Trends & Innovations
The PEO industry has never been static. Things are always happening—some good, some bad, some indifferent.
When enough of the same type of things are happening at the same time, it’s a trend. Right now, a lot of consolidation is happening in the PEO space.
This recent consolidation trend began after the 2008-2009 recession, spurred by increasing regulatory burdens placed on small business, the extensive amount of capital available combined with the PEO revenue model’s appeal to investors, the passage of the Small Business Efficiency Act in late 2014, and NAPEO’s industry visibility initiatives, among other things.
This ripe capital market for PEOs is not limited to funding consolidation. The strong economy, robust business growth, and low interest rates are continuing to create an abundance of capital. With it comes new business models, new growth plans, and new ideas for how technology is used.
That brings us to the increasing role of technology in the industry, which is also driven by client expectations. PEOs have had client and employee portals for self-service for a while, but with the consumerism of IT, the widespread use of apps, and the advent of the “customer experience,” PEOs are working to meet these new expectations by developing integrated technology platforms and rethinking how they use technology.
As these trends continue, they contribute to stronger PEOs and a stronger industry, which leads to more robust operational capabilities, more freedom to try new things, and an influx of ideas, which in turn leads to innovation.
However, it’s not automatic. The current environment can engender innovation, but PEOs have to pursue and nurture that creative spark. This can come from your staff, your clients, your peers, your competition, and even disruption.
A foretelling of things to come may be the fact that the PEO industry is continuing to mature as the generations of the digital age are becoming part of the business landscape.
The best part is that trends, innovations, and what comes next are greater than the sum of their parts. They can build on one another exponentially, and that can lead to a transformation of the industry.