Totally Rewarding Chats | Ep. 16: Handling Compensation and Benchmarks in Small Orgs

HR and compensation challenges small businesses face

Alison Stevens, Senior Director of HR Services at Paychex, discusses the challenges that small businesses face in managing HR and compensation. Small businesses often have limited resources and struggle to attract and retain talent. They may lack knowledge of compensation standards and struggle to navigate the regulatory environment.

Stevens emphasizes the importance of developing a compensation philosophy and strategic plan that aligns with the organization's goals and values. She also highlights the need for access to benchmarking data and analytics to make informed decisions. Technology plays a crucial role in providing small businesses with the tools and data they need to manage compensation and total rewards effectively.

In this episode

• Host, Sean Luitjens, General Manager of Compensation Benchmarks, Visier

• Guest, Alison Stevens, Senior Direct of HR Services, Paychex

Episode transcript

Sean Luitjens (00:00.814)
All right, it is another totally rewarding chat. And today we have Alison Stevens. How are you? Good. So she is the Senior Director of HR Services at Paychex. And instead of me just completely screwing that whole thing up and talking about that, can you basically talk about what that is for people who everyone probably knows who Paychex is, but what their HR services are?

Alison Stevens (00:09.326)
Well, Sean, how are you?

Sean Luitjens (00:29.998)
And then give your elevator pitch of your background on however many stories your elevator goes.

Alison Stevens (00:38.67)
I would be delighted to. So my role at Paychex is quite simply, I lead a team of amazing HR professionals and those HR professionals support our clients who make the decision to invest in our HR services. So those that know Paychex know that we offer payroll benefits, technology solutions, HR technology solutions to help small businesses grow and thrive. So the HR professionals are here to help support clients even further with their HR needs. So we provide guidance and support to them diving into their specific needs with respect to how they run their business from an HR perspective. And that is my role. I have accountability for that team and it is fantastic work and never dull moment.

Sean Luitjens (01:33.134)
Okay, and how did you get there? Or did you magically arrive?

Alison Stevens (01:37.774)
So my experience spans over 30 years in both professional services and HCM industry. Both as an HR leader at several small businesses and a service leader now leading Paychex HR services. And there was a time where I was working in what we call private practice HR, right? I was VP of HR for a small competitive intelligence firm and somebody I know that actually also still works at Paychex, reached out and asked me if I had an interest in the role, in a role at Paychex and I never looked back. I've been with the company for almost 18 years.

Sean Luitjens (02:20.462)
Okay, well, I notoriously tell everywhere I present that I have never been a practitioner because that job just looks like it sucks and it's hard.

Alison Stevens (02:29.294)
Right? Yes.

Alison Stevens (02:36.974)
It's very hard.

Sean Luitjens
And you are dialing in from Stowe, Massachusetts, is that right?

Alison Stevens (02:41.678)
I am. I am.

Sean Luitjens
Because all the cool kids live in Massachusetts. So, although for people who, people always, before we begin.People always think everyone's close to Boston. So strangely, you're like 45 minutes an hour. Is that probably right? Yeah.

Alison Stevens (02:57.134)
That's exactly right. About 33 miles west of Boston. So it's a good 45 minute drive. Yeah.

Sean Luitjens (03:01.838)
Okay. And I have to mock you a little bit when we started the call, you were like in Western Massachusetts, which basically that's how people, or Central Massachusetts you said, which is basically it's like Boston and then Worcester's far West and then it's California. I swear that's what people think. Cause we live in Western Massachusetts and people are like that's Springfield. We're like, that's still far away.

Alison Stevens (03:18.286)
Right?

Sean Luitjens (03:27.726)
So it's always interesting to hear how people from the near Boston reference Boston and then everything's just West. So to show this is.

Alison Stevens (03:33.998)
Exactly, that is true. That is true. But the real question is, have you been there all this time? Have you been in Massachusetts? Have you always lived in the city? No. OK.

Sean Luitjens (03:40.878)
No, we were in Vermont for a long period of time. I'm from the Midwest originally, so I can't actually claim to be a complete New Englander. I married into the New England group. So to prove you're a human, the check the I'm not a robot box. So what do you do for fun outside at work?

