Managing HR in the Small and Medium Enterprise: The Impact of Professional Employer Organizations
Abstract
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.
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A professional employer organization rents administration (payroll, benefits enrollment, compliance filing) but does not rent judgments about whom to hire.
“However, a professional employer organization rents administration: payroll, benefits enrollment, compliance filing.It does not rent judgments about whom to hire.”
From Borrowed Competence: When AI-Driven HR Builds Startups’ People Capability and When It Hollows It Out (2026) · cites this paper as [11]
Cites
Firm Resources and Sustained Competitive Advantage
Barney, J. (1991) · Journal of Management · doi:10.1177/014920639101700108 · Cited by 48,334 · see citing works
A Resource-Based Theory of the Firm: Knowledge Versus Opportunism
Conner, K. R., & Prahalad, C. K. (1996) · Organization Science · doi:10.1287/orsc.7.5.477 · Cited by 3,146 · see citing works
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Borrowed Competence: When AI-Driven HR Builds Startups’ People Capability and When It Hollows It Out
Ben Oz, R., Granot, N., Tzabbar, D., & Tzafrir, S. (2026) · doi:10.2139/ssrn.7489654
- Authors
- Klaas, B. S., Mcclendon, J., & Gainey, T. W.
- Affiliations
- Darla Moore School of Business at the University of South Carolina.
- School of Business Management at Temple University.
- Richards College of Business at State University of West Georgia.
- Venue
- Entrepreneurship Theory and Practice
- Publisher
- SAGE Publications
- Published
- 2000-10
- Volume
- 25
- Issue
- 1
- Pages
- 107-124
- ISSN
- 1042-2587
- 1540-6520
- Cited by
- 41
- References
- 2
- Language
- en
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