by Russ Banham

Best Buy’s Shopping Spree: Best Buy expands its customercentric approach to internal as well as external customers, Outsourcing its HR.

When Best Buy opted last year to begin transforming itself into a more customer-centric company, its metamorphosis unfolded gradually, touching different parts of the organization. But, the nucleus of the enterprise-wide transformation is human resources— the more than 90,000 employees who engage Best Buy’s customers.

To bring its transformation to a new level, Best Buy—a market-leading specialty retailer of consumer electronics, home office products, and entertainment software—reinvented its human resources organization by outsourcing non-strategic administration and transactional functions to Accenture HR Services. Under the seven-year outsourcing agreement signed this past January, Accenture HR Services will provide a range of services that include compensation, payroll, benefits, bonus administration, and performance management, among several others. Best Buy retains overall HR strategy, guiding employees to achieve its customer-focused transformation.

Accenture HR Services, one of only a handful of top HRO service providers, boasts a prominent client list that includes British Telecom (BT), Levi Strauss & Co., the U.S. Transportation Security Administration, and even the city of Copenhagen. The firm offered Best Buy a compelling value proposition: to help Best Buy transform HR not only into a best-in-class service model with “onestop shopping” for employees via integrated HR processes, services, and technology, but also to liberate Best Buy’s HR professionals to redirect the company’s human capital to focus on its customers. “We’re placing the customer at the center of their work and focusing our HR resources on the things that make a difference to our customers,” says John Walden, Executive Vice President of Human Capital and Leadership at Minneapolis-based Best Buy.

Best Buy’s new strategic direction is called “customer centricity,” which Walden explains “means trying to delight particular groups of customers by tailoring the products we offer in our stores to them, as opposed to the customary mass-market approach.” The customer-centric model represents the largest transformation of the company in its history, affecting the way in which the company thinks about its customers, the mix of products and services it offers them, and how employees interact with them. In addition, the strategy embraces the kinds of employees Best Buy wants to attract and the leadership it must deploy to achieve its transformation. “This is a very fundamental change in how our talent will be deployed to meet the demands of our customers,” says Walden.

“It required that we create a very different sort of HR infrastructure, one that supports the management of our talent base, leveraging what we do best as a department, and then aligning ourselves with an external partner that specializes in things that lie outside our core areas of focus.”

While Best Buy achieves a means to its transformation, Accenture HR Services hits the ground running with a worldclass HRO operation in North America, similar to its groundbreaking deal with BT in Europe (profiled in the HRO Today June 2003 issue). “We can leverage this newest partnership to achieve in North America what we did with BT in Europe, expanding on our true global breadth and multiple-platform capability,” says Diane Shelgren, Chief Operating Officer of North America for Accenture HR Services. BT she noted, utilizes a PeopleSoft enterprise resource planning system, while Best Buy is built around Oracle. The service provider also has clients on SAP’s ERP system.

Best Buy was the right client to build out Accenture’s global service platform, Shelgren comments. “Best Buy wanted a capability in place to take their HR services to the next generation,” she says. “They really wanted to transform the role of HR to make it more strategic, but also sought to transform their culture to unlock some of the human capacity they had in the business, by simplifying the employee experience through improved employee self-service and contact support. They’re extremely innovative and forward thinking when it comes to employeeprovided service, wanting the entire process to be as seamless as possible.”

BEST CLASS

Best Buy already had a long standing relationship with Accenture when it signed its pioneering HRO contract in January. Accenture had provided consultative services in the past and had developed a deep understanding of Best Buy’s culture, business, and values.

Efforts initially were underway at 37- year-old Best Buy to rethink HR in 2001. The Fortune 100 company had grown and diversified at an amazing rate in the 1990s, but its investment in HR had not kept pace, and it was beset with inferior technology and process infrastructure. “We were working like crazy trying to keep up with one of the fastest growing companies in the world, but without the benefit of the very best practices and technology the industry had to offer,” Walden says.

In 2002, various cross-functional “workout” teams were assembled to research the diverse capabilities underneath the HR umbrella, closely examining its services to determine the best way to support the organization in the years ahead. A major goal was to improve speed to capability. As this work progressed, Best Buy’s top management undertook the company’s new customercentricity strategy to totally re-engineer the customer value proposition at Best Buy stores, thereby distinguishing it in the market from competitors like Wal-Mart and Dell. Over time, these efforts collided and coincided. The new customer-focused strategic direction not only validated the transformation already underway in HR, but also accelerated it.

“The notion of customer centricity gave us a focus to deploy employees in such a way to think about how to serve specific groups of customers with the kinds of products they not only might want, but an experience that will delight them,” says Walden. “That affects how our stores display merchandise or assemble inventory or how these items are bundled and priced. Our employees will know these customers so well and the profit and loss impact of them that they will do innovative things to ensure the customer feels this is the best place to shop—that Best Buy is more than just the best buy.”

“The way to do that is not simply saying ‘behave differently,’” Walden continues. “You need to give employees new tools and methodologies that will abet the strategy, and HR is the perfect place to do that. We have this incredible network of 160 employees all over the corporation, from the corporate office and district offices to our field organization, whose job it is to provide HR services. If we can liberate these HR professionals from providing administrative and transactional support to our group leaders and make them change agents moving the dial on how group leaders and their employees act, we can accelerate our business performance.”

