What’s the Difference Between HRO, PEO, and ASO?

Comparing apples to apples

one green apple

There are a lot of confusing acronyms in the marketplace today, and though some people use the names interchangeably, there are significant differences between each that we will go over in detail below:

  • Employee Size
  • Customization
  • Technology
  • Employment relationship (co-employment)

Human Resources Outsourcing (HRO)

  • An HRO client will typically have 75 or more employees with average size having 300 to 500 employees (Corban clients typically have between 75 and 2000 employees).
  • Corban customizes their business processes around the client and develops “best practices” for compliance and maximum efficiency. Our solutions build in compliance and streamline for efficiencies.
  • Corban’s advanced technology platform simplifies the HR, Payroll and Benefits complexities that companies with 100 or more employees encounter on a daily basis.
  • Corban’s 98% client retention comes from our “Raving Fans” customer service. We don’t have “Account Managers.” Our professional HR Managers average 15 years of experience with a client to HR Manager ratio of 5 to 1 (not 40 or 50 to 1 like a traditional ASO or PEO).
  • There is no co-employment relationship with Corban OneSource. You maintain control of your employees, as well as, all of the potential financial benefits that are due to your company (Tax Credits, Lower SUTA Rates, Lower Workers’ Compensation Rates, etc.).

Learn More with Our HR Outsourcing Guide >>

Administrative Service Organization (ASO)

  • An ASO is identical to a PEO but is referred to as an “insurance carve out.” Most PEO’s have an ASO option where they provide all of the same services and technology, but you use a different worker’s comp. and benefits plan with no co-employment relationship.
  • All of the same potential limitations (employee size, technology, customization) as a PEO, but without the co-employment relationship.
  • We find ASO solutions fit well with companies that have between 40 and 75 employees, as they have time to establish their own lower SUTA rate and can leverage a “large group” status for health benefits.

Employee Leasing (PEO)

(If you are looking for a PEO solution we recommend: EvolveHR.)

  • The average size client in a PEO has 19 employees (Source NAPEO, Financial Ratio Survey).
  • A PEO uses one business methodology that you adapt your business process to (a box where one size fits all).
  • If the PEO has a master healthcare plan, then you pick from their plans which take into consideration 100’s of other companies other than yours. They can not customize the plan for your company. For a company with 50 employees that has an unhealthy group and their rates are high, this can translate into significant savings for them.
  • You use the PEO’s Workers’ Compensation plan. If there is a decrease in the Workers’ Compensation rates in your state, it is up to the PEO to pass on those savings to you or keep them for theirself. If you are a smaller company and have significant Workers’ Compensation issues, using the PEO’s plan can be a real benefit.
  • The entire technology platform PEO clients use is specifically designed for companies that would be a good fit for a PEO (have an average of 19 employees). The technology is very limited in nature as a 19 employee company will not have the need for a robust technology platform that is required of a company that has over 100 employees. State and Federal Labor laws change as your company grows, so compliance becomes increasingly important and technology starts to become a significant aspect of compliance.
  • A PEO has a co-employment agreement where you lose your FEIN identity and assume the PEO’s. This can sometimes be good if you are able to get a lower SUTA (State Unemployment) rate, but bad if you decide to leave the co-employment arrangement (your company grows) as your SUTA will “reset” to the states mandated amount, which will take 10 consecutive quarters to start decreasing.
  • The average “Account Manager” will have 40 to 70 clients they manage. This is fine if you have 20 employees and there is little need to have your HR Partner know a lot about your business. As soon as your company gets to 75 or more, it becomes increasingly important to have an HR Partner that really knows your business and the risks associated with it.

“As we grew, we found ourselves needing more than our PEO could provide. We needed better technology and someone that understood our business and challenges better. We were at 130 employees, so it was like we were trying to put 130 lbs. in a 19 lb. sack.”

CEO, 130 employee Distribution Company

Find out which plan works best for yo