How PEOs Can Stay Relevant in the Wake of Digital Reformation

May 17, 2017 by Kenzie Earle

Being in the era of the technological revolution, there are expectations to deliver excellence via digital services. Though customer service is prevalent in the success of many companies, the option to utilize software and have a positive user experience on a digital platform has become equally important – and maybe even more relevant. Enterprises seek the ability to reform their business models with the use of digital technologies, the ability to create new revenue streams and innovative ways to connect with their market place. It has become a requirement for the service providers of today to play a part in the impact of the consumer experience, apply automation platforms, and work with those enterprises to collaboratively solve problems and foster growth. As a PEO, there is priceless value in the human element of your services, but that isn’t the end-all in todays day and age. Fortunately, there are a myriad of options in our software rich nation so that you don’t need to succumb to the inefficiencies that manual processing brings with it. In 2013, the PEO industry and health insurance brokers witnessed opposition emerge when HR software made its debut and inaugurated a new and simple concept - purchase your insurance from them, and they will provide the software to handle the HR element of your business. It was a pitch that investors certainly bought into. The business model became so dominant, that at one point, one of the top HR software companies was valued at $4.5 billion within two years of surfacing. So how to does a PEO marry its traditional business model and the digital reformation that has swept the competitive market place? Let’s take a look into becoming a business that offers the service AND the product.

The Market Place of the PEO Demands Rebirth – But Why?

According to National Business of Professional Employer Organizations, “businesses that work with a PEO grow 7 to 9 percent faster, have employee turnover that is 10 to 14 percent lower, and are 50 percent less likely to go out of business.” But on the flip side, the afore mentioned stats don’t seem to be in contest with the digital alternative. 48% of HR and talent professionals want to replace their current HR software with a cloud-based system by 2018. Of those HR professionals who are looking to replace their HR software in the next year, 54% state that it is due to the inherent need for better capabilities and functionality. It can be argued that replacing the “human” in HR, with software is an oxymoron and partially defeats the purpose of the role that HR plays. We are not advocating for any PEO to take the ‘human element’ out of the equation, but based on studies, a PEOs potential customer base is looking for a component in their outsourced service that boils down to two things: Efficiency and convenience. 

Only Own What You Specialize In

Down to the basics; As a PEO, you are advocates for partnering with the experts so that a company can focus on what they do best. You have gathered empirical data highlighting the benefits of delegating an entire department. We encourage you to heed that same brilliant mentality. A PEO offers services in Payroll, benefits, HR, tax administration, and regulatory compliance assistance but that does not necessarily mean that the company specializes in each of those realms. Take a look at where your business needs improvement and where software can add efficiency and value without taking away the prided ‘human element’ of the business. With the competition in the industry at an all-time high, transforming into a one-stop-shop in the trade will bring relevance back to your business model.

It is common for a PEO’s mode of operation to be focused predominantly on the "human" side of a company, but bear in mind, becoming a well-rounded company in this day in age means appeasing the tech needs of your consumer as well as offering excellent customer service.   

Key Elements of Software

Rendering digital options is a common denominator that seems to have made HR software more desirable than a traditional PEO. According to a worldwide survey of human resource leaders, ‘organizations with fully integrated HR and talent processes, systems, and data outperform those organizations that have not integrated by 41% across twelve key HR and business operating metrics’. What does this mean for you? Integrating with software solutions internally can increase retention and customer satisfaction.

It may also be time to look into a new human resource management system (HRMS) so that you can take the time to deliver the core foundation of what a PEO excels in; ensuring a customized strategy is in place on a per company basis.


Payroll and cash flow also play an integral role in any business. But the payments industry is a complex world that few companies successfully specialize in. It’s a service that would be in your best interest to outsource to strategically so that your ROI is not hindered.  Some features to prioritize include the following:

eCheck Processing is a technology that has been refined by PayStand to increase efficiency in remittance of payment and offers swift fluidity in cash flow, making the payroll process a speedy and seamless one. Outside of a decrease in your time to cash, eCheck allows instant authentication and fund verification to avoid insufficient fund fees. (ACH is an alternate payment rail if your customer does not have access to bank logins)

Application Program Interface (API) offering the ability to build your own integration for your specific needs.

- Transparency. A dashboard with a superior UX is essential when you’re dealing with the intricacies of B2B payments.

Mobile Payment Options - In a mobile centric society, there is huge value in the added convenience of a mobile interface. 

Scheduled Payments – Programmatically schedule and execute payments tied to your contracts and invoices. Marry your net terms to payment remittance and replace manual processes with their digital equivalent.

B2B Payments Platform is essential especially when it comes to payroll. It is crucial to find a partner that handles the complexity involved in processing your payments (PCI Compliance, AML Laws, MTL Rules. Fraud Monitoring, Bank KYC Underwriting requirements, 1099K’s)

Here at PayStand, we find substantial value in advocating for the human behind the job title. It is our aim to endorse and validate the work done in your industry; with the right partnerships and some software enhancements, we believe PEOs can take your market share to new levels.

Contact us if you have any questions or if you think we would be one of those strategic partners.