6 Ways to Optimize Your Performance Management Processes with a PEO

performance management reviewCan a PEO really help with your performance management process? As a small business owner myself, I see clear value in using a PEO to reduce administrative workload for tasks like payroll, taxes, workers’ comp, government regulations, etc. 

However, I could not at first understand how a company that did not interact directly with my employees could possibly help me to evaluate and manage them. There are many things I do to keep my workers motivated, supervised, evaluated, and essentially happy working in my business. What could an organization outside of my industry and company culture possibly contribute to a performance review?

I'm glad to say that I now take a very different perspective. In fact, I'm a true believe in the power of PEOs to support small business performance and employee outcomes. 

I'd like to share with you 6 reasons I changed my mind. 

1. People Management

Good management starts with investing in employees. One of the ways a PEO helps you accomplish this is by keeping fundamental management objectives front of mind. To help employees do their best work while also avoiding burnout, managers should:

  • Know each employee’s strengths and weaknesses
  • Set and monitor growth and progress goals 
  • Acknowledge individual initiative, achievements, and impacts.

These practices are critical, yet it is easy for business owners to fall behind in executing them. There simply are not enough hours in the day for an owner to accomplish all of the tasks required in every facet of the business without support. 

A PEO frees you up to focus on critical people management opportunities by providing back office support for the administrative tasks that eat up your time.  

2. Strategic Development

Successful strategy development and implementation separates successful companies from failing ones by helping you look ahead, identify opportunities and course corrections, and keeping your day-to-day business functions aligned with your long-term vision. 

PEOs help you anchor your employees to your business strategy by clearly communicating business objectives and goals. This helps employees see how their roles contribute to achieving those objectives, providing motivation and support. 

3. Improved Outcomes

Working with a PEO is one of the fastest ways to make a measurable difference in performance outcomes. According to the National Association of Professional Employment Organizations (NAPEO), small businesses that work with a PEO are 50% less likely to go out of business, and they grow 7-9% faster. They do this by providing support in the form of business administration help, payroll and benefits, software platforms, advisory services and much more.

For performance management in particular, PEOs can help you keep employees on target with performance goals and expectations. In addition to providing a software platform and employee portal to track progress, the PEO can help you take a close look at key metrics, monitor goal progress, and make adjustments to policies and procedures as needed.

4. Performance Management Processes

PEOs can partner with you in an advisory role to help you update, streamline, and optimize your performance management practices to bring them in line with current recommendations. Here are a few of the areas they can support:

Workforce Planning

Workforce planning is often one of the first real strategic conversations departmental managers have with their PEO partner. Previously, managers may have focused on individual roles and job skills. A workforce planning strategy shifts the focus to big picture analysis of talent needs and gaps, cross-functional skill building, and long-term workforce requirements. It is critical that the PEO representative has a solid understanding of the strategy, can clarify when needed, and can facilitate decision-making. 

Management Processes

As part of your workforce planning strategy, your PEO can help you evaluate how changes will affect various groups and stakeholders. They can also help you determine what communications need to be in place to facilitate awareness and acceptance. PEOs can guide managers on how and when improvement opportunities should be brought to the employees’ attention so they can strengthen their skills before their performance review.

You can also use performance review calendars, progress indicators, and alerts to keep employees engaged with their goals. Managers can use these tools to provide timely reminders, check in with employees regularly, and provide support where needed.

Performance Reviews

The annual performance review as it has traditionally been implemented simply doesn’t work. Yet, far too many organizations still make this an annual “check the box” exercise. Peos offer solutions that help managers implement more effective review processes such as 360-degree feedback, informal check-ins, and more frequent formal reviews. 

5. Goal Planning

Employees don’t always know how to create effective goals. The goals they set for themselves may not be clearly developed, or they may not support the strategic goals of the company. A PEO can help you guide employees to make their goals SMART: 

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-bound

Establishing goals quarterly and taking things one step at a time can make a critical difference in outcomes for your employees.  By starting with simple goals, employees will see immediate progress, build confidence, and gain momentum. 

The PEO can also help you implement systems to communicate and track objectives across the organization using their HRIS platform. Some platforms already have hundreds of preloaded SMART goals, which employers and employees can browse to help them focus and narrow down objectives. Managers also have access to reports and analytics that track objectives by category, employee, teams, and more. They can use this data to help employees stay on target and make course corrections sooner. 

6. HRIS Platform

If you are still running your small business with Excel, I can testify that an HRIS platform will change your life. Most PEOs give you access to their technology platform and allow you to tweak your specifications depending on the size and objectives of your company. These may include:

  • Compensation management systems
  • Analytics and reporting
  • Performance management
  • Learning and development
  • Talent management and recruiting
  • Business intelligence

With the right HRIS, you can align the efforts of your workforce to your business strategy and build your performance management program around specific desired outcomes.


Find Your PEO Partner

Let’s return to our original question. Can a PEO really help you with performance management? Despite being initially skeptical, I have to say that working with a PEO made me a true believer. PEOs can take the guesswork out of performance management with advisory services, software tools, and implementation support. Focusing on these areas will ultimately increase the impact that performance management has on your business outcomes.  

When you’re ready to find your PEO partner, start with our PEO Matching Tool! Our tool offers fast, free PEO comparison based on your unique requirements. See how the right PEO can transform your business this year!