Alison Stevens (04:02.414)
So I am one, well first of all, I'm a New Yorker. I'm a New Yorker living in Massachusetts, so don't ask me what my sports teams are, because my answers always make people upset.

Sean Luitjens
That will make us, that will be a problem. So we'll just leave that go.

Alison Stevens (04:16.43)
Let's keep on moving. So outside of work, I like to do a lot of things. But probably for me, the thing I love the most is outdoors and getting fresh air. And being in New England, we've got plenty of fresh air. And so I am like outside walking trails. I love spending time on Cape Cod. So I spend a lot of time there being at the beach. You'll find me there whenever I have free time, particularly in the summer.

I also recently started to take very seriously the concept of developing strength, my physical strength. So I am trying to get to my 200th strength workout using the Peloton app. I'm almost there. I think I have about six to go. So yeah, that's what I do in my spare time. I'm also pretty active in my community. So I sit on the board of directors for our local Boys and Girls Club, helping them with some HR stuff and safety.

Sean Luitjens (04:54.222)
Okay.

Sean Luitjens (05:02.286)
Okay?

Alison Stevens (05:16.192)
And then I also am a member of a national board called Young People in Recovery that helps young adults with access to resources, skills training, and great support helping them navigate their recovery journey.

Sean Luitjens (05:33.646)
That's awesome. It's for a whole nother topic sometime, but a podcast in a bunch. The skills that we have in HR -ish that we think are pretty rudimentary, you can donate to miscellaneous nonprofits and places and 10 hours saves them oodles of time. They just don't know. And you might think it's the...most tactical thing and for them it's highly strategic and so the ability to donate that time is huge and I hope more people do that. So it's awesome to hear that you're doing that.

Alison Stevens (06:04.782)
Thank you and totally agree.

Sean Luitjens
So the reason I wanted to get you on and chat was paychecks, I think the average company size is somewhere around 40, you can correct me if I'm wrong. And obviously that sways to the hundreds to potentially thousand to those with two or three paying people probably. And so...Having been in the industry mostly at larger places tackling larger orgs, I'm fascinated by what do you see as the different challenges that they face in a small organization versus what a lot of compensation or total rewards professionals are dealing with.

Alison Stevens (06:46.19)
Yeah, it - it -

It really is fascinating, Sean, just to sort of see small businesses and how they navigate things like HR and then more specifically how they navigate compensation. And I think probably one of the biggest challenges they have is that they only have a handful of people, right? So if we're talking an average of 40, like think about even those much smaller businesses, right? You only have a few people available to perform each role, which means they don't have all the resources to help manage the employees.

Life cycle from hiring to retiring. With that, they often then don't necessarily have a great pulse on what are the standards of compensation, how can they attract talent and secure the critical hires that they need for their businesses to thrive. And then there might be further constraint on what they can even offer, right? So whether it's compensation, whether it's benefits, whether it's both, a large corporation, as you know, has a lot more agility at times to offer.

That wide variety of benefits like a gym membership or unlimited PTO or retirement plan matches. And small businesses usually have to rely on more basic offerings to entice their talent to come work there. And I think they find that they're pressured, right? Particularly in today's environment, they're pressured on what else can they do to bring talent into the door.

Sean Luitjens (08:10.606)
And so if you had to, I reiterate that I was at the South Carolina Human Resource Association, you know, presenting and I'm getting up to talk about compensation planning. And I'm thinking like this is the most important thing in HR, right? Because that's kind of where we are. And the leader of the group says,

before we bring up Sean, let's talk about the next four months worth of stuff, right? And it was a legal review, workers' compensation, active shooter, and I'm like, now I'm meaningless, right? And benefits enrollment, and I'm like, okay, I just got less important so fast, right? So what they have to tackle in small companies is kind of mind blowing when you think about having to at least be, well, you are the company expert on each one of those, no matter what your level is.

