Payroll administration in hospitality is a major constraint, especially when considering how satisfying guest needs is the most fulfilling aspect of the job. Every minute spent chained to the back office filling out paperwork takes away from attending to the guest experience.
For operators looking for a more effective way to spend time, their most valuable resource, options exist to outsource payroll and HR processes. One of these outsourcing options is a Professional Employer Organization, also known as a PEO.
You may be asking: what is a PEO? Professional Employer Organizations partner with small- and medium-sized businesses through co-employment arrangements. Taking advantage of the larger economies of scale, these businesses can outsource burdensome administrative tasks and have better access to resources and benefits at discounted rates.
As a co-employer, the PEO can remove your payroll and HR administrative burden, ensure compliance with regulations, and stop employee lawsuits before they happen.
What Is a PEO Really Doing?
To put it another way, PEOs provide human resource services to clients, paying wages and taxes while ensuring compliance with myriad state, local, and federal laws/regulations. In addition, PEOs often provide workers with access to 401(k) plans; health, dental, and life insurance; dependent care; and other benefits small businesses typically don’t provide.
Think of PEOs as a solid foundation to build your people operations around. Wage compliance prevents crippling fines, the outsourcing of tedious payroll chores frees up managers to focus on guest needs, and a robust benefits package gives your business a compelling advantage over competitors in the fight to attract and retain talent amid The Great Resignation.
Stats Don’t Lie
Last year, the National Association of Professional Employer Organizations commissioned a survey of PEO clients representing a total of 1.7 million employees, analyzing how they fared during the worst of the COVID-19 pandemic. Their findings reveal how compared to businesses of similar size and type, PEO clients were:
- 58 percent less likely to have permanently closed
- 82 percent more likely to have business operations back to normal
- Seeing positive net employee growth, compared to a decline for competitors
- 71 percent more likely to have received Paycheck Protection Program (PPP) loans in 2021
- 18 percent more likely to have had 2020 PPP loans forgiven
NAPEO also estimates with cost savings related to employee attraction and retention, increased productivity, and lowered HR expenses, PEO clients see an average annual ROI of 27.2 percent. This level of value has led 98 percent of surveyed clients to recommend a PEO to a small business colleague.
Removing an Administrative Burden
But what is a PEO doing for the day-to-day operations of your business, especially with the worst of pandemic restrictions lifted? Simply put, most small companies cannot afford to hire a human resource professional, meaning managers and even owners must take time out of their already busy days for menial tasks such as payroll processing, crafting benefit plans, and paying appropriate payroll taxes. These tasks are not only tedious, but keep managers confined to the back office, likely to the detriment of front-office operations — breeding scenarios that result in lost revenue and poor guest relations.
In contrast, almost all PEOs provide access to human resource professionals as a part of their services to small businesses. This outsourcing of the administration burden gives operators the time to deal with the guest-related responsibilities that really matter — why they got into the business to begin with.
Ensure Regulatory Compliance
Another major drawback to DIY administrivia — the regulatory pitfalls. Employment law, especially in hospitality industries, runs deep with complexities so specific that even major corporations run afoul of the law. Without proper resources, your business could sink from just one honest mistake.
Through their services, PEOs help small businesses comply with myriad federal, state, and local employment laws, while helping employees better understand their rights and responsibilities under these requirements.
Noncompliance troubles don’t just come from government agencies. Employee lawsuits, such as accusations of unpaid wages or a hostile work environment, can hamper any small business.
PEOs ensure each paycheck is accurate for hours worked and that all HR-related issues go through formal and proper processes — protecting you from liability in potential legal challenges.
Fourth, a PEO You Can Trust
Fourth offers PEO and HR services designed specifically for service industries, from hospitality to retail. We can help you navigate the daunting complexity of today’s HR challenges so that you can mitigate risk, offload your administrative burden, and focus on employee recruitment and retention.
Outsource the challenges of pain-roll compliance. Schedule a demo today: https://www.fourth.com/request-demo/.
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