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Employee leasing, also known as professional employer organization (PEO) services or co-employment, is a business arrangement where a company contracts with an external organization to handle various human resource (HR) functions and employer responsibilities.
Research has shown that outsourcing human resources to a PEO helps companies “grow 7-9 percent faster, have 10-14 percent lower turnover, and are 50 percent less likely to go out of business. (Source: napeo.org)
What is employee leasing?
Employee leasing, also called PEO or co-employment, is when a business partners with a third party to manage HR functions like payroll, benefits, and compliance—while the business retains control of daily operations. It allows businesses to offload administrative burdens and stay compliant.
Who typically uses employee leasing services?
Employee leasing suits a wide range of organizations that need HR support without building a large internal team. These include:
- SMEs & startups – Save time and avoid HR overhead
- Fast-growing companies – Scale without hiring full HR teams
- Franchise models – Ensure HR consistency across branches
- Seasonal businesses – Flexibly manage changing headcounts
- Compliance-heavy industries – Get expert help with legalities
What are the benefits of employee leasing?
Companies using employee leasing gain access to better infrastructure, legal protection, and resources. It helps them focus on their core operations while HR tasks are managed by experts.
- Access to HR experts
- Better employee benefits
- Shared compliance responsibility
- Time and cost savings
- Efficient payroll and tax management
What are the drawbacks of employee leasing?
While there are benefits, employee leasing also has limitations. Businesses must consider factors like control, costs, and alignment with their company culture.
- Less control over HR
- Higher dependency on the PEO’s performance
- Complex contracts and limited customization
- Initial confusion among employees
- Possible cultural mismatch with the PEO
What are the features of employee leasing?
Employee leasing comes with a range of features designed to support HR and compliance. These features streamline operations and reduce administrative pressure.
- Shared employer responsibilities
- Outsourced HR and compliance
- Centralized benefits management
- Payroll, tax, and risk handled externally
- Support with employee relations and legal updates
How does employee leasing work?
The leasing process is structured and follows a co-employment model. The PEO takes care of backend HR functions while the client runs daily operations.
- Contract with a PEO outlining responsibilities
- Shift payroll & HR to the PEO system
- Manage compliance, taxes, and benefits via the PEO
- Maintain control of daily employee management
- Review and optimize the relationship regularly
Encuestas sobre el pulso de los empleados:
Se trata de encuestas breves que pueden enviarse con frecuencia para comprobar rápidamente lo que piensan sus empleados sobre un tema. La encuesta consta de menos preguntas (no más de 10) para obtener la información rápidamente. Pueden administrarse a intervalos regulares (mensual/semanal/trimestral).
Reuniones individuales:
Celebrar reuniones periódicas de una hora de duración para mantener una charla informal con cada miembro del equipo es una forma excelente de hacerse una idea real de lo que les pasa. Al tratarse de una conversación segura y privada, te ayuda a obtener mejores detalles sobre un asunto.
eNPS:
eNPS (employee Net Promoter score) es una de las formas más sencillas y eficaces de evaluar la opinión de sus empleados sobre su empresa. Incluye una pregunta intrigante que mide la lealtad. Un ejemplo de preguntas de eNPS son ¿Qué probabilidades hay de que recomiende nuestra empresa a otras personas? Los empleados responden a la encuesta eNPS en una escala del 1 al 10, donde 10 significa que es "muy probable" que recomienden la empresa y 1 significa que es "muy improbable" que la recomienden.
En función de las respuestas, los empleados pueden clasificarse en tres categorías diferentes:
- Promotores
Empleados que han respondido positivamente o están de acuerdo. - Detractores
Empleados que han reaccionado negativamente o no están de acuerdo. - Pasivos
Empleados que se han mantenido neutrales con sus respuestas.
What types of businesses benefit most?
Employee leasing is useful for companies that need scalability, compliance help, or lack HR bandwidth. It's especially effective for:
- Geographically spread companies
- Cost-sensitive teams
- Those lacking internal HR expertise
- Firms navigating HR regulations
Does employee leasing affect company culture?
Yes, it can. Since a third party is involved in HR matters, it’s important that the PEO aligns with the company’s values and culture.
- Cultural misalignment can disrupt workflows
- Employees may feel confused if not onboarded well
- Clear communication and training help bridge the gap
Can employee leasing help with compliance?
Absolutely. One of the biggest benefits of PEOs is their deep expertise in labor laws. They help companies avoid errors and penalties.
- Ensure timely tax filings and payroll compliance
- Navigate state and federal labor regulations
- Stay updated on HR legal changes
Is employee leasing scalable for growth?
Yes. Leasing adapts to fluctuating workforce needs and is ideal for growing businesses that need to hire fast without expanding HR infrastructure.
- Add or remove employees with ease
- Maintain consistency across departments
- Avoid administrative strain during growth phases
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