Latest NAPEO Study Shows ROI of Using a PEO Is 27 Percent

The National Association of Professional Employer Organizations (NAPEO) released a new study and determined that the average professional employer organization (PEO) client can expect a return on investment of 27.2 percent based on cost savings alone.

This new study is the seventh in a series that was conducted by noted economists Laurie Bassi and Dan McMurrer of McBassi and Associates and focused solely on costs and calculated savings for PEO clients in five HR-related areas that include: HR personnel costs, health benefits, workers’ compensation, unemployment insurance (UI), and other external expenditures in areas related directly to HR services such as payroll and benefits.

The study found that the average cost savings from using a PEO is $1,775 per year per employee and also reinforced findings of earlier research that indicated notably lower employee turnover, higher rates of both employee and revenue growth, and enhanced employee benefit offerings.

“We have known for some time now that using a PEO is good for a company in a variety of ways, and we now have a compelling and impressive number on the actual ROI of using a PEO,” said NAPEO President & CEO Pat Cleary. “When you put this new data on costs savings and ROI together with the data we already had on business growth, turnover, survival and employee satisfaction, it’s clear that there really is no better value proposition than PEOs in the HR space.”

Howard Leasing and other PEOs provide human resource management, payroll administration, workers’ compensation, and risk management assistance to small and mid-sized companies to help businesses improve productivity, increase profitability, and focus on their core mission. Through PEOs, the employees of small businesses gain access to employee benefits such as 401(k) plans; health, dental, life, and other insurance; dependent care; and other benefits typically provided by large companies. A copy of the full study is available here.

SOURCE National Association of Professional Employer Organizations (NAPEO)

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