ADP and Avery Dennison prove that payroll can be global.
By Debbie Bolla
The numbers were daunting. Twenty countries across Europe. Six thousand employees. Employee population per country ranging from 13 to 1,900. 25-plus payroll systems. Something had to change this diverse and inefficient payroll platform. Identification and decorative solutions developer Avery Dennison sought to get its international employee population on the same payroll page through a single outsourced vendor. It was a lofty goal most definitely, but if achieved, one that would bring a bevy of benefits to the global organization.
“When we started out, we didn’t know all our systems or how many systems we had per country,” said Chris Lomer, European compensation and benefits project manager for Avery Dennison. “We were lacking that visibility and governance on how to shepherd in our payroll activities across Europe.”
The inefficient system was costing the company money as well as putting it at risk from a compliance standpoint. Lomer headed up the effort to build a business case to align all payroll platforms through one outsourced vendor. First, Lomer had to understand each system by country since they varied so greatly. For example, France and Germany had delivery completely in-house, the U.K. had a mixture of insourcing and outsourcing, while smaller countries with offices of 20 employees or fewer completely outsourced to local agents.
“To build a business case, we wanted to know what they had, and where they had it,” said Lomer. Data was accumulated by documenting specifications about each office and its payroll platform, including the number of employees, how payroll was being handled, how many systems were being operated, and the approximate cost. Lomer found that the company was supporting a lot of headcount for the function, and expenditures were being allocated to high-cost third-party facilitators.
Then Lomer developed an agenda that had the C-Suite in mind—a key he said to ensuring executive support. Many questions, Lomer recalled, had to be addressed:
• What would the investment be?
• What was the amount of savings that could be projected?
• What would be the end result?
• What type of governance model should be set up?
During this very extensive due diligence, a factor that saved Lomer much time and headache was the absence of a request for proposal process. “We’ve had a longstanding relationship with ADP, and we had a preferred provider agreement,” explained Lomer. “Any new system was to be looked at with ADP.”
“Avery Dennison engaged ADP primarily for our capabilities to support both their smaller entities as well as their larger populations with a single source, single global partner approach,” said Laurie Eldridge, ADP corporate vice president. “Avery Dennison’s approach was very detailed and comprehensive.”
Having this relationship with the payroll provider accelerated the process of addressing the questions for Avery Dennison’s business leaders. The investment would entail two of ADP offerings, which would suit the varying employee populations across the countries. Savings would be recognized in the first year, and there would be cost predictability, something the company was lacking. Having one provider allowed for one point of contact to assist in troubleshooting as well as overseeing compliance and gaining visibility in payroll across Europe. All this added up to a very efficient process that garnered company buy-in. A contract was signed in February 2008 and included 19 countries.
The heart of the engagement delivered access to two ADP payroll solutions: GlobalView and Streamline. GlobalView, the pricier of the two, has a full range of ESS and MSS capabilities that are available through a portal, and was better suited for the larger employee populations (more than 100) with a time-sensitive roll-out period of six months. Streamline is a fully managed payroll service delivered through a central ADP service center. Overall, GlobalView is being used by more of Avery Dennison’s employees.
“GlobalView is specifically designed to scale to manage the large employee populations Avery Dennison has around the world, while the Streamline targets Avery Dennison’s smaller employee populations,” said Eldridge, who is also general manager for GlobalView. “This gives Avery Dennison the peace of mind of knowing that all their employees in scope are managed to the same standard by an ADP service group.”
Lomer agreed. “We’ve closed several gaps by leveraging the single platform. We deliver payroll to 85 percent of our employees in Europe through GlobalView. Seven of our countries have about 85 percent of the population. In January, we paid 4,500 employees from an ADP solution.” He went on to say that implementation is currently underway for two countries, Italy and Turkey.
The benefits are varied. Lomer described the advantages of the outsourcing engagement falling under these umbrellas.
• One payroll vendor. Managing a multi-country payroll system has been much easier and more efficient with one point of contact. “If I have any problems in one country, that country’s payroll person will raise it to myself, and I have one contact to go to with ADP,” said Lomer. “They will filter it down to the right person, which is a very efficient communication channel. We know what’s going on as to the time frames, any constraints, and CLAS (collective labor agreements). ”
• Compliance management. “We’ve gained visibility in payroll across Europe, when before we had none,” said Lomer. “Now we have control. We don’t worry about compliance; that’s ADP’s work. We are benefiting from their in-country knowledge.”
• Cost reduction. Since the rollout, Avery Dennison has experienced significant cost savings through its more efficient outsourced platform. Additionally, cost predictability has allowed it to keep aligned with annual budgetary planning. “We know at the end of the year what it will cost us,” explained Lomer.
• Data availability. Both employees and managers can easily navigate data in the GlobalView system. Employees can view and edit personal and pay information; managers can perform organizational management functions. “Beforehand if we wanted to pull up our gross wage bill it was nearly impossible,” noted Lomer. “Today, for 85 percent of our employees, we can get that at fingertips.”
While the benefits of the new system are many, they were rightfully earned. Lomer’s tedious process of due diligence earned the approval of key stakeholders and managers of payroll. “Everyone needs to be in same boat and striving toward same goal,” he said. “Payroll is a catalyst for change, but change management is difficult. You have to involve your functional teams. Change management shouldn’t be mismanaged since the first thing anyone will think is ‘What does this mean for me?’ You can never over communicate.”
Global payroll is certainly gaining momentum. “Companies have emerged from the recent global financial crisis understanding that they require greater insight into all of their global operations and are beginning to treat payroll in particular as a business process that often benefits from centralization of services,” said Eldridge. “The crisis also uncovered the need for multinational companies to have a single, global HR system of record. Organizations need the ability to extract and analyze workforce data easily and to glean immediate intelligence from a single system. This is key to their strategic and workforce planning needs.”
Over the last three years, demand and engagements—at Philips, Dell, Intel, IKEA and Avery Dennison—have been on the rise. Lomer feels that this success will help encourage other payroll deals that are global in nature. “The future is bright for multi-country payroll,” he concluded.