How Growing Tech Startups Choose the Best PEO Partner

For tech startups, partnering with a Professional Employer Organization (PEO) can be a game-changer. Top PEO companies offer comprehensive HR solutions that alleviate administrative burdens, mitigate risks, and provide vital support in managing employee benefits.

However, finding the best PEO partner requires careful consideration and evaluation of several critical factors:

  1. Size and experience of the PEO team
  2. Scope of HR day-to-day administrative tasks outsourced by the PEO
  3. User-friendly HR, benefits, and compensation management system
  4. Employee engagement platform and app
  5. Flexibility and scalability for future growth
  6. Reputation and customer reviews

Let’s explore these key criteria that tech startups should prioritize when selecting a PEO partner in more depth.

Size and Experience of Your Soon-To-Be PEO Team

Since tech startups often need personalized support and tailored employee benefits plans, the best PEO includes well-staffed advisory and service teams that offer greater customization and guidance. Ensure that the PEO has a team of dedicated and experienced professionals who can understand your startup’s unique needs, provide expert advice to optimize your benefits offerings, and support or take over your day-to-day HR admin tasks.

For example, if your tech startup is struggling financially in our current economic climate (like most startups), your benefits advisory team may recommend focusing on your high deductible health plan during open enrollment—incentivizing election of this coverage and thus putting less financial pressure on the company.

Also, ensure the size of your current or prospective PEO team meets your needs. As you grow, you’ll need more assistance with day-to-day administrative tasks. The best PEO partner for you should alleviate workload and free up more time for your HR and leadership to focus on company goals.

On the flip side, ensure your HR services team isn’t so large that you become “another number in the crowd.” Top PEO companies have representatives that are dedicated to your specific business and a go-to human resources business partner who can provide invaluable guidance.

Scope of Outsourced HR Administrative Tasks

Tech startups can benefit significantly from outsourcing various HR administrative tasks, allowing them to focus on their core responsibilities. When considering a PEO, evaluate the extent to which they can handle tasks such as payroll processing, risk management, compliance, and employee benefits-related queries. An effective PEO should streamline these administrative processes, saving time and resources for your startup.

When meeting with your current or prospective PEO, pay careful attention to the credentials of the team members who attend your introductory calls. Ideally, you’ll want a service team that specializes not just in benefits best practices, trends, and administration; payroll; total rewards; and risk management, but also understands compliance in the states where you may have employees reside. With today’s distributed workforce, it’s essential your PEO services team understands the best practices for each area that impacts your HR operations.

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User-Friendly HR, Comp, and Benefits Management System Built for Tech Startups

Efficiency, transparency, and data insights are vital when managing HR processes, especially in the fast-paced world of tech startups. The best PEO for your company will offer an intuitive and easy-to-use HR, compensation, and benefits management system. In addition to centralizing all employee-related data, a robust system should enable self-service options for employees, provide real-time insights, and generate reports that CEOs, founders, board members, and investors would find valuable. Seamless and transparent access to data ensures better decision-making and greater oversight.

It’s worth noting that many PEO service providers have a traditional focus only on HR administration, benefits, and payroll. However, a new breed of PEO partner will also help guide your company toward strategically addressing the entire spectrum of total rewards and provide tools to help you manage all aspects of employee compensation. This additional support could be a game changer in helping you better manage your people spend and retain top talent.

When more than 75% of your total spend goes toward compensating and caring for your people, it’s vital you have access to your real-time people data to show ROI for your next round of funding. Top PEO companies won’t load the raw reports and data interpretation onto your plate. They’ll help you create personalized dashboards and insights that can be quickly accessed and utilized to help guide your people strategy, board meetings, and company goals.

Tools That Increase Employee Engagement with Benefits and Total Rewards

Whether you currently have internal or outsourced HR, your startup has spent a fair amount of time trying to understand the myriad of benefits carriers to provide the lowest cost plans that still meet your employees’ needs. Now, you need to ensure your employees actually engage with those benefits. One of the biggest asks from successful tech startups is that their employees have a convenient way to access their benefits and compensation information.

Top PEO companies will offer highly-rated mobile apps for benefits that give easy access to employee medical, wellbeing, retirement, and compensation information in an easily-digestible design. The app should also be a resource for you to communicate HR updates directly with employees, helping you more easily drive awareness, promote programs, and announce changes.

Flexibility and Scalability for Future Growth

Tech startups have the potential for rapid growth and change. The best PEO partner for your company should accommodate and support such an evolution. Evaluate the PEO’s flexibility to adapt to changing circumstances, accommodate growing headcounts, and address new compliance requirements. A PEO with scalable solutions and a track record of working with tech startups during different phases can be an excellent long-term partner.

Also, ask during the consultative period what the process looks like to transition off of a PEO. Top PEO companies will not only create a smooth transition experience when you start services with them but also when you ultimately decide to move on from the PEO.

If your prospective PEO doesn’t have a clear transition plan, consider exploring other alternatives to ensure your entire lifecycle with the PEO runs efficiently.

Outstanding Reputation, Retention, and Customer Review from Other Tech Startups

Top PEO companies who specialize in servicing tech startups should have high retention rates and many positive reviews from current and previous clients. Take the time to research and evaluate the PEO’s reputation and customer reviews. Visit the PEO’s website for testimonials and client success stories and see if what other clients have said is relevant to your needs. Seek feedback from other tech startups or businesses in your industry to gauge their satisfaction with the PEO’s services. Their experiences can provide valuable insights and highlight any potential red flags.

Don’t know other companies who have previously used your prospective PEO? That isn’t always a bad thing. You can rely on review sites such as G2, Capterra, and TrustRadius to find honest reviews and detailed experiences with the PEO. As a pro tip, don’t be put off by a few “negative” reviews. Even the best PEO will have clients who didn’t have a 10/10 experience.

During the consultative process, ask your PEO representative about the experience and gauge their response. In many cases, top PEO companies will welcome constructive feedback and improve their platform, guidance, and services based on this feedback. This should only be viewed as a positive. It shows that the PEO is truly there to meet the needs of ever-evolving tech startups.

The Best PEO for Your Tech Startup

Selecting the right PEO partner is crucial for tech startups looking to offload HR administration responsibilities, optimize employee benefits offerings, and ensure compliance. By considering factors such as the size and experience of the benefits advisory and HR service teams, outsourced HR tasks, user-friendly management systems, scalability, and reputation, tech startups can make an informed decision. A well-chosen PEO partner can provide invaluable support and guidance as a startup navigates its growth trajectory, freeing up time to focus on innovation, talent retention, and strategic planning.

If you’d like to experience what dedicated service feels like from the most referred PEO in tech, explore our Sequoia One PEO today. Interested in discussing our PEO offerings in more depth? Schedule a meeting to talk with our experienced benefits advisors now.

Scott has 20+ years of knowledge when it comes to strategic PEO best practices. Before Sequoia, he held a sales leadership role, leading HRO/PEO teams for one of the largest HCM companies in the world. Over the course of his career, he has helped countless seed-funded and publicly-traded companies strategize and find solutions to better understand, manage, and promote their total people investments.

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