Building an Effective Shared Services Team at the World’s Largest Retailer




In February 2006, Wal-Mart’s finance executive leadership team began strategizing about transforming the numerous accounting processes for Wal-Mart Stores and Sam’s Clubs in the US and Puerto Rico into a shared services organization. As part of this process, a Shared Services Advisory Committee was formed, consisting of open-minded corporate leaders from the accounts payable, accounts receivable, general accounting and human resource areas. The committee developed a strategy that led to a vision of becoming a source of support to our internal customers, and providing them with business solutions and value-added information that would allow them to focus on their specific business plans and initiatives. Selling this message was key.

Because of the size and volume of accounting transactions processed at Wal-Mart, efficiency had already been worked into our environment. However, the plan was to offer additional value to our shareholders by lowering costs and allowing the business units to focus on their strategic priorities through resource sharing, increasing span of control, and integrating all accounting functions from different operating areas. Our strategy centered on developing the concept of "People–, Process– and Technology–" and communicating and marketing it to the company.

Marketing

The first marketing initiative was to create signs with our mission statement ("to deliver valuable financial services to Wal-Mart’s business and support units at a cost and quality better than competitive alternatives") and post them throughout the shared services building, including the lobby area, to ensure our business partners understood our focus.

The Advisory Committee researched different shared services concepts via publications in the marketplace (such as this one) and by networking with practitioners at SSON-sponsored conferences. The key thing was to learn how to effectively market and communicate our mission and achieve a smooth transition.

In benchmarking with other companies utilizing shared services and outsourcing support, our Advisory Committee traveled to Costa Rica to tour Procter & Gamble, Hewlett Packard and IBM facilities. One of the key takeaways from our benchmarking visits and conference attendances was the use of metrics to define process cost and measure productivity and how those metrics could be posted visually for all associates (our term for "employees") and customers to see. While many SSCs charge internal business units for their services, this was not in our transition scope as we were seeking ways to prove the value add our SSC could provide.

One of our greatest challenges was selling the value add of the shared services concept to other areas within the company that were still running their own F&A transactional processes. Shared services was not mandated from the executive level for all business areas, which made our focus on marketing a vital part of the transformation.

Communication

Our initial communication to the management team defined "success," and the "keys" to achieve that success. Success was defined as:

  • reduced cost
  • improved controls
  • initiation of best practices learned through benchmarking
  • improved customer service

Keys to success were identified as:

  • including the right people
  • developing the right culture
  • incorporating efficient support systems
  • a Results-Only Work Environment (ROWE)

The Advisory Committee identified gaps that existed between the environment as was and our vision, and developed a plan to narrow these. Another major challenge was overcoming resistance to change. The previous structure had been in place for more than 25 years; we knew that we would only win the divisions over if we could prove the implementation of the proposed changes would work and would create opportunities for associates to grow, learn new business concepts and remain engaged in the change.

Organizational Structure

An organizational structure was developed to support each major process within the shared services division. Both new and existing resources were utilized in this restructure. Centers of Excellence (COEs) for all major transactional processes were created to promote efficiencies, develop our people, enhance career paths, promote sustainability, and improve controls. The Centers of Excellence are marketed in our "Shared Services Wheel":

Initially, five such COEs were established:

  • Internal Disbursements (payroll, payroll tax, and travel & expense payables)
  • External Disbursements (merchandise payables, warehouse, asset & expense payables, freight payables)
  • Receipts (accounts receivable, billing and collections)
  • Controls (reconciliations, master data, transactional controls, post audit)
  • Support (imaging, data entry, record retention, technology and Six Sigma continuous improvement)

In 2007, an additional COE for General Accounting was added as the integration of new processes from that area of finance began to accelerate. Once we identified and realigned our existing processes and associates into individual COEs, we were able to utilize resource sharing and identify process efficiencies. A Continuous Improvement team was developed which utilized Six Sigma principles in its review of processes for all COEs. Several successes resulted from the reallocation of resources and the streamlining of processes that were deemed inefficient by our associates.

