| Many leaders of small and medium-sized enterprises (SMEs) outsource human resource (HR) functions and activities to professional employer organizations (PEOs) to meet changing and complex HR challenges. Although most directors of SME-client organizations are satisfied with the results of HR outsourcing, employees' perspectives regarding the effect of PEO presence on organizational culture and morale have not been considered. The purpose of this qualitative study was to discover the perceptions of nonsupervisory employees regarding organizational culture and morale in SMEs where PEO services are used. A phenomenological approach was used. In-depth, semistructured interviews were conducted with nine nonsupervisory employees of SMEs in central New York State currently conducting business with a PEO. Participants were selected by means of purposive sampling. The Denison organizational culture model served as the theoretical framework for the investigation. Common themes in interviewee responses were identified, coded, and summarized. Investigator triangulation was used to ensure the integrity and accuracy of findings. The key finding derived from the study was that participants did not perceive their PEOs as having a significant influence on either organizational culture or employee morale. Alternately, participants perceived organizational owners, directors, and coworkers as having a greater influence on culture and morale. Based on the study results, there are several key recommendations for future best practices. First, it is recommended that PEOs and PEO representatives assume more of an active role as coemployer and contribute more constructively to their SME client organizations' culture. Second, it is recommended that PEOs and PEO representatives constructively shape employee morale by engaging its client organizations' employees more, providing additional opportunities for closer interaction, and improving communicational channels. Third, it is recommended that PEOs and PEO representatives solicit and consider employee perspectives and viewpoints because they represent a fundamental component of evaluative feedback that can be used to assess PEO outcomes and shape future associations between PEOs and current and prospective client organizations. The study's findings are expected to assist PEO executives in developing proactive platforms for marketing its services. Future research may wish to investigate the impact of PEO utilization on employee retention and turnover. |
