Small to mid-sized North American companies on the brink of European expansion prepare to embark on a new chapter of success and business growth. For these businesses, beginning European operations can feel exciting and full of opportunity. However, European expansion can bring challenges as well.
The role of Human Resources (HR) in seamless and successful transition is pivotal, but an inhouse HR department may not be able to fulfill your needs. Depending on the size of your organization, partnering with a PEO (Professional Employer Organization) or outsourcing your HR may save you time and money.
Allowing trusted, contracted professionals to handle your administrative tasks and ensure compliance to national and European labor laws and employment regulations can help you to focus on your mission and day-to-day operations. But which option is right for your company?
Let’s take a closer look at the role of a PEO and HRO (Human Resources Outsourcing) to support the expansion of your company.
A guide to PEOs
When you’re brainstorming HR strategies for your small business or mid-sized business expansion, PEOs and HROs are terms that you should know. Each type of HR partnership can prove beneficial for businesses, but the route you choose to travel should be based on your company’s specific needs.
PEOs may provide much needed help for small to mid-sized organizations, but exploring and researching your options before your European expansion is a key to seamless transition.
PEO definition
A PEO, also known as co-employment, is a third-party organization that businesses partner with to handle all aspects of HR. Typically, PEOs do not offer customized HR strategies, such as the creation of policies and procedures, management training, or talent acquisition strategies.
However, a PEO will take care of the creation and implementation of employee benefits, adhering to compliance, and payroll administration. The delegation of these HR tasks allow businesses to focus on their core competencies.
How a PEO works
A PEO partners with a company to manage HR responsibilities. For small to mid-sized companies with European expansion plans and cemented HR strategies, a PEO can help relieve the burden of hiring an inhouse team to control payroll and benefits. A PEO will also take control of an organization’s adherence to legal compliance.
A PEO works in the following ways:
- Establishes a co-employment model:
When a business partners with a PEO, the PEO becomes the legal employer of record for payroll, taxes, and employees’ insurance
- Administration of general HR tasks:
A PEO handles HR tasks such as compliance management, benefits administration, and risk mitigation
- Pools client resources:
A PEO may have access to excellent benefits packages and employee insurance plans due to discounts and competitive rates. By shopping for multiple clients as one large pool, a PEO can reduce collective expenses for their clients.
The benefits of a PEO
A global PEO can prove extremely beneficial to organizations that include a merger or acquisition in their expansion plans. According to PwC, after a significant decline in global mergers and acquisitions, a rebound has begun — this is due in large part to effective, excellent HR.
Ineffective HR teams, or HR professionals that lack knowledge of European labor laws and employment regulations can stall a company’s growth or lead to European expansion failure.
The global PEO market continues to grow rapidly. Thus, there are numerous third-party partners that can offer small to mid-sized business expert PEO support. Some of the benefits of a co-employment PEO partnership may include:
- Administrative relief:
Companies that delegate HR tasks to a PEO may find significantly freed up resources and time to focus on strategic business growth initiatives.
- Expertise:
Most PEOs employ HR professionals with specialized expertise. An expert staff can lend businesses vital compliance, payroll, and benefits administration support.
- Access to excellent benefits:
Due to a large client base, a PEO can provide comprehensive benefits packages that aren’t available to single entities. These packages may include access to healthcare, employee pensions, retirement plans, and wellness programs.
Challenges of a PEO
If you choose to partner with a PEO, you should be aware of some of the challenges you may face as well. Consider the following before deciding on a PEO:
- Loss of payroll ownership:
When a business partners with a PEO, the PEO becomes a co-employer and holds all control over payroll data.
- Lack of consistent communication:
A PEO has numerous clients. Therefore, you may not have a dedicated team that works solely based on your needs. This may make consistent and transparent communication difficult, and necessary ad hoc requests may not be met.
- Relinquished control:
Along with a loss of payroll management, you may not be able to control vital features of your HR including benefits decisions and other aspects of employee management
- Customized solutions:
The standard HR policies and procedures a PEO has in place may not be malleable. If your organization has specific HR requirements or a unique company culture, the solutions provided by a PEO may not meet your needs.
How Europe HR Solutions can help
Europe HR Solutions may provide the outsourced HR help and support your small to mid-sized business needs. We’ve helped numerous U.S. and U.K. clients successfully expand into Europe, and understand the complexities and nuances of European labor laws and employee regulations.
If you’re not sure if a PEO is right for you, outsourcing your HR may still be the key to your business growth and success in Europe. We offer outsourced HR contracts on an ad hoc, interim project, or retainer basis. You don’t have to relinquish your control over any aspect of your business, but you can count on us to offer HR expertise and support.
Along with the standard benefits of a PEO, Europe HR Solutions can provide:
- Attention to ad hoc, timely requests
- Compliance expertise for every European country
- Consistent and clear communication
- Creation of compliant HR policies and procedures
- Customized, strategic solutions tailor-made to meet your specific needs
- Direct, personalized HR support
- Employee contracts
- Employee training, including management compliance training
- Support for seamless European expansion
- Strategic consulting to fine tune your HR processes
- Succession planning
- Talent acquisition and retention strategies, including help with onboarding and offboarding checklists and processes
Outsourcing HR vs a PEO
A PEO may be the right choice for some small to mid-sized businesses expanding into Europe. However, HRO could provide similar services without the same commitment or relinquishing of control. The right HRO can provide the flexibility, autonomy, adaptability, scalability, financial savings, and specialization a PEO may not be able to provide.
When considering outsourcing your HR over partnering with a PEO, it’s important to understand the services both provide, identify your needs, and research companies that may be a perfect match for your organization.
Connect with Europe HR Solutions
At Europe HR Solutions, we understand the foundational need for effective HR in any type of business. Small to mid-sized North American companies looking to expand into Europe can count on us for knowledgeable, efficient support and innovative HR solutions. Our expert team members have decades of experience in HR that inform the strategies and solutions we provide.
We can supply companies with the benefits of a PEO and much, much more.
Connect with us today for a free consultation, and visit our blog for the latest HR insights, trends, and tips. The road to your foundational HR and successful expansion is only a step away.
