PEO vs. HRIS: Which is Best For Your Business?

As a business owner, you have a lot to manage, from planning strategic initiatives to carefully monitoring finances. As you work on these tasks, you may realise you don’t have enough time to devote to human resources (HR).

The good news is you can streamline your HR processes by employing the right solutions. Professional Employer Organizations (PEOs) and Human Resource Information Systems (HRISs) are two viable options.

So, what’s the difference between a PEO vs. HRIS? And how can you determine the right HR solution for your business? Below, we’ll break down the differences between PEOs and HRIS and explain how to narrow down your selection when choosing the right tool for your HR function.

Understanding PEOs: Outsourcing HR Functions for Efficiency

A PEO is an organization that provides comprehensive HR support to its client companies.¹ For example, Omnipresent offers PEO solutions in the USA and the UK. 

The key features of PEOs are as follows:

Co-employment Arrangement

PEOs enter co-employment relationships with their client companies. As a co-employer, the PEO can handle its client companies’ HR functions, from global payroll automation to tax compliance. Meanwhile, the client company retains control over its daily operations and workforce management.

HR Support

PEOs provide a wide range of HR support services, including onboarding, training and development, compensation and employee benefits, payroll processing and tax filing, and risk management. As dedicated HR experts, PEOs can often fulfil these HR processes more efficiently than small HR departments.

Employee Benefits

PEOs enjoy economies of scale, enabling them to secure better benefits packages than individual companies. In turn, PEOs can reduce costs and increase job satisfaction levels for their client companies’ employees.

Legal Compliance

Beyond payroll, global companies must adhere to the laws and regulations of each employee’s location regarding employment contracts, minimum wage, overtime pay, onboarding and termination protocols, and tax filings. Keeping track of these laws can be a lot for a company to manage on its own. Fortunately, PEOs have the resources and partnerships to ensure top-notch legal compliance.

By outsourcing HR to a certified PEO, busy companies can focus on their core business operations and provide their employees with higher-quality HR support.

Exploring HRIS: Internal Management of HR Information

Now that we’ve discussed PEOs, let’s focus on HRIS systems. These software systems are designed to help HR teams and senior leadership teams to manage people and HR processes.²

Here are just some of the ways they can streamline your company’s HR processes.

Providing a Centralised Place to Store HR Data Securely

Maintaining detailed records is important for HR professionals. An HRIS software is the perfect place to combine and store this data in a way that’s organised, secure, and easily accessible.

Facilitating Stronger Decision-Making

By keeping HR data in one place, HR can facilitate detailed reporting and data analysis about recruiting practices, onboarding protocols, time tracking, payroll, professional development programs, promotions, bonuses, employee retention, and more.

Automating Time-Consuming Tasks

HR professionals perform repetitive roles, from weekly payroll to quarterly tax filings. Not only can these tasks be error-prone, but they can also take up a lot of time. Fortunately, an HRIS system can automate many of these projects, improving accuracy and efficiency.

Enabling More Personalised HR Service

As HR systems automate time-consuming HR tasks, HR professionals can give employees more of their attention. For example, they can address employee concerns quickly, develop exciting professional development initiatives, and take proactive steps to curate a positive company culture.

Offering Employees Access to Handy Self-Service Features

Certain types of HRIS systems with self-service features allow employees to access data about their pay stubs, tax documents, and remaining paid time off. By giving employees this access, HRIS systems can streamline HR professionals’ workloads even further.

While all HRIS systems can store data, support better decision-making, and automate repetitive tasks, some offer more specialised features than others. 

For example, tactical HRIS systems can help companies hone their resource allocation by aggregating and analysing external market data. Meanwhile, strategic HRIS systems contain advanced workforce planning features to help companies strengthen their human capital management and succession planning.

Get All of The Perks of an HRIS System With OmniPlatform

At Omnipresent, we offer our clients access to our advanced HR platform, OmniPlatform. Thanks to its great data security, this innovative HR tool can store all your employee data safely. With its intelligent automation and easy-to-use interface, OmniPlatform can also streamline many key HR tasks, from onboarding to terminations.

HRIS vs. PEO: Which One Should You Choose For Your Business?

While PEOs and HRIS systems can both enhance your company’s HR, they differ in the following ways:

• Type of support – PEOs allow you to outsource certain HR tasks to another company. Meanwhile, if you invest in an HRIS, your internal HR department will still be responsible for managing your company’s HR function—they’ll simply have helpful HR management software to enhance their organisation and efficiency. It’s important to note that the company will still be liable for tasks required by H&S laws, as well as performance reviews and management.
  
• Scope of support – PEOs provide much more comprehensive support than HRIS systems. That’s because PEOs include support teams of employment experts and HR software solutions. In contrast, an HRIS is simply an information management system. While your HRIS may come with a customer support team, it won’t include the same range of PEO services as you would get with a dedicated team.
  
• Pricing model of support – Generally, PEOs charge a fee per employee or a percentage of your workforce’s total wages. Many PEO services offer discounts if you have a high volume of employees. HRIS systems, on the other hand, typically charge an annual or monthly licensing fee, along with an additional per-employee fee.

With these key differences in mind, let’s examine when you should choose one system over the other based on the following factors.

Scalability and Flexibility: Choosing the Right System for Growth

Many companies need to expand their workforces to keep pace with their ambitious growth goals. One way to acquire more skilled talent is to hire employees overseas.³

If you decide to expand internationally, you’ll need an HR solution to support your increasing administrative troubles and compliance complexities. While HR systems are essential for building out your processes and your workforce when applying abroad, PEO services can outsource many aspects of the HR process, freeing up your business operations to focus on other things.

For example, while an HRIS system can help you manage increasing employee records, a PEO can offer third party expertise and support with payroll processing and employee benefits packages.

Cost Considerations: PEOs vs. HRIS From a Financial Perspective

Comparing PEO solutions and HRIS systems is more complex than you might think. PEOs offer a much broader range of services than HRIS systems, so they may come with a higher upfront cost. However, a PEO company may help you save money over time by:

• Eliminating your company’s need for a large internal HR department.
• Ensuring strong legal compliance, reducing your risk of incurring penalties and fees.
• Enabling your company to scale up its HR support services as needed.
• Using its economies of scale to score your employees better rates on benefits.
• Freeing up your time and attention to focus on your core business objectives.
  

Due to these benefits, a PEO company may provide a better return on investment than an HRIS system in the long run. However, it ultimately depends on your company’s needs and budget.

Implementation Strategies: Harmonising PEOs and HRIS for Success

Before you decide between a PEO vs. HRIS, you may wonder what the implementation timeline looks like for each solution.

When you partner with a PEO service, it will guide you through its onboarding process, starting with an assessment of your HR requirements and business goals. Often, PEO providers will come with their own HRIS, which could be another time and cost-saver.

If you opt for your own HRIS instead, you’ll need to set up the software, migrate your HR data, and integrate it with your other HR applications on your own. You’ll also need to provide your HR team with training to operate the new HRIS system effectively. If you need help, you can always contact an IT professional or your HRIS customer support representative.

A PEO solution can therefore be more of a time-saver if you’re looking to off-load some of the day-to-day processes and operate safely in the knowledge that you’re managing people and payroll efficiently and compliantly in each country where you have a presence.