Managing HR in the Small and Medium Enterprise: The Impact of Professional Employer Organizations

Due to their limited size, many small and medium enterprises (SMEs) cannot justify full-time HR professionals in their organizations. Thus, the complex and time-consuming nature of many HR activities can result in a significant drain on existing managerial resources. Professional employer organizations (PEOs), however, offer SMEs an alternative for handling their workforce by providing compensation programs, regulatory compliance, and other HR-related services. This study examines the satisfaction levels of 763 customers of one large PEO. Results show that firm growth, past HR problems, workforce size, contractual detail, service representative-client relations, value congruence, and overall PEO usage are significantly related to managerial satisfaction with PEO services.