Serono S.A. is a global biotechnology leader with headquarters in Geneva, Switzerland. With nearly 5,000 employees worldwide and a significant presence in some 35 countries, Serono generates more than $2 billion in annual revenue. In the following discussion, Tom Coleman, Director of Compensation and Benefits at Serono, talks with Authoria about the challenges of effectively managing compensation across such a large, diverse, and rapidly growing workforce.

Traditionally, what was Serono's approach to compensation planning and management?

It may seem hard to believe for an organization of our size, but until a couple of years ago, we were like most companies; our compensation planning and tracking were based on spreadsheets being endlessly cranked back and forth around the globe. Not only was this a lot of work, but that system precluded us from knowing how well, or poorly, we were really doing in implementing our performance and compensation programs. Were managers actually following our compensation policies? Were some making exceptions inconsistent with those in other parts of the organization? Were differences of practice occurring other than those required by local law and customs?

Although our manual system enabled answering such questions, the time and labor required made doing so prohibitive.

When did Serono realize its traditional approach was becoming a problem?

We really became aware of it about four years ago when our annual growth rate was pushing 20 percent. Supporting such rapid growth was an increasing concern for our CEO, Ernesto Bertarelli, who recognized the need to significantly improve our ability to acquire the specialized skills and talent our growth required. He also believed, however, that Serono's workforce already included many people of exceptional ability, and he envisioned developing internally many of the specialized skills Serono would need. He therefore charged HR with this vitally important task, and ultimately revolutionized Serono's entire approach to performance and compensation management.

How did HR set about addressing the problem?

Francois Naef, our senior executive vice president for HR, viewed the new charge as an opportunity to improve Serono's compensation management systems and processes, and in doing so, to lay a new strategic foundation for the department. The primary thrust of any HR effort, he said, should be on content rather than on managing labor-intensive processes. So, in late 2003, we began exploring how various talent management solutions could help us automate the daily administrative work of compensation management and other labor intensive tasks, and simultaneously deliver new strategic benefits.

What were some of the biggest challenges you faced in seeking a solution?

The biggest was being a large, multinational organization with numerous, geographically diverse operating units.

More importantly, Serono units in various countries must tailor compensation to comply with local laws, customs, and budgets. Compensation and tax laws vary significantly from one country to another, as do governmental reporting requirements. Base pay in Switzerland, for example, has four components that we're required to break out for tax purposes, including a "representation fee" for managers and professionals plus a meals allowance, both of which are tax exempt. And, as a company, we've been emphasizing variable pay while also moving toward a compensation strategy that places greater emphasis on individual, rather than group and company, achievement.

So how did you ultimately determine which solution fit best?

To begin, we knew that any solution we considered would need to be compatible with our recently installed Oracle-based HRIS system. It would need to accept real-time information and updates for performance and compensation reporting, as well as pass back updated information. After identifying our major technical and functional needs, we evaluated the offerings of a wide array of vendors and finally determined that Authoria's integrated suite of HR solutions best fit our present needs-and it had the ability to change and grow with the organization, regardless of the direction we might take in the future.

Tell us a little about the implementation process and the results.

Given the complexity of the company and our compensation system, we decided not to roll out the new system everywhere simultaneously. So, once we selected Authoria, we assembled a multinational, interdepartmental team and included the successful implementation of the system in the performance objectives of every team member. Although we had decided against a global rollout, we did set our sights high: Phase I was to include all Serono employees in Switzerland and the U.S. and our management staff around the world-about half of our workforce, spanning more than 20 countries. This took a lot of communication and close work with the local

Human Resources staff, but we ultimately achieved our launch objectives and the bulk of the implementation process went quite smoothly.

As for results, the implementation is still young but our HR staff feels their administrative load has lightened significantly. On the performance side, we had a goal of having 80 percent of participating employees set competency objective, and we achieved over 92 percent without any of the typical paper chasing. And, we also were able to significantly reduce the time needed for our senior management compensation review. Most importantly, the new system enables our HR staff to focus on its strategic function, so the quality of discussions with managers about a person's bonus or increase were much better. Because we installed both Authoria Salary and Authoria Performance, which are highly integrated, we could immediately see how our compensation plans were performing, who our most promising performers likely are, and where we might be having problems, anywhere in the organization.

What has Serono learned from the experience that could be helpful to others?

First, assemble a project team that includes a wide cross section of members-not just HR and IT representatives, but a good representation of end users as well. You need to learn how line managers in various countries will react to the system's user interface, for example. Will the terminology it employs confuse supervisors in one country and not another? You'll also want to establish a reasonable one-year goal for the project team. It's common practice to pilot test HR initiatives, but if you do, be sure to include non-HR staff who will actually be charged with deployment.

Secondly, our initial rollout objective was, in retrospect, pretty ambitious and risky. Phase 1 is where you learn what challenges you're most likely to encounter in subsequent stages, so starting on a somewhat limited basis is probably advisable, especially in complex multinational organizations. Finally, chose a system that provides a high degree of flexibility. The philosophy, customs, and laws that help shape every organization's compensation plans are continually evolving, so companies need to protect their technology investments by acquiring systems and solutions that can be easily adapted as circumstances change.