Many CFOs and fractional finance partners are under growing pressure to find smarter ways to save money, simplify operations, and improve financial forecasting. But balancing the need for cost control with the investments required for sustainable growth is no easy task.
At LBMC Employment Partners, we understand the challenges that today’s CFOs are facing. We also recognize that smart CFOs ask the right questions. They demand real value, not just promises. That’s why more financial leaders are turning to Professional Employer Organizations (PEOs) as a way to reduce complexity, create cost predictability, and drive long-term growth. As an HR solution, PEOs are a strategic and powerful financial tool.
In this post, we’re unpacking how a PEO can transform HR from a variable cost into a predictable, value-driven investment that directly strengthens your bottom line and strategic planning.
Evaluating HR Costs: Beyond the Obvious
Whether you staff it in-house or outsource it, HR is a significant budget line item. A full-time HR professional could cost $60K–$80K annually, in addition to benefits.
For smaller or entrepreneurial businesses without a full-time employee handling HR, the costs are often hidden in the time senior leaders or administrative staff divert from their core responsibilities. This “soft cost” is significant. Imagine a CFO or COO spending hours each week on payroll queries, benefits administration, or compliance research. This is time not spent on strategic financial planning, market analysis, or revenue-generating activities.
Furthermore, there are substantial investments associated with recruitment and onboarding top talent, benefits administration, and risk management. A single misstep in payroll, an unaddressed compliance violation, or a mishandled employee claim can result in hefty fines, legal fees, and reputational damage.
The Cost-Effective Financial Benefits of a PEO
For CFOs seeking to optimize HR spend, improve forecasting, and mitigate financial risk, partnering with a PEO offers compelling advantages. Here are just a few to consider:
1. Boost the ROI of Your HR Spend
FACT: PEO users report a 27% return on investment through cost savings alone.
CFOs are always looking for investments with a strong return. That’s real money that can be saved or reinvested into operations, innovation, or rewarding your team.
2. Reduce Compliance Risk
FACT: 95% of PEO clients stay compliant with changing regulations.
Navigating the labyrinth of federal, state, and local employment laws is a constant challenge, particularly for companies with multi-state operations and industries with specific regulatory requirements like healthcare. PEOs are instrumental in mitigating potential financial liabilities stemming from compliance issues.
3. Offer Exceptional Benefit Packages
FACT: 92% of workers say health benefits are important to them.
PEOs pool businesses to access employee benefits typically reserved for larger companies. That includes health, dental, vision, 401(k) plans, and more. This enables companies to offer attractive perks without incurring the prohibitive costs associated with self-administering such extensive benefits programs.
4. Lower Costs Associated with Employee Turnover
FACT: Businesses using PEOs report 10–14% lower employee turnover.
Employee turnover is a major expense for any organization, impacting recruitment costs, productivity, and institutional knowledge. PEOs are proven to help reduce employee turnover, which directly impacts financial forecasting and ensures a more stable and productive workforce.
5. Drive Revenue and Profitability
FACT: PEO clients show double the annual median growth, with a 16% increase in profitability over comparable firms not using a PEO.
A strategic PEO partnership doesn’t just save money; it fuels growth. Because of the benefits mentioned above, many PEO clients save substantial financial resources that can be redirected toward growth and innovation.
Chart a Smarter Path with LBMC Employment Partners
For CFOs and financial leaders, the decision to partner with a PEO is a strategic move that extends far beyond HR administration. It can help companies optimize spend, mitigate risk, improve profitability, and position your business to support sustained growth. LBMC Employment Partners recognizes the importance of these financial considerations. We offer a personalized approach to PEO services, ensuring a partnership that aligns with your specific financial goals and operational needs.
Learn more about LBMC EP’s personalized approach to PEOs and discover how we can help you strategically manage HR spend to drive your business forward.
