Have You Outgrown Your PEO?
For many employers, partnering with a Professional Employer Organization (PEO) is a smart early step. PEOs simplify HR administration, payroll, compliance, and benefits management, making them attractive for small and growing companies that want structure without building internal infrastructure.
But what works well during one phase of growth doesn’t always remain the best solution long term.
As organizations scale, evolve, and refine their workforce strategy, the PEO model can become more expensive, less transparent, and less flexible than many employers realize.
The question becomes:
Is your PEO still helping your business grow, or has it become a barrier to better outcomes?
Understanding the True Cost of a PEO
PEOs typically bundle services into a single invoice. While this simplifies administration, it can also make it difficult to understand what you are truly paying for.
According to ADP, PEO administrative fees often range from:
- 2% to 12% of payroll, or
- $40 to $160 per employee per month, depending on the service structure.
These bundled costs can obscure:
- Administrative fees
- Embedded commissions
- Carrier pricing structures
- Additional service charges
TriNet and other industry leaders recommend regularly evaluating pricing models, hidden fees, and long-term return on investment to ensure your organization continues to benefit from the arrangement.
Many employers never conduct a full cost breakdown, which means opportunities for savings or strategic improvement remain hidden.
Signs You May Have Outgrown Your PEO
PEOs provide efficiency, but they are designed around standardized solutions. As your company grows, those standardized frameworks may begin to feel limiting.
Common indicators include:
1. Rising Costs Without Added Value
You may notice premiums or administrative fees increasing without clear improvements in service, plan quality, or employee experience.
2. Limited Plan Design Options
PEOs often offer pre-packaged benefits programs. If you want more customization or carrier flexibility, the structure may restrict your options.
3. Lack of Transparency
If your invoice bundles multiple services into a single charge, it can be difficult to evaluate whether you’re receiving competitive pricing.
4. Desire for Greater Control
As organizations mature, leadership often wants more ownership over benefits strategy, vendor selection, and long-term planning.
The Benefits of Transitioning Beyond a PEO
Moving away from a PEO doesn’t mean losing support. In fact, many employers find they gain more control and flexibility with an independent benefits strategy.
A structured review can uncover opportunities for:
✔ Lower overall costs
✔ Customized plan design aligned with workforce needs
✔ More competitive carrier options
✔ Greater flexibility in HR and benefits strategy
✔ Improved transparency into spending
For many organizations, transitioning allows benefits to evolve from a bundled administrative function into a strategic advantage.
Why Regular PEO Evaluations Matter
Even if you ultimately remain within your PEO, conducting a periodic review provides clarity and confidence.
A thoughtful evaluation answers key questions:
- Are you paying more than necessary?
- Are your employees receiving competitive benefits?
- Does your current structure support future growth?
- Could independent solutions deliver better outcomes?
Without a clear comparison, employers may continue paying for convenience long after their organization has outgrown the model.
How Maddock & Associates Helps
At Maddock & Associates, we believe benefits strategy should grow alongside your business.
Our team provides:
- Comprehensive PEO cost analysis
- Transparent breakdowns of bundled pricing
- Side-by-side comparisons with independent solutions
- Customized strategy recommendations tailored to your workforce
As an independent, privately owned firm, our focus is simple: helping employers make informed decisions that support both their people and their bottom line.
Ready to Evaluate Your PEO?
If you’re wondering whether your organization has outgrown its current PEO structure, we’re here to help.
Contact Maddock & Associates for a complete PEO cost analysis: dave@maddockinsurance.com
Because the right benefits strategy should evolve as your business does.
