Categories: Benefits Management, Human Resources, Payroll, Strategy & Industry Insights,
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A Look Into the Increased Demand for PEOs

Today’s job market is quickly and constantly changing. In order to stay competitive in recruiting and retaining quality employees, businesses must provide them with more than a decent salary and a few extra vacation days. In recent years, employers have started turning to professional employer organizations (PEOs) to help provide their employees with the benefits and resources they need and expect. Brokers, too, are commonly enlisting the help of these organizations as a way to impress clients by differentiating themselves as well as demonstrating resourcefulness in assisting clients with their employee benefit needs. These PEOs are often responsible for Broker discussing PEOproviding access to HR professionals, information regarding employee benefits, and access to the benefits themselves.

A recent post from ExaByzness explored the increased demand for PEO services and the effect this has on the industry’s growth and development. In 2012, the industry added $8 billion to its gross revenues, making the total revenues around $92 billion for that year, a 10% growth from 2011. BenefitsPro looked deeper into the reasons why brokers are turning to PEOs for assistance in managing their clients. They state that professional employer organizations are “the quintessential resource for market-responsive, comprehensive employee benefits, payroll and tax administration, and related regulatory compliance services.”

So how does working with a PEO potentially boost a broker’s market position? BenefitsPro says foremost, providing clients with these services strengthens the broker’s relationship with them by proving them to be a “value-add” business partner. In building these relationships, they are able to prevent risk of other brokers or benefit providers taking over their client accounts by proving to be more valuable. Working closely with PEOs often provides brokers with the connections to obtain leads to direct them towards potential future clients. Finally, in taking advantage of PEO services, brokers are able to develop new and returning revenue streams.

Needless to say, the estimated 700-900 PEOs in the US have found themselves in a highly competitive market with the growing demand for their services. Brokers are looking for PEOs who offer a complete collection of products and services including:

  • The ability to fulfill all administrative duties and requirements
  • A team of experienced HR and risk management professionals
  • A history of successful relationships with insurance brokers
  • Proven track record and credentials that demonstrates ability to successfully service clients

The value of PEOs as service enhancers rather than competition is continuing to change the job market and helping businesses provide their employees with improved benefits and services.


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