Cheaper isn't always better: why money shouldn't be your #1 priority when choosing a PEO
- Last updated: October 16, 2024
Less money spent on a PEO means more to invest in your operations, right?
Cutting corners on your PEO is not the smartest business move, especially when expanding to a foreign country, far away on the African continent. Upfront, this might save you money – but in the long, mid and even short term, you might just regret your choice. Here are the dangers you expose your company to when you make spending your top consideration when choosing a PEO in Africa – and what factors you should be looking at instead:
1. Price v/s Value provided by your African PEO
Often, when you pay less, you also receive less.
PEOs worldwide are engaged in a “race towards the bottom”, all eager to slash prices – often at the expense of services and value provided to you, the client. Well-established PEOs, on the other hand, tend to charge more, because of their years of experience and the wider range of services they provide. So, while you do spend more, you also get more value in return: both in terms of the range of solutions provided and the client care you receive.
PEOs like Africa HR Solutions, for example, offer you a single point of contact, which means no endless redirections and long wait times to get a simple answer. Client service like this is a precious time-saver for busy executives who want the freedom of focusing on their company’s operational growth.
Bare minimum services and client care can only get you so far before they are stretched to their limits – and need to be upgraded.
Remember: investing in your PEO also means buying yourself peace of mind and convenience.
2. Trust in your PEO
Trust can’t be bought…or can it?
Well-established PEOs like Africa HR Solutions offer a priceless resource to companies like yours: trust. When you are working with a PEO, you are trusting them with crucial employee functions, which often includes payroll.
How can you be sure that a lesser-established, lower-priced PEO will not pocket your employees’ intended salaries? How can you know for a fact, that part of the amount will not be diverted?
When working in a foreign country, you put yourself at a disadvantage when you do not choose vetted PEO providers. There are unscrupulous PEOs who attract foreign clients with lower prices, and who don’t deliver on the promised services.
Working with a well-established PEO at a slightly higher price point will certainly save you all that trouble and money. Compared to money loss and even theft, investing in a good PEO can be the more profitable option for your company.
3. Compliance
How willing are you to pay non-compliance fines?
Or to have your employer reputation ruined?
When choosing a lower-priced PEO, you may be agreeing to the risk of not being 100% compliant with local regulations. Local regulations are always changing, with old laws being replaced and updated, and new ones being introduced, each with their own timelines, and their own target audiences. This is something that PEOs need to always be ahead of to protect you, the client, from fines, costly and time-consuming trials, and from a soiled reputation.
But when your main consideration is cost, you may be sacrificing this vital aspect of doing business in a foreign country.
On the other hand, when you choose a PEO like Africa HR Solutions, which guarantees 100% compliance in all the African countries we serve, you essentially place a shield between your company and any non-compliance risks.
4. Employee Satisfaction with your PEO
Who is the first affected by a poor PEO provider: the company itself, or the employees?
Employees have a lot to lose when your company partners with a poorly performing PEO provider. Why? Because they are the first ones to feel the effects of an ill-administered payroll system, simple payroll miscalculations, or incorrect benefits administration. Considering that only 2 payroll mistakes will send up to 49% of employees on the search for a new job, and that hiring new employees is costlier than keeping existing employees, choosing the wrong PEO could actually cost you more than you think.
Even beyond such extremes, a poorly performing PEO could simply ramp up employee dissatisfaction – and bring down productivity all at once – which is sure to impact your company’s performance.
5. Technology
In 2024, while operating in one or multiple foreign countries, it is crucial for your company to have a modern HR system, complete with digital payroll interfaces. A lower-end PEO provider may lack access to the modern technology your company needs to keep up with the hectic rhythm of HR processes and calculations. Besides, mistakes will be more frequent when using dated technology and processing time will be much longer – not to mention: you will not have access to highly practical features such as an Employee Self Service platform.
6. Scalability with your PEO
Your Organisation’s HR requirements will change as it expands. Selecting a PEO with a capacity for growth guarantees that the collabouration can adjust to your evolving needs. Selecting a PEO only on the basis of price may prevent you from scaling your business effectively, which will result in higher expenses down the road.
What should be your top 3 considerations when choosing a PEO?
If not price, what factors should you actually consider when choosing a PEO? These 3 considerations are a great starting point for any business:
1. Trust
Check the PEO provider’s credentials: look into their portfolio of clients, their past projects, case studies, testimonials and other relevant information that proves the PEO provider’s claims.
2. Technology
Find out which type of technology a potential PEO provider uses – and how far it is scalable for your business in the long run.
3. Range of services
Does this PEO provider also offer cross-border payment services? How about medical insurance or immigration assistance? Find out which ancillary services a potential PEO provider offers to determine how compatible they may be in the long run.
Looking for a vetted, modern, and highly competent PEO provider in Africa?
Africa HR Solutions is the PEO you need! With over 14+ years of experience working with NGOs, Fortune 500 companies and startups in Africa, we offer modern solutions to all your HR needs. Find out more about how we can help you and why you can trust Africa HR Solutions: get in touch with us now!