Alison Stevens (09:02.062)
Yeah, and you know, even within that, right? The volume of things they need to know that they most likely don't know. And then on top of that, it's the challenge of just having to navigate the regulatory environment, right? Understanding pay equity laws, salary history bans, pay transparency, you know, how do they stay on top of all of those things? I think that's also a real challenge for small business owners, you know, from time to just knowing where to go to get the information they need that's trustworthy, you know, to really be sure they have what they need to make the right decisions for themselves, their businesses, but totally true.

Sean Luitjens (09:38.574)
So how do you see small companies tackling total rewards or compensation in this space? How do you see them? Because we know how large companies that have a comp professional or a total rewards head kind of have their cycle. How are small companies handling it? Last minute, what's their planning cycle look like? Can you walk us through what that looks like?

Alison Stevens (10:03.118)
Yeah, you know, I talk to my HR professionals, I talk to my team often, and I think they find that a lot of times our clients who are small business owners are making, they're making decisions on a whim or they're making decisions based on what they know. So what they know may not be up to standard, they might not be paying in alignment with the market. They may not be, they might be out of compliance. I think there's a lot of things.

Wrapped into that that you know happen inside of a small business where you know they can go pretty far off track before you know they realize wait we might have a problem or they're finding well why are we experiencing so much turnover because they're unable to be as competitive as they would like to be.

Sean Luitjens (10:58.062)
So if you had to rank order a couple of the compensation problems that they have, I mean, what would those be? Is it benchmarking, offers? Like what are they getting data, you know, relevant data? What's the?

Alison Stevens (11:12.622)
Yeah, it's probably benchmarking is a big thing, right? What's the business down the street or what's the business and like industry doing that I'm not? It's that, it's regulatory, just navigating the regulatory environment and understanding, you know, what should I be doing that I'm not or that I can. And then, you know, third, I think it's...developing a compensation philosophy, right? So how do I take a step back and develop a plan?

Because I think small businesses tend to operate more in a reactionary mode than proactive. So how do they sort of slow down and develop a philosophy and a plan or a strategy for how they're going to build a compensation program that has the benefits and the other pieces they need to attract and retain the talent that they need to run their business.

Sean Luitjens (12:11.31)
So where would someone start like that? Because in my mind, it's like, I mean, the soapbox I get on all the time is, and everyone's heard me kind of quote, due to my level of education, I guess. Alice in Wonderland, so Cheshire Cat. If you don't know where you're going, all roads will lead you there, right? And having a plan, I think in a larger company where you can take the time and put together a compensation plan, you...

it's a little easier in a way to, I mean, tactically it's more complex because you're in the magnitude of thousands of lives, but where should a small company start aligning their plan? Is that different? Do you think it's the same having been a practitioner before? Where do you see the differences in trying to get their arms around where they should be?

Alison Stevens (12:57.55)
I think it really starts with really taking the time, right? So time is not on anyone's side, but time is really not on a small business owner's side. So really taking the time to sort of say, okay, what's important? What are our objectives? What do we know, right, about our employee base? Where can we start to develop the strategies and the way we want to run the business that matches our culture, matches our values, and then matches, you know, where we are from a business perspective?

So, you know, I think it's developing a strategic plan that matches both the organizational organization goals, but then also, you know, we talked a bit about benchmarking, right, that then maps up with is it is our compensation plan competitive? And, you know, are we heading towards a path of what are the investments we need to make and how do we make them? Right. You know, so understanding how do the financials come together when you're making decisions about what your compensation plans and your total reward strategy need to look like. So I think it just starts with time, with planning, with understanding your current state, using data insights to get there, and then using data insights to also drive your path forward.

Sean Luitjens (14:11.822)
So do you see more companies using, there's lots of terms, but I kind of use a compensation as a service. And maybe that's part of what you guys offer in the tool, but basically, a fractional compensation professional for a piece to help through. Are you seeing companies use that more and more because they're realizing they have to do it or can they not even see that that's what they need at that stage?

