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How A PEO Can Help You To Save Money By Avoiding Bad Hires

A bad hire can occur at any point. Things may begin swimmingly, only to later morph into disaster as serious flaws emerge. Or, things may sour quickly, maybe even within a few days of the employment start date. Either way, a bad hire is bad for business, and it happens more often than you may think.

Studies show that:

  • 75 percent of employers say they’ve hired a poor fit at some point.
  • Theft, fraud, loss of customers, reduced productivity, work-related stress, and absenteeism are among the top consequences of a bad hire.
  • The average cost of replacing a bad hire is 2-3 times the salary for the position.
  • It takes an average of 42 days to fill an open position.

On a more positive note, high-performing employees are reportedly four times as productive as average workers, yielding as much as 80 percent of a company’s profits. But, finding top-performing employees who will stay the course is easier said than done, which is why you might want to consider partnering with a co-employment provider.

What Is a Co-Employment Provider?

A co-employment provider (or Professional Employer Organization) serves as an employment partner to its clients. The co-employment provider actually becomes the “Employer of Record,” managing many of the client’s HR activities (back-office functions), while the employer remains the “Worksite Employer,” retaining control over its employees and daily operations.

To deliver real value, the co-employment provider should offer a full range of HR solutions, including:


  1. Benefits Compliance
  2. Core Employment Compliance
  3. Employee Relations & Terminations
  4. Employment Liability Protection
  5. Worksite Safety


  1. Absence Management
  2. Employment Cost Benchmarking
  3. Flexible Staffing Strategy
  4. HR Accounting
  5. HR Strategy
  6. Health Care Premiums
  7. Unemployment Administration


  1. Employee & Manager Service
  2. New Hire Processing
  3. Payroll
  4. Time Management
  5. 401K Benefits Administration
  6. Health Benefits Administration
  7. Flexible Benefits Administration


  1. Benefits Strategy
  2. Compensation Planning
  3. Talent Attraction
  4. Talent Retention Benchmarking


  1. Diversity & Inclusion
  2. Employee Engagement
  3. Leadership Development
  4. Performance Management

Per the National Association of Professional Employer Organizations (NAPEO), small businesses that partner with a co-employment provider experience 10-14 percent lower employee turnover, growth of 7-9 percent and are 50 percent less likely to fail.

How a Co-Employment Provider Protects You from Bad Hires

  1. Industry Knowledge.
    Some co-employment providers have recruiters that specialize in specific industries, making it easier for them to source the right candidates for your business. These recruiters know whether a particular candidate will fit into your business structure and can also suggest changes that you might make to your benefits package in order to attract more suitable candidates.
  2. Networking Power.
    Co-employment providers work with multiple clients, which typically gives them a network reach that extends much further than an individual client’s. This is noteworthy, because studies show that up to 85 percent of jobs are filled through networking rather than job boards.
  3. Onboarding and Training.
    Studies repeatedly expose “lack of training” as one of the main culprits behind why new hires quit. A co-employment provider can make sure that your new hires receive the training they need to not only execute their role but also understand the company’s mission, values, culture, policies, procedures and expectations. In addition, the co-employment partner works closely with new hires to ensure they’ve completed the right documents, such as tax withholding and benefits-related forms.
  4. Legal Compliance.
    When hiring employees, employers must comply with a number of regulations—including those relating to discrimination and compensation—or potentially face penalties from the government. A good co-employment provider knows precisely how to keep you compliant.



April 11, 2018




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