A Business Owner’s Guide to the Pros and Cons of Employee Leasing


Did you know that over 157 million Americans are part of the country’s workforce? Each one is going to fight tooth and nail for every position available.

If you have no time to screen employees because of the nature of your business, employee leasing is a good choice. But without prior experience, you won’t know the pros and cons of this practice. You might end up getting more than you bargained for if you don’t prepare.

Don’t feel discouraged yet.

With this guide, you’ll learn about the pros and cons of leasing employees. That way, you’ll have an idea whether it’s worth your business investment. Read on and find out more:

What is Employee Leasing?

This is the process of recruiting employees using a third-party contractor. This process is a great fit for small businesses because it’s often effective and viable as an option to meet your firm’s requirements.

Leasing employees has its set of advantages and disadvantages. In the succeeding sections, you’ll see how this process benefits your business. These are the primary reasons lots of companies across the country rely on this method.

Benefits of Employee Leasing

The advantages of leasing employees center around borrowing the expertise of more experienced recruiters. It means getting cost savings and other legal protections. Here are some things you might find desirable:

1. Less Business Liabilities for Certain Tasks

When companies hire new employees, they must do some necessary routine tasks. Some of these tasks include:

  • HR management
  • Paying taxes
  • Workers’ compensation
  • Benefits administration
  • Payroll

Hiring a third party to help lease employees will remove these liabilities from you. It’s because these will become associated with this organization instead.

2. Your Business Gains an Instant Framework

Structuring your HR department from the ground up is almost impossible. After all, small businesses won’t have enough funds to do it. But if you lease employees, you’ll get the means of installing an instant framework.

This framework caters to solutions that make it more accessible as required. With this, your business can enter the market with more ease.

3. The Services have Predictable Prices

When you lease employees, the company giving you the service will charge a flat rate. Once you’re aware of these costs, you can include them in your business framework. It will give you a better way of calculating your annual expenditures.

As time passes, the contracted rates will start fitting well into your business. It will give you convenience and access to your needs. With this, your business can move more confidently toward your goals.

4. Employees can Get More Advantages

The leasing company has the means of accessing better advantages for its local employee base. This makes it a great recruiting tool for directing inexperienced but sound people to your business. With the third-party rife with techniques, you can retain employees better.

This applies even when you’re a start-up business. It’s because the employees offered by these services go beyond the usual competitive salary structure most companies offer.

5. Advanced Performance Management Support

If you partner with an active agency, you’ll get invaluable support. It’s because they manage your employees’ performance using scheduled programs related to retention and review. This means these people will get better in time.

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Most companies hiring employees won’t request this active management style. But with a third-party provider, you and your employees will get unbiased feedback. As needed, this company can give development and training support to everyone.

Drawbacks of Employee Leasing

As great as a professional employer organization (PEO) is, it comes with some disadvantages. These often relate to commitment and communication. But in most cases, exerting more effort as a company can offset these drawbacks.

Here are some of the things you must consider:

1. Less Employee Control

Because the leasing agency hired these employees, you won’t have as much control over them. In most cases, they will perform their functions at their convenience. This means you won’t have the ultimate authority in their workplace, even as the business owner.

You only have partial control over your employees’ functions. This means you lack the authority to fire and hire employees. The leasing company will transfer these issues to the customer’s worksite.

2. Lack of Communication

When you lease employees, you add another layer of bureaucracy to the employment procedure. Whenever employees have queries about benefits and other HR-related issues, they will talk with the leasing agency instead of your company. Take note, you won’t have this problem if your company has a strong and reliable working relationship with the leasing agency.

The bad news is that in most cases, the relationship isn’t as strong. That means a communication gap will often exist between your leased employees and your business. This can become a widespread problem, especially when the majority of people working in your company come from leasing agencies.

3. Commitment Issues

Do you intend to create a long-term working relationship with an employee? If so, leasing employees isn’t as desirable. It’s especially when you want your hired employees to become long-term investments.

Most programs related to leasing can maintain a long-term relationship between you and your employees. But the drawback is that most will only give temporary services. This makes employee deployment programs difficult to implement.

4. Impersonality

If you get employee leasing agencies, you won’t give the same level of personalized solutions to these employees. Typically, you’ll end up treating employees hired by third-party companies differently. That’s why lots of employees avoid getting hired using a leasing program.

The good news is that it isn’t a certainty. Regardless, this happens often enough to warrant your attention. Check out this page about PEO workers comp to learn more about what it can do for your situation.

Start Employee Leasing Today!

These are the pros and cons of employee leasing. Use this guide to weigh your options and see whether this process is worth your company’s time and resources.

Of course, there is a lot more to learn when it comes to handling your employees and running your business. To discover all the tips you need, we encourage you to continue reading our other guides right here, today.

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