Alison Stevens (14:35.89)
I think it's a little bit of both. And of course, you know, I think we know that like this notion of fractional HR services is really a growing industry right now. But from my perspective with respect to the clients that we serve and the clients that we will serve as they continue to come and do business with Paytax, I think what's important is making sure that we're giving them what they need when they need it.

But I think one of the things is that sometimes they don't know what they don't know, right? And we're able to give them, we're able to start that conversation because we can say to them, hey, like your turnover rate looks like it's jumped up a bit, or we're talking and you're telling me that you're having trouble getting open positions filled.

So to me, it kind of always starts with a conversation. And that conversation around people can, I think tends to lead us towards a conversation around how can we help you start to really dive a little deeper into what are the things you might need to do, whether it's look at your wage base, look at your wages and your rates, whether it's look at your compliance, whether it's let's look at the benefits that you offer, and what are the things you can or should be doing to make changes that ultimately may help you attract more talent into your organization or help keep people working for you and happy to work there.

Sean Luitjens (16:09.07)
I think the analytics becomes so much more important because obviously their internal sample size, they can't look at, you know, a thousand employees or, you know, 50 employees in a department and figure out my risk or resignation. I can't figure that stuff out. But sometimes I think the more tools we offer small companies, they start to box themselves in. And the example I've been using is, you know,

Small companies a lot of times will want to benchmark against other small companies. And that's great. And all of a sudden you realize, I'm paying P 70 or something. and so why is my turnover so crazy? But then you realize you're only comparing yourself for small companies. And to your point, large companies benefits, the whole package for a lot, you know, might put you actually at P 40 in the market. And so is the problem actually a pay problem or not? It gets hard to get your arms around when you're a small company.

Alison Stevens (16:38.894)
Yes.

Sean Luitjens (17:04.352)
Without all the analytics, which sounds a little inverse, right? I think companies think I'm huge, I need all these analytics. But actually, if you're small, how do you know what a good job looks like when your sample size is tiny?

Alison Stevens (17:19.502)
Exactly. And I think, right, many small businesses lack...the access to the benchmarking data. So, how do you bring it to them and also bring it to them in a way that's timely and current? Because that's another thing you see, right? And I know this too, like we talked about some of my work, the board of the Boys and Girls Club, where some of the board members even are like, three years ago, we paid this person whatever. It's like, actually, we're gonna wanna get some current data so that we can make a really informed decision. We really can't be going back three years to make an informed decision about pay rates. So, you know, making sure they're not looking at things that are out of date, giving them current data so that they can leverage current benchmarks to make good decisions and to your point, you know, helping them with, okay, well, what do we do with this information, right? What is it telling me?

And, you know, we're excited, right, about our partnership with Visier because, you know, our solutions that we work together on can bring businesses of all sizes access to that benchmarking data and tools to make sure we can help them address that long -standing challenge of what should I be doing, what should my rates look like, what could I be doing differently, or what are my opportunities and what does the data tell me?

Sean Luitjens (18:40.654)
I mean, that's the interesting thing with an HR practitioner, because I think I saw somewhere, you know, the current HR stack for the average company, whatever average is, is 14 plus pieces of tech, right? And there's no shortage of more tech coming out. And so...

for an HR generalist or even if it's the office manager, right, small, who is also slash HR generalist. Are you seeing it more and more critical? I mean, that's my thing, so I'm biased coming in, even though we're a point solution. Are you seeing it more and more critical to be able to get the tools and analytics in flow so they have a main system? And I say that because in comp,

it flies a little bit in the face of what I preach out at some of the larger comp places saying you can get multiple point solutions because the data is portable, et cetera. But when you're a comp professional, you can have two or three tools and that's what you do all year long. If you added up all the tools a HR general has had to go into, I mean, it's crazy. So does it become more important to be able to put those in flow and in the system?

Alison Stevens (19:48.27)
I think it definitely is, right? You have to be able to bring together sort of the full spectrum of your workforce analytics, right? So your people data, your finance data, so that businesses can really understand like, you know, what's going on with my talent in the organization and how are my total rewards even distributed? What are my costs of labor? And I think when you're an HR professional trying to go to different places to go get that information, I feel like speed to action is more important than ever. And so when you're bringing it together under one flow, how do you make sure you can make right the right decisions and not have to stop and start by going to different places to then have to aggregate the information to make that decision. Just my opinion.

