5 Factors in Building a Total Rewards Strategy with your PEO

employee rewardsTechnology, engagement, leadership, analytics – all these buzzwords and more draw a picture of the rapidly changing landscape of Human Resources.

In this new world, you struggle to align employee and employer goals, comply with new regulations and benefits pricing, and reduce risk and costs. But, this evolving landscape is clouded with concerns about talent recruiting, development, and retention - as examined by Jennifer Barton, SPHR in a recent presentation before the SHRM Annual Conference. Without a total rewards strategy, the struggle is uphill.

Against this landscape, the Professional Employer Organization, or PEO, asserts its growing strength. And, while the PEO succeeds by lightening your Human Resources management burden, you need to work with the PEO on building a total rewards strategy that addresses the special issues involved in co-employment.

1. Branding

Your task is to attract, motivate, and retain employees. Chief among the factors is the company’s brand. It needs to be a place worth working for, a brand people can believe in, and a set of values they want to buy into.

However, one aspect of that branding is the employer-employee image it projects. Every business gives off an aura, so to speak, that advertises its reputation for a blend of money, benefits, and opportunities.

2. Compensation

Money attracts talent and even steals it away. But, for most operations, “money” no longer simply means a base pay rate. Real talent works differently than it once did. Any compensation plan needs room for variable awards and premium pay.

Managing compensation and keeping within regulatory compliance may seem more difficult within a PEO arrangement, however the opposite is true. The PEO works for your company, and is there to help you structure and leverage a competitive or leading compensation plan.

3. Benefits

The PEO will offer you the cost savings and economy of volume discounts on group employee benefits. Its broad and deep HR professionalism selects plans and enrolls employees to their personal benefit and regulatory compliance.

You can also trust the PEO to administer paid time off, leaves of absence, and risk management. That puts your HR function at arm’s length without guilt. As they administer the life/work policies, you exempt your office and the business from charges of subjectivity and discrimination.

4. Recognition

Rewards and recognition reconcile the disconnect between employee expectations and employer perceptions. Recent feedback indicates that employees feel undervalued with respect to their realized talent.

The PEO discipline automates performance evaluations regularly and formally to link goal setting with achievement. In fact, the PEO system can drive management to honor its obligations to employees and develop a profile for individual growth and advancement.

As it administers the employer’s tasks, it also identifies skills and abilities. It sorts and prioritizes them into a talent pipeline and succession plan. It, thereby, structures opportunities needed and defined by you.

5. Strategy

A PEO relationship can be often task focused, delivering as it does on the administrative functions. But, if you want to make that a more strategic partnership, you have to ask and answer some key questions:

  • What key performance indicators serve the business’s objectives?
  • How are the KPIs measured and communicated?
  • What skills drive your business and what behaviors demonstrate those skills?
  • How do you assess and encourage such behaviors?
  • What specifically identifies high potential employees?
  • How does your training link the potential and the performance objectives?


A strategic recognition program is communication-intensive. You are accountable for keeping talent concerns to the front of your discussions. This means you have to plan the strategy, justify its framework, and determine the PEO’s sustaining role. A coherent and effective rewards strategy only works with a strong foundation of communication and follow through with your PEO company as well as your employees.