee engagement and retention levels.

Improved Quality of the Overall Work Experience

Throughout nearly all of the NAPEO survey questions, employees' responses at PEO client organizations were 7 percentage points higher on questions related to competitiveness, quality of HR practices and the overall workplace experience.

PEOs and employee retention rates may be linked because companies that use PEOs tend to be the ones that value their employees more generally. This mindset carries through all of their actions, from being deliberate about where they put their resources to taking care to select a good partner to service their employees. They know how to get the best help to run their business.

Enhanced Revenue Growth and Profitability

The NAPEO survey suggests that using PEO services supports revenue growth and profitability. According to the report, PEO client companies expected annual median revenue growths 40 percent greater than those of their nonclient counterparts. Companies employing PEOs were also 16 percent more likely to report a boost in profits. It makes sense: Companies using PEOs can focus on their products or services, feeling confident that their human resources administration needs are met by their partnering company.

This kind of growth and profitability helps create stable companies that can, in turn, offer better benefits, development opportunities and working environments to their employees. In workplace environments like that, people tend to be happier in their jobs.

Sharpened Recruiting Competitiveness

According to the Bureau of Labor Statistics, employees remain at a job for an average of four years, though in some industries like technology and advertising, turnover rates are much higher. In ad agencies, turnover can be as high as 30 percent.

In such an environment, turnover is due primarily to the fierce competition for the brightest stars. To meet that competition, these and any other industries can use the services of a PEO to add a competitive edge to their business when it comes to recruiting. The appeal of improved benefits offerings and more streamlined benefits administration make such companies more attractive to potential employees.

If employee retention, profitability and competitiveness in hiring are areas you'd like to see improvements in at your business, perhaps it's time to consider working with a PEO. If you do, be sure to keep thorough measurements to see how your partnership is performing compared to those profiled in the NAPEO report.


Tags: Trends and Innovation PEO Research & Insights Articles HR