Sean Luitjens (20:35.118)
No, it's interesting because I've come to that because I think, you know, over the years I've said, you know, data is now more portable, right? So whatever I have, systems integrate much better, but you still have to go log into each system, even with SSO, figuring out where I go for each system. And so I think the smaller the organization, the more hats you have to wear, basically. Now can I have that in one place, or at least the same number of places as somebody else doing a more specific job.

Alison Stevens (21:06.222)
Exactly. And again, I said earlier, time is not on anyone's side. But really, think about a small business owner who is oftentimes wearing multiple hats, has multiple jobs, and oftentimes does not even have the luxury of sitting behind a laptop to do their work. They're driving around, talking to their crew, or managing, or meeting with clients, whatever their activities might be. So they're mobile. So how do you give them and deliver to their handheld device or the device they'll ultimately get to when they're not working, where they can see it all at once and they can easily digest it. And that's the beauty of what the HR business partners on my team do, right? Because we're there helping that business owner sitting right alongside them to offer some of the guidance they need to navigate the data that they might be looking at.

Sean Luitjens (21:56.718)
Yeah, yeah, I mean, it's funny. I get on the soapbox about manager experience and tell people it's less important sometimes than the administrator. But in this case, I think at some point, you know, there's the right, you know, the two axes cross. But at this point, I think the administrator becomes basically like, you know, the manager experience because they've got so much going on.

Alison Stevens (22:20.014)
Yeah.

Sean Luitjens (22:21.006)
So how do you see tech? I mean, I know we're a bias, we're a tech company. So how do you see technology? And I'm also a development nerd by trade. So I always like to ask, how do you see technology helping professionals in small midco over the next couple of years?

Alison Stevens (22:37.678)
You know, I think...In today's environment, like, comp strategies may not be just about what's fair and competitive pay for the workforce, but also affordability. And so, you know, I think this is especially true with many SMBs where margins, cashflow are challenged, quite frankly, right now. And this is where technology plays a really key role. So, you know, we talked already about workforce analytics. How does an SMB get access to the right people data?

And the finance data so they can make the right decision and make it quickly sometimes and based on what situations or challenges they might be faced with. Benchmarking, which we already talked about, right? If they don't have that access, I think leveraging technology to have access to current benchmarks is of critical importance. And then developing a strategy around how do you develop some low overhead benefit solutions?

And there's over five, there's five, five generations in the workplace right now, so there's so much variability in the benefits that people want, what's important to them. And that historically puts that larger company at an advantage, but SMBs can't necessarily afford the same breadth and depth of the benefits that a large enterprise might offer. So add on to that the cost of administrative overhead to the employer, and it becomes a really, really big challenge to stay competitive for talent as a small business.

So, you know, really trying to identify what are those low overhead solutions you can integrate into your talent strategy so that you can get your employees to a place where they're happy, they're reporting to work every day, and they're staying.

Sean Luitjens (24:27.214)
Yeah, it's interesting because I do know and I've talked to kids coming out of school and I say kids because I guess I'm older. But you know, like the value of working at a small company, I think people like it, but there's a certain amount that's there and then it's just money. Like the delta can't be that big and so for small companies to be able to figure out what that delta actually is by looking at when I pay here, turnover's here, the market average is here, you know, that stuff to be able to kind of look and again in a macro economic way versus themselves I think is just gonna be critical and available.

Alison Stevens (25:03.214)
I agree. And I think that also you just made me realize an advantage that a small business may have, which is...they can get to their employee base and talk to them. And they have access to them, perhaps more easily than a large enterprise business that has to do surveys or rely on manager feedback, getting all of that data and bringing it together to really understand what is most important to the employee base. So in a small business, they may have an easier time trying to get to what's important to my employees right now. What are they really interested in or what are they asking us for to help make those decisions a little bit easier?