HR is the catalyst of Best Buy’s overall transformation, leading change across the organization. But first, it had to offload the administrative and transactional things HR used to spend its time on. “The best way to do this, we realized, was to engage an external partner using a strategic alliance approach,” says Walden. “We and Accenture have an opportunity to pioneer a new model of partnership, in which our respective employees function as one cohesive team that creates greater value from their respective strengths.” He notes that both companies actually prefer the term “partnership” rather than “outsourcing” in describing their relationship.

BEST PRACTICES

By aligning with Accenture, Best Buy can leverage the provider’s global expertise in building and providing HR services and systems, allowing it to achieve a flexible, scalable delivery model much faster than if it were to build these capabilities in house. In addition to speed to capability, the partnership simplifies the complex challenge of transforming HR, enabling Best Buy’s HR professionals to focus on leading the human-capital component of its transformation.

The payroll and bonus administration functions that previously were the province of finance have moved over to the new HR team at Accenture. “Aligning these functions under HR allows for a single point of contact for Best Buy employees, thus improving the overall employee experience,” Walden explains. “It also enables employees in these functions to work more seamlessly and collaboratively with each other— common in other world-class companies.”

As part of the outsourcing agreement, approximately 120 employees at Best Buy have now become employees of Accenture HR Services to service Best Buy and potential future clients. This group of employees consists of about 90 former HR corporate and field personnel, of which roughly 25 are from the payroll and bonus administration teams and the remainder are IS personnel supporting HR systems. These employees will serve as the basis of a new Accenture HR Services delivery center nearing completion in Minneapolis. At present, most employees remain at the Best Buy campus awaiting the christening of the new service center.

Accenture will build several new HR capabilities for Best Buy, including a onestop call/service center to answer or investigate all employee questions; an employee web portal to automate all possible employment and management processes and answer employee questions; a staffing system to facilitate the internal and external recruiting of employees; and an employee-centric data warehouse that centralizes all data about individual employees, with the expected security and integrity that is required. The services delivered by Accenture HR Services will be phased in over time, but ultimately will include compensation, bonus administration, performance management, staffing and recruiting, HR support staff, Information Systems staff supporting HR systems, payroll, benefits, corporate HR generalists, and HR operations and technology.

“We have begun a series of capability release builds, as we call them—infrastructure components we need to have in place to have the new service-delivery model up and operating,” says Randy Ross, Best Buy Vice President of Human Resources. “The first one to be live is our staffing management system, which went up in early August. As these systems move over, the employees that are now part of Accenture physically move over with them.” Up next are Best Buy’s compensation management system and the new employee Web portal, Ross notes.

Ross says his job has changed in important, if not drastic ways, since the agreement. “This is all about a partnership with Accenture—they are not a vendor,” he explains. “We troubleshoot and problem- solve together. Consequently, I worry about things like how the partnering part of the relationship is coming along.”

As for his daily dealings, Ross now heads a group of specialist leaders whose job it is to focus on strategy in their respective areas. “For example, the director of our benefits administration group recently produced information about how our employees are using their benefits, allowing us to strategically design our next rewards benefit iteration,” he says. “When you are fighting day-to-day fires like ‘my benefits claim hasn’t been processed’ or ‘my payroll doesn’t reflect the accurate amount,’ you don’t have the time to do the kind of data analysis you want. I now trust that my partner’s system will take care of these problems, and what I do is manage that through our service level agreements. The flow of the work and the culture we’re jointly trying to build—that’s what I pay attention to now.”

SIDEBAR: PEOPLE POWER

One day you’re working in the human resources department at super retailer Best Buy, the next you’re an employee of Accenture HR Services. The odd thing is you still work with many of the same people and—for at least the time being—at the same desk and in the same chair. This seemingly metaphysical feat describes the working lives of 120 former Best Buy/current Accenture employees like Melanie Douglas. “Up until today, my paycheck said ‘Accenture’ but the jobsite said ‘Best Buy,’” Douglas laughs.

Prior to March 1, 2004, Douglas was the Employee Relations Director at Best Buy. Today, she’s the Employee Relations Service Line Lead servicing Best Buy at Accenture HR Services. Does she like the switch? “What is exciting about this is that I get to work with Best Buy as a client to understand their needs and provide services the way they see fit, using world-class technology and processes with a much larger staff,” she responds. “At Best Buy, HR was a cost center that had a difficult time competing for resources against other parts of the organization that bring a return to the company, such as the supply chain. At Accenture, HR is the sole focus and the core competency. It’s a profit center, not a cost center. This is our business.”

Her much larger staff includes specialists focused on a particular HR function, such as benefits administration or payroll. “At Best Buy, we utilized HR generalists, with one person handling several different issues across the organization,” she explains. “The new model calls for deep expertise in areas of employee relations like records management or lead management, handling regulated and unregulated time off. We now have true standardization; we’re building teams that allow us to provide better services to Best Buy and then commercializing this model to offer the same services to other organizations. Ultimately, we can draw from the best practices of each client to improve services for all clients.”

Douglas is not the only former Best Buy employee liking the switch to Accenture. “To suddenly find yourself no longer a support function within a corporation but instead being all about the end product that another company provides has proven very exciting for many people here,” says Randy Ross, Vice President of HR at Best Buy. “Many times, HR finds itself at the bottom of an organization fighting for resources. To be the center of what Accenture as an organization is building—to go out and provide HR services to multiple organizations—is compelling.”

Ross says he was “personally surprised” at the extent to which HR employees reacted to the transition. “In most cases, these people were members of my team, but they were so positive about the opportunity to make a career in this new environment. Helping them, of course, was that they did not have to move to another city—that, and the fact that for several months they still worked at the same desks. It was a pretty transparent transition.”