Jennifer: Let’s start with the basics. Who are you and what do you do?
Allison: My name is Allison Ehrlich and I work at Paychex in their PEO and HR division. And I should add, I’m a strategic consultant, not just a salesperson. That distinction matters a lot to how I approach this work.
Jennifer: And for those who don’t know, what is a PEO?
Allison: Think about a small business. They don’t have the capacity to hire an HR person, a benefits person, a payroll person, a compliance person, a safety expert, and a full back office of specialists. A PEO, which stands for professional employer organization, gives a small business access to an entire department filled with specialists who partner with their internal team.
A manufacturer, for example, got into business to make their product. They didn’t get into business to manage employees, run benefits, and navigate regulations. So they use a PEO. At Paychex, we bring a company onto our EIN for payroll and tax purposes only. The business still hires and fires. Their name is still on the W-2 and the check. They’re still the business owner they’ve always been, but now they have a full back office helping them plug the leaks, whether that’s talent retention, compliance, or benefits.
And on the benefits side, because they’re under our EIN, we use our pooled employees to negotiate rates with carriers the same way Costco uses buying power. A 46-employee manufacturing company about to get hit with a 20% increase on their healthcare has nowhere to go on their own. We can go back to our national carriers and might come back with something that’s significantly less than what they’re paying today. Now they get medical, dental, vision, life insurance, and an employee assistance program, which is what I get as a Paychex employee. That’s a big deal for a small business trying to compete for talent.
Jennifer: You don’t have to tell me. We started offering benefits a few years ago and it completely opened up our talent pool. Even if the pricing is similar to the open market, and it’s usually less, just the fact that you’re offering it changes things. My director calls it being a “big girl company.” People underestimate that. They look at benefits as a line item, something only big companies can afford. The PEO is a great bridge to that.
I want to lean into something we talked about before we started. I had a really negative experience with a PEO, which I won’t name. I met their version of you, felt great about it, and then never heard from them again. Emails went into a black hole. Questions got bounced between departments. The ticketing system was a nightmare. So talk to me about why Paychex and specifically you are a better solution than what I just described.
Allison: There are five to six hundred PEOs out there right now.
Jennifer: I had no idea.
Allison: More PEOs than payroll providers. Let that sink in. So the value of the PEO is real, but so is the variance in how it’s delivered. The first thing that sets Paychex apart is customization; a lot of PEOs are all or nothing. You have to fit into their box, and if you don’t, they can’t help you. That never sat right with me because I’m a relationship-based person. I need to be able to meet a client where they are.
For example, if someone wants to keep their benefits broker because they love them and they want to stay in the open market, they can do that. We can still work with their broker, run the ancillary benefits, handle the administration, and tie their broker into our platform. I had no idea that was possible before I joined Paychex, and most people don’t.
We’re also 401k advisor friendly. We do the record-keeping, but we don’t require clients to use our 401k. The platform is open architecture, which the financial advisors I work with really appreciate.
And on the workers’ comp side, I can work with a P&C broker on cases where it makes more sense for them to write the coverage. A nonprofit client of mine had too much risk for us to write their workers’ comp, so I brought in a P&C broker. That’s not something a lot of PEOs would do.
Jennifer: Who is not a good fit for a PEO?
Allison: If you’re running entirely on 1099s, a PEO doesn’t apply. And structurally, if you’re a sole proprietor with one or two employees, the economics usually don’t make sense. I always tell clients upfront, here is what you’re going to invest and here is what you’re going to get. If the why isn’t there, it’s not the right fit.
That said, I work with businesses from about five employees all the way up to 500. I recently started working with a five-person company, but they were forming a new EIN, operating across five different states, and needed tax registration compliance, multi-state benefits, and full administration from day one. So size isn’t always the determining factor. It’s really about what they need and where they’re trying to go.
I don’t sell savings , I sell smart investments. Those are two very different conversations.
Jennifer: And the price conversation is only part of it. Through the flexibility of a PEO, a small business gets the buying power of a company with thousands of employees. That’s not nothing. So I imagine the only real limiting factor is price.
Allison: Price comes up, and I’m upfront about it. There’s a per employee, per month fee on top of what you’re paying for benefits and workers’ comp. But I try to get in front of the CEO, CFO, and HR together because each of them cares about something different. The CFO wants to know what it costs. HR wants to know how it helps with retention. The CEO wants to know how it supports growth. If I can address all three, then we can have a real conversation. And if I only talk to one of them, the others are going to shoot it down later for reasons that could have been addressed upfront.
CEOs don’t always think about the cost of turnover until you put a number on it. Do you know what it actually cost your business the last time you lost a good employee? That’s usually a conversation that changes the dynamic.
Jennifer: Talk to me about the HR support side of what Paychex offers. I think people are laser focused on the hard costs, the medical, dental, 401k, and they underestimate how much of the PEO is about HR.
