When businesses decide to end their partnership with a Professional Employer Organization (PEO), it’s crucial to have a clear and well-planned Exit Strategy to ensure a seamless transition. Whether you’re looking to bring HR functions back in-house, transition to another PEO, or take a different direction, an effective exit strategy helps minimize disruption to your operations and employees. This guide outlines the transition process, timeline, support services, and next steps involved in exiting a PEO partnership.

How PEOs Assist During the Exit Process

Even though you are leaving the PEO relationship, the provider will often offer support to ensure the transition is as smooth as possible. Here are key support services a PEO may provide:

Preparing for a Successful Transition

Once you’ve initiated the exit strategy, here are the next steps you should follow to ensure everything goes smoothly:

Evaluate Internal HR Readiness

If you’re bringing HR functions in-house, assess your internal HR team's ability to manage payroll

Select a New PEO

If you plan to transition to another PEO, begin researching and evaluating other PEO providers.

Communicate with Employees

Keep employees informed throughout the process and provide them with any necessary information regarding their benefits

Monitor the Transition

Once the exit is complete, monitor the ongoing transition to ensure that all functions are running smoothly.