Fagron is a global pharmaceutical company with a headcount of 3000 employees and a presence in over 25 countries across North America, South America, and EMEA.
Like many multinational organizations, Fagron's payroll was decentralized, with each country operating semi-independently with in-country providers or in some cases in-house teams processing payroll and reporting to local headquarters, who in turn were accountable to corporate.
Fagron has experienced substantial growth over the last few years, driven by international expansion into new markets and a disciplined mergers & acquisitions (M&A) strategy.
As Fagron has grown, the complexity of its payroll landscape has increased exponentially. Integrating entire new business units from M&A is a complex process in itself, and it becomes more so when the payroll function is highly decentralized and there are no company-wide standards or processes to ensure new employees are correctly integrated into the organization.
“We had countries that were doing it fully in-house, using software, and we had others that were completely outsourced – and everything in between. Our payroll landscape in Europe was very scattered.” – Payroll Transformation Project Manager
This, in addition to the company’s natural headcount growth as a result of its continued expansion, has created certain growing pains around the organization’s payroll operations.
The Challenge
Due to the highly decentralized nature of Fagron's payroll landscape, there was a lack of control and visibility of local payroll operations and data. Payroll data was stored in local systems and was largely inaccessible to leadership, making it difficult to leverage the data to inform decision-making.
“By not having access to this data, because it’s all in local systems, we couldn’t do any analysis. Think about pay gap, salary evolution, OPEX evolution… all these kinds of things. That was a big hurdle because we didn’t have the data centralized.” – Global HR Director
Furthermore, there was a lack of standardization and clear processes across the organization. With each country operating its payroll independently, the workflows, systems, and data generated by payroll operations were not harmonized. This made it difficult for payroll to properly support and enable the company’s aggressive growth strategy.
Overall, Fagron presented a picture that is common for growing multinational organizations. In many businesses, the payroll function develops reactively as the company grows, without an overarching strategy. This can result in a lack of transparency, oversight, and accountability towards the rest of the org, and poor interoperability between the different payroll systems.
“Instead of one global payroll, we had lots of independent national payrolls that were all disconnected from each other” – Global HR Director
To solve this problem, HR leadership decided to move to a centralized payroll model, using Payzaar’s technology to consolidate payroll management and increase governance and control across Fagron's 20+ payrolls.
The Solution: Standardization and control through a technology layer
The primary goal of Fagron's transformation project was to improve oversight and control over its international payroll operations, especially in the EMEA region, where each country operated independently and was heavily siloed.
Leadership at Fagron was keen to leverage existing payroll vendor relationships and minimize disruption since the local payroll services delivered high value to the local teams in most countries. The company therefore decided to adopt an incremental, targeted approach to improving the organization’s payroll operations.
Instead of contracting a global payroll aggregator service, which would require Fagron to re-implement all of its national payrolls with the aggregator’s network of providers – a highly time-consuming and disruptive process – Fagron valued Payzaar’s open, plug & play approach of providing standardization, governance, and control without having to change the existing local payroll providers.
To achieve this, Fagron overlaid Payzaar’s global payroll management platform on top of its existing national payrolls.
“Being able to add the tool on top of existing systems where nothing needs to change, such as the US region, was one the biggest selling points for us” – Global HR Director
Payzaar’s platform is process and solution-agnostic, meaning it can interface and consume data from any national payroll and create standardization by channeling data through a unified workflow and reporting suite.
“We want to be able to link all regions from a reporting perspective to have access to global insights.” – Global HR Director
In addition to workflow management, compliance and security were also important concerns for Fagron. As a pharmaceutical company operating in a heavily regulated environment, all processes and workflows needed to meet certain standards in auditability.
Payzaar’s Operations Control module satisfied these requirements by enforcing a single workflow across all of the organization’s individual payrolls, and creating a fully trackable audit trail and clear sign-off procedures.
The key factors why Fagron selected Payzaar as its global payroll system were:
- Being able to overlay Payzaar on top of the organization’s existing in-house payrolls and provider network, integrating them into the platform without having to re-implement them from scratch.
- Shorter time to value and less disruption caused by implementing the solution compared to other alternatives in the market.
- Robust data processing and reporting functionalities, capable of unifying data from a diverse payroll landscape and creating highly detailed reports, enabling leadership to analyze the company’s payroll better and make decisions.
- Significantly lower cost than other solutions, and the ability to exercise greater control over the cost structure thanks to the solution’s modular, platform-as-a-service model.
Key Takeaways
- A large, rip & replace payroll transformation project is sometimes not the way to go because it requires more time, more investment, and more of the organization’s resources. The disruption that goes along with the rollout of a traditional global payroll solution often creates tremendous internal friction that undermines the value of the entire project.
- Adopting an incremental, technology-driven approach that focuses on specific regions and specific use cases (workflow harmonization, system integration with the company’s HR & Finance solutions, data visibility and reporting within EMEA, expanding later into North America, South America, and APAC) produces shorter time to value, comes with considerably less risk and gives the organization quick wins that result in significant operational improvements.
- Platform-as-a-Service and a highly modular approach allow the solution to align with the organization’s specific needs in a more targeted manner while leveraging the investments into existing partnerships, tools and infrastructure, ultimately resulting in significantly lower costs than traditional global payroll solutions.