Sean Luitjens (25:39.662)
Yeah, and I guess the ability, I mean, I hadn't even thought about it until you said that the off -cycle increases are much smaller, are much easier. It's not an exception across 10 ,000 employees. It's a couple exceptions. So highlighting a problem, there's an interesting statistic that Visier had about if you, I get it right, but if you address a problem within the first month of having a problem you know, actually just like you learned in kindergarten, right? The likelihood of someone staying for long periods of time if you address it in the first month or two versus six months versus 12 months or more. I mean, it's statistically very different on addressing those problems and the nimbleness of the small company if they have the information. They do have nimbleness in their corner for the most part. I mean, depending on cash flow and money, et cetera, but they at least can recognize the problem and deal with it faster.

Alison Stevens (26:32.814)
Absolutely, but and it also goes both ways right so they they might you know need to then ultimately be careful of how nimble they are not to say that they shouldn't be but you want to be supportive right, but then how do you also develop you know routines or some consistency right regular performance management cycle etc, but You're right rated enables them to be able to to be a little bit more agile when when circumstances

Sean Luitjens (26:48.846)
Yeah.

Alison Stevens (27:02.768)
Arise that that -

Sean Luitjens (27:06.926)
So the last question I usually ask then is you get to break out the rainbows, unicorns, pot of gold and automagically solve something in HR. Yeah, so if you could automagically solve one thing right away and I'll put it in the small media, you know, SMB space. What would that be that you could solve for them?

Alison Stevens (27:15.758)
Taking care. Yeah.

Alison Stevens (27:34.158)
Wow, I want to solve so many. It's so much. It's so much. You know, I think, I think this, I was.

Sean Luitjens (27:35.726)
I have so much power, I know. I gave you too much power.

Alison Stevens (27:46.573)
If we're talking about pay, you know, and we're talking about compensation, right? And we taught, we hit on this a little bit. Like pay is really personal, right? What matters to you may not matter to me as much. And that's completely fine, right? So, you know, as we enter into an era where technology just continues to evolve and just be so amazing with the things that we can leverage technology for, you know, how do we get even better?

at bringing employee sentiment into the decisions we make. Because I feel like companies with distributed workforces, companies who are managing a team of remote employees, where they're not seeing those employees every day. And that is still applicable to SMBs. How do you start to really grab the sentiment of your employee to help you make great decisions and not making decisions on what you think is the right thing, but rather what your employees are really thinking and feeling that can help you make the best decisions?

So your business can grow, your employees thrive, your communities thrive, and then everybody's happy.

Sean Luitjens (28:53.102)
It is interesting as you were saying that I was thinking the line of sight question, right? Kind of comes up. It's hard to throw someone else in the company under the bus or say senior management or whatever. They're not five layers away. They're literally in the same building and one of 20 people, you know, or one of even 50 people. So you pass them all the time. It becomes a much more human, you know, personal thing.

Alison Stevens (29:21.518)
Absolutely. And things change, right? What's important to me right today could be drastically different tomorrow. And I feel like based on some of the things we navigate with our small business clients, particularly in the HR space or employee relations, we find that even though it's a small business, oftentimes they're just not asking the right questions of their employees to really be able to develop the best path forward on any situation.

Sean Luitjens (29:49.07)
Well that's awesome. I appreciate it. I'm still learning, you know, the small medium space.

literally tell people I've been around since last millennium, you know, with code and working in HR tech, but traditionally pointed at the larger orgs. And like I said, it's been interesting to see some of my opinions on how you prioritize things. You know, I used to think it's just smaller scale, but they're actually just different from a priority standpoint as they move down into smaller orgs. So I really appreciate you coming on. This has been awesome. For those that are watching,

Allison's information will be linked about. Definitely probably harder to find Allison Stevens on LinkedIn than Sean Luchins. So we'll make sure her information is there and you can reach out and chat about things in the small media business or paychecks. I don't get too excited about payroll, but maybe Allison does as we go. So this has been great. Thanks so much.

Alison Stevens (30:47.17)
It depends.

Thank you, Sean. It was great to be with you.