Such process changes had a positive impact on business units, both inside and outside our division. These positive changes created an avenue to market and communicate the value add our transition would have, not only to the business but also to the associates throughout the business. The largest impact for change within the organization was realized in the development of our Governance Committees. These committees were created because we understood that people were the key to our success and giving them a voice in decisions made would create the "buy in" needed to make our transition successful.

Initially, nine Governance Committees were created:

  • Communication
  • Finance
  • Executive
  • People (Associate)
  • Process (Metrics)
  • Marketing
  • Risk
  • Sustainability
  • Technology (Innovations)

At first, committees were staffed only with management associates. Each manager chose a committee to participate in, based on their area of interest and commonalities. Over the next several months, the
committees made great strides in increasing communication, creating a new culture, and instilling a greater level of pride within the organization.

To enhance communication to all associates in the shared services division, the Communications Committee developed a weekly newsletter which marketed committees’ initiatives, highlighted new hires and promotions, and introduced a new avenue of communication called SharePoint (Microsoft software) to th edivision.

Initiatives

The Marketing Committee led several initiatives to build divisional pride by purchasing apparel with Wal-Mart Shared Services embroidered logos, pride pins, and other items that incorporated the shared services logo. The senior leadership team wore these shirts and pins to promote pride within the division, and the items were presented in meetings.

To ensure the division had representation and insight at all levels, we expanded our committee participation to hourly associates. This move to include all associates within the division enabled us to overcome another challenge that we faced—that of divisional pride. Our associates could now identify with an organization that embraced change, was willing to share and involve all levels of associates, and create a professional atmosphere that promoted flexibility and career development. Governance Committee participation also helped identify several hourly associates with specific talents needed to push the organization forward. Career opportunities for these talented associates were accelerated, based on their increased exposure to a broader base of divisional leaders.

Associate Engagement scores measured through opinion surveys grew from 58% in FYE2007 to 71% in FYE2009. In addition, Senior Leadership held "skip level" meetings with associates to provide another avenue for communication, offering an opportunity for our associates to speak directly with Senior Leaders in the division without management reporting levels present, to offer ideas and give feedback on our progress. As our business grew, so did the need to promote and fill new and existing positions within the organization. From July 2007 to August 2008, there were 108 promotions within the division, including 66 promotions within the hourly ranks, 31 promotions from hourly to management ranks, and 11 promotions for management associates to a higher level of management; all on an associate base of 850 people located in Bentonville, AR and Derby, KS.

Committees Are Key

The Governance Committee structure has now expanded to a total of twelve committees. The Marketing and Communication committees were merged into one as it was recognized that they overlapped in many areas, resulting in a duplication of initiatives. The merged teams now create common strategies on how to market with creative input, and who to communicate those efforts to. There is also a Customer Experience Committee, which provides guidelines on service level agreements and customer scorecards.

In addition, we added Talent Management, Building Pride, and Strategy Committees. Our Talent Management Committee meets weekly to review divisional job openings for internal postings, along with developing career paths and succession plans for the division. The Building Pride Committee, made up of mostly hourly associates, prioritizes the project list for improving our facilities from an associate’s perspective. The Strategy Committee is the most recent addition, developed to better define the division’s long-term (greater than five years) strategy. By giving autonomy to these dynamic, cross-divisional committees we’ve achieved remarkable results—while at the same time avoiding bureaucracy.

Governance Committees have proven to be the key success in improving associate engagement, participation, and level of morale. As an example, this year’s "Victory Campaign," in which we were challenged to operate with an expense structure that was four percent less than that of the previous year’s. The Marketing Committee developed a campaign to drive this initiative (Win At Reducing, or WAR) and encourage all associates to participate with expense saving ideas and personal commitments to reduce costs throughout the division. Signing for the WAR theme was based on the 1940s theme during World War II, with illustrated pictures and concepts of the U.S. public pulling together in times of need.

