An Inside Look at How PEOs Have Helped Businesses During the COVID-19 Pandemic
The COVID-19 pandemic has created unprecedented economic challenges for almost all employers, with small businesses being hit especially hard. Some industries were hit harder than others—consider restaurants compared to professional services, or hospitality and tourism compared to banking. But no matter what industry you work in, all businesses needed to make changes and adapt to new laws, regulations and local and state mandates. All employees were impacted in some way, bringing people management practices front and center among the priorities that business owners needed to address.
The National Association of Professional Employer Organizations (NAPEO) recently conducted a study on the early impact that Professional Employer Organizations (PEOs) like Oasis had on business outcomes for their clients. Due to the COVID-19 pandemic and its ongoing effects, it is not yet possible to assess any final effects on small businesses or the economy as a whole.
A PEO provides human resource (HR) outsourcing services to client companies to help them handle many of the time-consuming administrative tasks associated with managing employees, such as payroll processing, employee benefits, legislative and regulatory compliance and risk management. Business owners work with PEOs to take certain back-office HR functions off the business owner’s plate so they can stay focused on what’s most needed for their business to be successful.
NAPEO’s study, titled “How PEO Clients Fared in the First Months of the COVID-19 Pandemic: A Comparative Analysis,” found that business owners who worked with a PEO were:
- 119% more likely to have received a Paycheck Protection Program (PPP) loan.
- 72% more likely to have received PPP loans in round one of government funding.
- 91% less likely to still be temporarily closed.
By receiving timely guidance and expertise from a PEO, business owners were more than twice as likely to receive PPP loans, with 98% of PEO clients receiving successful PPP applications. As Greg P., an Oasis client from the Financial Service sector, said: “Great news! I just heard from my local bank and they have approved my SBA PPP loan. I just wanted to thank you for all your help. I know you went out of your way to help me. So thank you very, very much.”
While PPP funds provided an important short-term prop-up for many businesses, the longer-term ability to survive depends on the ability to be open for business. As of late summer 2020, almost all businesses across the United States were permitted to be open in some form. Whether a business is actually open or not reflects its ability to adjust to the changing circumstances and its agility in meeting the external requirements related to public health and safety. According to NAPEOs study of PEO clients, 1.3% were temporarily closed on July 31, 2020, compared to a national rate of 14% of small businesses that were temporarily closed during the same time period.
As Peggy A., an Oasis, a Paychex® Company client from the Eye Care sector, said: “I want to thank you and your entire staff for all your help throughout this whole chaotic, stressful process. It hasn’t been easy for any of us and I appreciate all your hard work.”
Further research has proven that small businesses that work with a PEO can benefit from cost savings of up to $1,775 per employee, 20% less employee turnover, lower health benefits costs, and significantly fewer concerns related to hiring, retaining and motivating employees.