If you’re the leader of a growing business and you have heard the term “co-employment”, but you’ve never given it much thought or, you’ve often wondered why other organisations bother with such arrangements, the answer is: FOCUS.
The underlying power behind a co-employment arrangement is that it unleashes the force of focus in businesses that leverage co-employers or professional employer organisations (PEO).
As a result, organisations in relationships with reliable co-employers/PEOs enjoy a degree of focus that most organisations do not. To explain what we mean, let’s start from the beginning: what is co-employment?
What is Co-Employment?
Though the term might sound complicated, co-employment refers to the legal arrangement that allows business owners to share selected employer responsibilities (and risks) with an outside partner, called a Professional Employer Organization (PEO).
In a co-employment arrangement, your employees have two employers: your organisation and the PEO of your choice.
If it seems as if the lines of authority can quickly become blurry in such an arrangement, the reality is that, when the terms are clearly defined, this hardly ever happens.
Recommended Post: 3 Ways PEOs Can Help Your Business Rapidly Recover Revenue
How Does Co-Employment Work?
Since co-employment means allocating and dividing employer responsibilities between your organisation and the PEO you choose, the logical question then is, who does what?
As the business owner/leader in a co-employment arrangement, you are the operating employer. This means that you are entirely in control of your employees and what they do at work.
You call all the shorts with all issues related to hiring and firing, managing how your employees do their jobs, assigning core job responsibilities, and making decisions about your organisational structure.
Your employees are yours, and they remain under your command.
On the other hand, the PEO, also called the administrative employer, is tasked with managing a selection of employer-related responsibilities outlined and agreed upon in the working contract—often called a client service agreement (CSA).
For example, a PEO like Workforce Africa is typically responsible for:
- Processing payroll
- Administering payroll deductions
- Issuing paychecks
- Preparing, filing, and depositing payroll taxes
- Providing benefits to worksite employees
- Providing HR advice to the client company
Why Co-Employment Might Be an Excellent Strategy for Your Business
Every business is driven by either one of two goals: purpose or profit. To achieve either, an organisation needs to run efficiently with minimised risk and maximised talent.
One of the best and fastest ways leaders can make this happen without setting up in-house functions is to leverage a co-employment relationship with a professional employer organisation (PEO).
As a matter of fact, the very first benefit a business stands to gain in a co-employment relationship with a good PEO is access to a highly experienced and trusted business partner.
There are several potential upsides to being in a co-employment arrangement with a PEO. Here’re a few common ways that a healthy co-employment relationship can translate into benefits for your business:
1. Access to top-class benefits at competitive rates
As the administrative employer, the PEO takes over the tasks of securing employee benefits from various carriers and getting your business access to the required insurances it needs.
If your PEO is a large organisation that manages thousands of employees, they’ll be able to leverage their significant buying power to offer you quality products at competitive rates.
Since the PEO assumes all plan sponsor responsibilities and obligations from start to finish, it means that you will no longer need to invest time and energy:
- Negotiating rates with providers
- Managing employee enrollment and notifications
2. Payroll support
A PEO will do all the heavy-lifting when it comes to processing your monthly or biweekly payroll. Not only will the PEO’s payroll experts ensure accuracy and compliance, but they’ll also simplify the payroll process so you can focus on other areas of your business.
What this means for your growing organisation is that the energies of your in-house employees can now be re-channelled to achieve the core purpose of your business, whatever that is.
3. Compliance support
Non-compliance can be costly to growing businesses, so it’s one key area that a good PEO can stand in for your business. Leveraging their expertise and legal counsel, an experienced PEO ensures that your business complies with all government requirements and regulations.
4. Strategic HR support and planning
There’s simply no substitute for the strategic value that a reputable PEO can bring to growing businesses. When companies expand, so do their headcount.
Therefore, in a co-employment relationship, a PEO like Workforce Africa can help you:
- Assess your current HR capacity and identify talent gaps
- Attract great talent and onboard them
- Design training and development strategies
- Implement training and leadership development services, including supervisor coaching or online learning courses
- Design and conduct employee performance appraisals
- Construct base compensation structures
- Build an employee recognition program
- Create a succession plan
Summing it all up
Being an employer has never been more challenging and time-consuming than it is today. As a business leader, there are critical issues about the growth of your business that no one can handle but you.
Your attention is too precious and should be focused on strategy and core competencies, not monopolised by details like employee handbooks and onboarding paperwork, payroll, etc. Still, those details are essential, and they need to be handled with care and integrity.
The good news is that you don’t have to go at it alone. Now that you can answer the question “What is co-employment?” you can and should delegate those time-consuming responsibilities to a co-employer so that you can use your time and resources most effectively.
If you’re ready to begin your search for a trustworthy PEO that can help take your business to the next level, don’t make any decisions until you have read our post on what to consider before choosing a PEO for your business.