Getting on board a Professional Employer Organisation (PEO) or an Employer on Record (EOR) is one of the easiest ways a foreign MNC can launch operations in new markets. However, what is overlooked is how this big boardroom decision impacts your internal human resources team. For one, how are you, as the leader, going to make this unique collaboration work?

Outsourcing your HR team’s entire employee dossier to a strange PEO company in a new country can be tough and unsettling. If not managed well, it can also lead to quick fall-outs on both ends. To prevent such unfortunate events and enhance your team’s faith in the PEO company, both parties should dexterously pen agreements that help them work together seamlessly and without interruption; even if your HR manager quits.

People Management under a PEO
HR teams pride themselves in people management. That’s the cornerstone of their existence within an enterprise. Trusting a PEO to run your human capital needs takes a huge leap of faith and it can be done by sharing controls by both the client and the PEO. That means, hiring can be finalised by the client while the onboarding and documentation can be done by the PEO. If you are operating from a new country, your PEO can assist you by sharing SOPs concerning local domestic hiring. As the PEO only “acts” as the ‘Employer on Record’, the client actually deals with the employee directly.

Organisational Culture & Values
At a time when culture is highly people-oriented and deeply linked to organisational success, it is not surprising why HR managers would have reservations around the subject with the entry of an external partner. But the bright side is, PEOs don’t dabble in your internal affairs – whether it’s culture, inclusion or values. They silently work in the background, ensuring payroll and taxes are filed on time. They also make sure your employees get their work visas, renew them when they overdue, and protect them from statutory complications.

Dependency Issues
With the coming in of PEOs, employees themselves are bound to wonder who they should be reporting to. Consequently, this rattles up the HR department too, as confusion reigns on who is supposed to handle what. For example, if the employee’s work permit is about to expire, does the employee inform his/her HR or get in touch with the PEO? Who should they get in touch with for tax exemptions and Benefits-in-Kind issues? Well, if you are drawing a contract with a PEO, the rule is simple: day-to-day affairs are all managed by the client, while the PEO just executes what the client tells them to.

Handling Sensitive Information
PEOs largely help companies manage contract workforce in different locations. Keeping track of their diverse backgrounds and the visas could be cumbersome. Could your HR team trust a PEO to handle employee data carefully? Will they maintain the confidentiality that the client keeps? To answer this question, it is very important to understand the rules and regulations that apply to both parties when they get into a formal contract. As per the contract in such cases, all paperwork is done jointly and clients always have an upper edge when it comes to data and security. PEOs are expected to have insurance for all the liabilities and are required to provide clients with compliance reports as well.

Domestic Compliance & Accountability
For the HR team, hiring PEOs takes away their chance to catch up on regulatory formalities and statutory laws of the country where they have hired the workforce. The problem compounds itself when the question of accountability arises – is it your team that should take the blow or your PEO? For the uninitiated, PEOs act as legal entities of your company in the country where you set foot in. That means that PEOs are wholly responsible for whatever compliance or statutory issue there may be with your company.

Quality Management Systems
As PEOs operate with high confidentiality, the systems and processes they use are lean and in accordance with ISO standards. Being a trusted source of service, they are subject to periodical reporting and communication so that transparency is maintained. At Propay Partners, we use ISO90001 systems to maintain superior customer service and reliability.

Hiring a PEO will fuel your HR’s capacity to achieve top-speed operational efficiency even when they are dealing with auxiliary workforce. As PEOs focus on lower manpower volume and hiring for key positions in new investment territories, it will not affect overall HR function as per popular belief. Getting your team to work with a PEO partner can be easy and satisfying as the contract will be your go-to guide.

For the last twenty years, we at Propay Partners, have been serving several multinational companies as a reliable PEO that understands all their employee tax and payroll needs to the tee.

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