PEO + HR: A Powerful Partnership For Nonprofits

Professional Employer Organizations (PEOs) are often viewed as a comprehensive HR solution, but they can’t replace the human connection, strategy, or cultural insight of a fractional or in-house HR team. While the PEOs typically provides standardized solutions such as payroll and benefits, they may create a disconnect between company culture and employee support.

Understanding the Limitations of a PEO-Only Approach

PEOs offer immense value when it comes to reducing benefits costs, streamlining compliance and operations, but there are some critical areas they don't address:

• Limited ability to customize performance management systems to reflect real values

• Lack of direct, empathetic employee interaction during onboarding or leave processes

• No capacity to support culture-building, DEI, or leadership development work

• No dedicated point of contact to interpret or apply nuanced internal policies

• No time or capacity to manage the PEO relationship

  
  

The Strategic Role of HR Professionals

That’s where a strategic HR partner makes all the difference. HR professionals don’t compete with PEOs—they complement them. They manage the strategic aspects of HR, including team onboarding, cultural alignment, internal communications, and policies that reflect the organization’s mission and values.

For mission-driven organizations, balancing compliance and culture is no easy task. Here's how one nonprofit found the right formula—by combining a PEO and collaborating with a values-aligned HR partner.

Nonprofit Success Story: How an International Nonprofit Scaled with a PEO + Strategic HR Partner

Organization Profile: Fully remote, multi-state nonprofit with international operations and a fast-growing team with more than 50 employees.

The Challenge: Navigating complex multi-state and international compliance, international travel, and benefits administration

The Solution: With Kiwi Partners' guidance, the nonprofit selected a PEO to handle:

• State registrations and tax compliance

• National benefits plan administration and renewals

• Leave compliance through a centralized portal

  
  

The HR Gap: The PEO provided the infrastructure—but not the human connection.

• Staff still needed clear guidance on benefits and leave

• Leadership needed strategic support and culture alignment

Kiwi’s Role: As a trusted HR partner, our team:

• Led ongoing HR strategy and culture work

• Provided employee-facing support 

• Liaison between PEO and staff, ensuring human-centered communication

• Freed up leadership to partner with HR to focus on people and growth—not paperwork and compliance.

The Result: A stronger, more compliant, and people-centered organization—ready to scale with confidence by leveraging the best of both PEO and HR leadership.

Enhancing the Employee Experience: Human Touch Matters

Where PEOs deliver structure and systems, HR delivers empathy and engagement. From onboarding to leave administration, HR professionals provide face-to-face (or virtual) support and help employees navigate sensitive or complex experiences with care.

Customizing Performance Management

PEOs offer tools, but tools need to be tailored. Dedicated HR teams can add customization to the tools. They can adjust evaluation frameworks, coach managers, and ensure feedback loops support real growth. They align performance reviews with organizational goals, not just off-the-shelf templates.

Stronger Together: PEOs + HR for Nonprofit Success

Together, PEOs and HR professionals offer a holistic workforce solution—PEOs are the back-end technology. As an outsourced HR Solution partner, our goal is to maximize the HR systems, enhance benefits, and increase efficiencies while maintaining and enhancing culture, ensuring that employees feel heard, supported, and aligned with our nonprofit clients' mission. It’s not either/or—it’s both.

Are you using a PEO but still facing challenges with employee engagement or alignment? Let’s talk about how our HR experts can partner with you to build a strategic HR presence that can complement your PEO and elevate your employee experience. Contact us to learn more.