Allison: I want to break this into two parts: HR technology and HR support.
On the support side, every client with ten or more employees is assigned a dedicated client advocate. That person handles the day to day tactical HR questions so our HR team can focus on the strategic stuff. Need a termination letter? Call your client advocate. Have a performance issue? Same place. Every member of our HR team is SHRM certified with ten to fifteen years of experience, either at Paychex or in HR roles. We’re not putting recent graduates on client accounts.
The support goes further than most people expect. I had a client recently who needed a role play before a difficult employee conversation. Someone on their team was dealing with a personal situation that was spilling into the workplace, and the manager didn’t know how to handle it. Our HR manager did a full role play with them before the conversation happened, walked them through dispute management, and helped them prepare. That’s not something most people associate with payroll and benefits.
Jennifer: Wow! I don’t often hear people talking about that part of it.
Allison: The proactive work is where it gets really interesting. We meet with our HR business partners quarterly to review what’s working across our client base. One example that stuck with me was a dental practice with five locations that was building a sixth. They lost three front desk employees in a short period. We helped them design and run an employee survey across all five locations to understand what was driving the attrition.
What came out of the data surprised them. People were showing up late, patients were unhappy, morale was low. So we helped them build an employee referral program. Existing employees could bring in people they knew and trusted, and they got compensated for it. It shifted the culture. People were bringing in their networks, there was less friction with new hires, and the dentist who was also the CEO could focus on running his practice instead of managing a staffing crisis. He had an office manager handling accounts payable and receivable, but nobody focused on the people side. Our HR business partner filled that gap.
Jennifer: The part I find so interesting is that the CEO is just one stakeholder in how the front desk is performing. That’s a really myopic view of the problem. Your own team is often the best source of insight into what’s actually working. That’s something I try to apply in my own business too.
Allison: It all starts with the right discovery questions. I always ask, where do you want to be in a year? What do you need to get there from an operational, support, and employee perspective? If I understand that a business wants to open two new locations and grow from 50 patients to 60 patients a day, I can work backwards from that goal. Do they need an HR generalist? A director of HR? Do they need us to handle the administrative piece while a fractional HR consultant handles the employee-facing work? I try to figure out what’s actually going to help the client succeed, not just what’s going to help Paychex land the deal. Sometimes that means telling someone they need to build a full advisory team before a PEO even makes sense.
And when new locations open, there are layers people don’t think about. OSHA compliance, ergonomics, fire safety requirements, state-specific regulations. We have safety managers who can walk clients through all of it, and for clients in multiple states, we can coordinate across locations. That dental practice had locations in Florida and New York, and our safety manager did a full training via video for both teams. The dentist had no idea he needed some of what we covered.
Jennifer: So let me ask you, is there anything we haven’t touched on that you want people to know about Paychex or about you?
Allison: What I keep coming back to is this: a lot of business owners know the storm is coming and they’re still not fixing the leaks. They know they’re going to get a 30% increase on benefits in the next six months. They know regulations in states like New York and California are a moving target. They know turnover is costing them more than they’re accounting for. But they’re waiting until they have no answers before they do anything about it.
I work entirely on referrals. And if someone had a bad experience with Paychex before, maybe they were a ten-person company on payroll and felt like they fell through the cracks, I’d ask for the chance to show them what it looks like now. Because too many businesses are going into the storm with a small umbrella when they could have a full awning and the support to weather it.
The other thing I want people to think about is that payroll is just one piece. It has to get done, but it doesn’t drive revenue. What drives revenue is strategic HR, the right reporting for your CFO, the right compensation and culture to keep your best people. If ten of your best employees leave in the next year, and your best clients followed them out the door because they loved working with those people, that is a revenue problem. I have lived that firsthand.
The clients I work best with are CEOs, CFOs, and HR leaders who have a seat at the table and want to be champions for change. If that’s not the dynamic, the solution won’t stick no matter how good it is.
Jennifer: I want to say, one of the things you changed my mind about today is that you can work with existing brokers. That’s a genuine game changer. Most people feel like switching to a PEO means walking away from a relationship they value. Knowing that’s not the case makes the conversation feel a lot less extreme.
Allison: Everyone’s brother and father-in-law is their financial advisor or their broker. I’m not asking anyone to walk away from that. I’m asking, how can I complement what’s already there and make it better? That’s the approach I try to take with every partner I work with. Lead with the questions, not the features. If you start dumping features on someone before you understand their situation, you’re just doing surgery without a diagnosis. Ask the right questions first, and the right solution usually becomes obvious.
Jennifer: Thank you for this, I think it’s going to be really valuable for our audience. And I learned something, which doesn’t happen that often in these conversations.
Allison: I’ll take that. Thank you for having me.
