One of the reasons why large businesses can offer better pricing to customers or clients is because they operate more efficiently and cost less per employee to operate. Due to their small size, everything from commercial insurance to health care coverage to onboarding costs more per employee. But, small to medium-sized businesses are trying to change that with the help of professional employer organizations or PEOs. These types of organizations help small to mid-sized employers successfully use co-employment. If you’re thinking about co-employment, read on to learn more about what this is and what the benefits of co-employment for small businesses are.


What Is Co-Employment? 

Co-employment is a business arrangement in which professional employer organizations, or PEOs, help small businesses connect to share employment responsibilities. PEOs basically oversee the process of sharing employees and resources among businesses that are looking to decrease their operating expenses. For example, one business may not need a full-time employee to run payroll. As such, a PEO may hire a payroll specialist, and that payroll specialist may run payroll for five companies. The five companies then share the costs of that one employee, which is much cheaper than each of them hiring their own professional for just that one task.

What Are the Benefits of Co-Employment?

Co-employment is not a term that many people are familiar with, but it can be beneficial to employers. Read on to learn some of the key benefits associated with Co-employment

Access to Better Benefits

A professional employer organization typically offers better benefits than small businesses are able to get on their own. The cost of the benefits may be cheaper and/or the plan itself may be better. Health insurance companies often offer better benefit packages at lower costs to businesses with more employees. When multiple small businesses all share one health insurance plan, operated through the PEO, they are able to take advantage of these better plans or lower costs. 

Some Shared Employees

Human resources professionals are the most common type of shared employee through co-employment. Instead of one employer hiring one human resource professional to interview new applicants, answer benefits questions, or complete payroll, small businesses can all share one or two professionals, as well as the costs associated with that. Most small businesses don’t have a need for a full-time human resources professional, so this allows your business to get the help it needs when it needs it without having to hire and pay a full-time employee.

HR Regulation and Compliance Expertise

One of the lesser-discussed benefits of co-employment is that a PEO provides HR regulation and compliance expertise. This means that they stay up-to-date on changes to the labor code, OSHA regulations or other compliance-related issues for your county, state, and business type. They then share this information with your business, helping you to stay compliant, without having to do all of the research and work yourself. 

Costs Split By Multiple Companies

The term co-employment confuses many small business owners. While co-employment does involve the sharing of employees, it also involves sharing other expenses outside of employees. The exact types of split or shared costs may vary from PEO to PEO. Some PEOs allow small businesses to share costs when it comes to many other things, including business supplies, workers’ compensation insurance, and even corporate retreats.

Consistent Talent Management Strategy

Lastly, a PEO can help to offer small businesses a consistent talent management strategy. This helps to streamline everything from the hiring process to the employee exit process.  Your human resources needs are handled by a third party, which helps to take some of the pressure off of you, as a business owner. No one can accuse you of playing favorites or discriminating against anyone, because your HR needs are being met by individuals who are not employees of your company.

There are numerous benefits of co-employment for small businesses, but essentially, this type of setup allows small to mid-sized employees to pool their resources. While each business operates independently, they may share employees, health insurance plans, workspaces, or other resources to help decrease their overall operating costs. This helps them to remain profitable. Reach out to local, experienced professional employer organizations to learn more about using this type of service for your business.