Fractional vs. PEO vs. In‑House HR:
The ROI Decision

If leadership is the escalation path for payroll, benefits, onboarding, and reporting, growth gets taxed. The fix isn’t “more HR.” It’s People Ops, under control—clean data, predictable execution, and fewer fires.

Most scaling teams end up choosing between three models:

PEO

A PEO is the fastest way to stabilize HR administration. Payroll runs, benefits are bundled, compliance basics are handled. That’s the win. The limitation is equally clear: a PEO doesn’t build your operating model. It won’t install comp architecture, tighten hiring flow, or create a reporting rhythm leaders trust.

In‑House HR

In‑house HR is the right end‑state once your system is already working and you need daily ownership. It’s not the fastest way to build the system from scratch. One hire rarely covers the full bench of execution: HRIS integrity, payroll precision, benefits ops, compliance cadence, manager enablement, and reporting governance.

Fractional HR

Fractional HR is the best option when you need senior direction and real execution capacity now—especially during a hiring ramp, multi‑state expansion, a messy HRIS/data situation, or a transition off a PEO. Done well, it’s a bridge: build and stabilize the operating system, then hand it to in‑house.

A simple decision rule

If the pain is admin coverage, start with a PEO. If the pain is “we don’t have a system,” use fractional to design and build it. If the system is stable and you need an owner, hire in‑house. The most common path that works in real life is PEO for stability, fractional to build, in‑house to own.

Where ROI actually comes from

The ROI isn’t abstract. It typically shows up as faster hiring, leadership time back, lower regrettable attrition, fewer payroll/benefits errors, and cleaner reporting that finance can forecast from

Are these your exact numbers? Probably not. But they’re close enough to start a leadership conversation and a spreadsheet where finance can plug real assumptions.

Three moments fractional pays for itself

1. Post‑raise sprint: You need speed and guardrails—bands, approvals, offers, onboarding.
2. HRIS cleanup or re‑platform: You need one source of truth and handoffs that don’t break between HR and finance.
3. Multi‑state expansion: You need a compliance cadence before issues become penalties.

What “good” looks like in 90 days

• Month one: Stabilize the highest‑impact failure points and stop the compounding errors.
• Month two: Clean the data, connect the stack, and lock workflows so execution becomes repeatable.
• Month three: Run the cadence (tickets, onboarding, benefits ops, reporting) and document governance so it holds under growth.

Bottom line

A PEO is a strong administrative stabilizer. In‑house HR is the right end‑state for continuity once the machine runs. Fractional HR is the fastest way to install the operating system when growth is outpacing your infrastructure.

We build the systems behind great people.

People Street is the People Ops Operating System for scaling teams: we implement or stabilize your HRIS, then run managed People Ops with a documented cadence—so payroll, benefits, onboarding, and reporting stay clean as you grow.

If you’re exiting a PEO, dealing with an HRIS/data mess, hiring fast across states, or tired of being the escalation path, we should talk.

Book a consult (or take the 3‑minute People Health Assessment).