Building the Business Case to Transition from a PEO Model
ScottMadden supported a private equity portfolio company in transitioning from a PEO-based HR model to a more scalable and cost-effective structure by defining the future-state operating model, assessing costs, staffing, services, and vendor needs, and developing a business case and implementation roadmap.
At a Glance
Annual Cost Savings
$300K+ in potential annual savings by transitioning from the PEO to a hybrid in-house and outsourced HR model.
Future-State HR Model
Defined the services, capabilities, internal roles, and third-party vendor responsibilities required to support the new operating model.
Scalable HR Delivery
Established a transition path that improved HR service scalability while clarifying the cost and operational implications of moving away from the PEO.
Challenge
A leading private equity firm engaged ScottMadden to support a portfolio company that had outgrown its professional employer organization (PEO)-based HR model and needed to evaluate a transition to a more scalable and cost-effective operating structure. While the need to move away from the PEO was clear, the client required support to define the future state HR model, understand cost implications, and determine the services, staffing, and vendors needed to enable the transition. ScottMadden was asked to develop a business case and implementation approach that would support a smooth and effective transition.
Process
- Assessed current state HR services and dependencies within the PEO model
- Identified services and capabilities required to transition away from the PEO
- Outlined roles of internal teams and third-party vendors in the future state
- Developed a cost comparison of PEO and non-PEO scenarios to support decision-making
- Advised on a transition path aligned to cost, timing, and operational considerations
Result
- Quantified potential annual savings exceeding $300,000 through transition from a PEO model to a hybrid in-house and outsourced HR operating structure
- Enabled a confident transition away from the PEO model by clarifying cost and operational implications
- Improved scalability of HR service delivery as the organization continued to grow
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