Another initiative, the HERO (Helping Expense Reduction Occur) pledge, was introduced for associates pledging to reduce expenses. Each associate that pledged received a camouflage t-shirt, a HERO lapel pin and lanyard. The camouflage shirts are worn on jean days or casual dress days within the division, and the lapel pins and camouflage lanyards are worn daily. In addition, the team created a BRAVO award which stands for "Bigger Rewards Allow Victorious Outcomes" which provides financial incentives (up to $1,000) for cost saving ideas implemented from suggestions by hourly associates.

The Talent Challenge

With Operations and Merchandising at the heart of Wal-Mart’s business, the shared services division and other divisions indirectly related to operations face challenges with recruiting talented associates (both hourly and management). The more attractive jobs were thought of as being related to Operations or Merchandising. To build divisional talent, we needed to position ourselves within the company as a destination point for talented associates. Our continued marketing efforts have paid off. We are starting to see more and more interest in our division as we continue to create excitement within the company and promote our associates to their fullest potential. This trend, in turn, has enabled us to showcase our talent within the finance organization.

Career opportunities within the division enabled our associates to fulfill F&A core competencies outlined by Wal-Mart financial leadership for more senior level promotion opportunities. Increased interaction within the finance organization has provided us with opportunities to participate in quarterly finance meetings, accolades for the team from our CFO and CEO (unprecedented visits to our facilities!), and an active seat at the Finance table as accounting experts.

As we continued to showcase our accounting and process expertise and present the scope of current transaction volume and dollars, we began receiving requests from different areas of the company for a review of their F&A processes. As a result of implementing the Centers of Excellence concept, the integration of new processes occurred with little to no interruption to customer service. Many processes were integrated without additional headcount.

In some instances, specific teams were integrated along with their processes. This enabled us to implement F&A controls and efficiencies by merging into existing processes with commonalities. Communication and Marketing of our financial shared services also included education of this concept to our business customers outside of Wal-Mart. In September 2008, we held a Supplier Summit which was attended by more than 300 Wal-Mart merchandise suppliers. Each Center outlined its key responsibilities, contact information and shared how to communicate effectively to resolve issues.

Global Services

As Wal-Mart Stores, Inc. continues to grow, especially on the international front, it has become apparent that a Global Finance Transformation Project is needed to support continuing initiatives. We have now embarked on this project, which will dramatically change the financial landscape we operate in. The journey includes moving all current financial systems to SAP. Several SSC managers were transferred to a project team to assist with the planning and integration of the SAP system.

The transformation to SAP will allow Wal-Mart to move to a single global platform for all countries. Different financial platforms have been a significant roadblock in the path of continued growth. Based on the success of our US Finance SSC, Wal-Mart is exploring various options to operate financial SSCs to support all our operations in North America, Asia, Europe and Latin America as a part of the PROFIT Global Finance Transformation Project. The project group formed a Global Financial Shared Services team which spent a great deal of time with managers in the U.S. shared services division reviewing organizational structure and process maps, and benchmarking the governance committee approach.

Our transition is not yet complete, as we strategize on becoming part of the North American Shared Services Center. We have learned a great deal through the transition to date and are currently working to complete a professional catalog of services to publish and display for our business partners. With the benefit of hindsight, this catalog of services would have been beneficial to our customers from the beginning as we were integrating processes into our division.

Additionally, we continue to focus on growing our management talent in the organization as we have lost several subject-matter experts to job rotations during the three-year transition. Our shared services management team is excited and ready for the future. The future includes global growth, increased skill set through professional certifications in the F&A profession, a continued focus on our business partners, and additional integrations to provide the value-added solutions for the company. In the end, our journey so far has shown that financial shared services works at Wal-Mart.

Points of Discussion:

In February 2006, Wal-Mart’s finance executive leadership team began strategizing about transforming the numerous accounting processes for Wal-Mart Stores and Sam’s Clubs in the US and Puerto Rico into a shared services organization. As part of this process, a Shared Services Advisory Committee was formed, consisting of open-minded corporate leaders from the accounts payable, accounts receivable, general accounting and human resource areas. The committee developed a strategy that led to a vision of becoming a source of support to our internal customers, and providing them with business solutions and value-added information that would allow them to focus on their specific business plans and initiatives.

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