Over the past years, the complexity of human resource management has evolved, making HR outsourcing a strategic choice for startups and established businesses. As businesses strive to focus on core operations, understanding the differences between Professional Employer Organization (PEO) and Administrative Services Offering (ASO) is crucial. Effectively leveraging these HR outsourcing solutions can improve talent management, benefits offerings, compliance, and more.
As our previous blog article discussed, a PEO provides comprehensive HR outsourcing services by entering into a co-employment relationship with a client company. Under this arrangement, the PEO becomes the employer of record for tax and compliance purposes and assumes responsibility for managing critical HR functions on behalf of the client business. These responsibilities often include:
By partnering with a PEO, a business can outsource its entire HR operation to dedicated experts. This allows leadership to focus more on core business operations rather than getting bogged down in complex HR administration. Furthermore, the depth of support provided by a PEO enables companies to offer more robust HR services and employee benefits than they may be able to provide independently. Having access to Fortune-500-level wellness plans, retirement accounts, life insurance policies, and more can significantly boost attracting and retaining top talent across the organization. According to the National Association of Professional Employer Organizations (NAPEO), businesses that utilize PEO services experience a 10-14% lower employee turnover rate and are 50% less likely to go out of business.
An Administrative Services Offering (ASO) structure offers a similar range of human resource services and support as a PEO but without establishing a co-employment relationship. Under the ASO model, the client business retains full control and responsibility as the sole employer of record over its workforce.
The core services provided through an ASO typically include:
While the PEO handles very comprehensive HR outsourcing, an ASO allows the business to pick and choose the specific support functions it wishes to offload. This enables greater flexibility and autonomy over the employer-employee relationship. Opting for ASO services is an excellent option for many businesses that want to maintain control over their talent management practices while outsourcing essential administrative HR tasks. By leveraging an ASO provider, companies can reduce their HR-related workload, freeing up leadership resources to instead focus on strategic planning and operations, and driving sustainable growth. Additionally, the tailored consulting that ASOs provide can be invaluable for ensuring legal compliance, shaping effective policies, and supporting strategic decision-making across all elements of human capital management.
Deciding between a Professional Employer Organization (PEO) or an Administrative Services Offering (ASO) depends primarily on the level of human resource support your business requires. Both can provide tremendous value to organizations of varying sizes and industries.
As co-employers, PEOs offer comprehensive, full-service HR solutions customized to the unique needs of your workforce and workplace culture. The breadth of perks and risk mitigation makes PEOs extremely versatile for ambitious companies with complex talent goals:
ASO Pros: ASOs provide flexible, à la carte HR assistance that empowers businesses to shape policies around strategic talent priorities. The tailored nature of ASOs also makes them widely adaptable across diverse firms:
Whether you’re exploring PEO or ASO services, Marvel HR is here to guide you through every step of the way. We offer both types of services, allowing us to tailor our approach to your specific needs and goals. Our team of experts is dedicated to ensuring your HR operations foster a thriving workplace.
Contact us today to discuss how we can support and streamline your HR functions. To get started, visit www.marvelhr.com or contact our team directly at 865-281-1789.
