In an effort to respond to the ever-changing and increasingly complex world of corporate treasury and finance, AFP is refreshing the Executive Forum. Now known as BreakThrough Treasury and Finance, this event will focus on some of the biggest innovations happening in this space.
AFP recently spoke with John Josten, CTP, assistant treasurer, Tractor Supply Company, whose session at the event centers on how treasury and finance leaders manage change efforts. Doing so effectively will have a positive effect on the organization’s ability to drive growth and survive disruption.
AFP: One of the only constants in treasury and finance these days is change. Can you share some of your experience in managing change at Tractor Supply Company?
John Josten: Some of the bigger changes we’ve been going into seem to hit from different angles, especially on the treasury side. Bank branches have been closing, so we’ve had to look at the physical procedures around cash handling. Then we’ve got the regulatory issues that are seemingly constant. And at least for us, we consider any change that comes from the major credit card brands as a regulation.
The other side is technology. Every year, the IT folks are coming up with different ways to do things. Most of those are better, but they’re a little bit more challenging. But I have to say that, for the most part, we’ve handled every change of a material size through technology. It does really seem to be that, in order to move better, faster and cheaper, we need to investigate and find the best technology. Technology just seems to be the overarching answer when it comes to responding to change.
AFP: Can you elaborate on some of the technologies you’ve implemented?
Josten: When it comes down to fees, we’ve been getting the most bang for our buck by moving to least cost routing on debit cards. That has really shown us some strong returns. We’re even at the point where we’re beginning to negotiate contracts with the various debit networks, depending on what volumes of business we think we can give them and what discounts they’re willing to give back. So that’s a huge win for us.
I think probably the biggest change that we’ve been dealing with recently is the change to EMV chip cards. That was a multiyear process for us. It was a combination of hardware in our stores, plus an awful lot of software, and a lot of analysis of every type of transaction that would be going through the cash registers to make sure that we had the right answers in place.
AFP: Was the EMV transition difficult in terms of training your employees? And how about your customers? Was there a learning curve for them as well?
Josten: Yes, there were definitely customers who needed to be trained, because every retailer did their EMV transition a little bit differently. Fortunately, we were a little later to the market on it than we were supposed to be; we missed the original deadline. But that gave us a hand-up because the huge retailers had already started to train their customers.
But yes, making sure people understood which buttons they were supposed to push and which ones they weren’t—that’s both on the cashier side and the customer side. Sometimes there were issues in which a customer was trying to pay by Visa but Visa International would show up on the screen and they had no idea what they were looking at.
But we knew how big this was going to be and we assembled a really good, solid, cross-functional team that was able to address this from all sides. We all knew that there was no question; this was a change that was coming, and we had to address it as quickly and completely as we could. That’s the case more often than not; when we’re addressing change in this day and age, there’s no choice. There’s rarely the ability to decide whether you want to do it.
AFP: There have been some retailers, particularly in the fast food sector, that have opted not to transition to EMV because their fraud levels were so low. Was that ever a consideration for you?
Josten: I’ve had conversations with a lot of the fast food folks, and they have a point; no one is going to compromise their cash registers to steal $20 worth of lunch. But we have far too many high-priced ticket items that we had to make the change. And I’ve had some conversations with the card brands and they’ve admitted that fraud has been rolling downhill. When the giant retailers all implemented EMV, then the fraud immediately went to the second tier stores, and then the third tier.
It’s unfortunate, but you don’t have to run faster than the fraudsters—you just have to run faster than your competitors. So the quicker we could get EMV up and running in our stores, the more protected we were going to be. We saw a huge upswing in fraud after the other guys got EMV in place.
AFP: Thinking a little broader now, what are some tactics that treasury executives can apply when their teams are trying to manage change that’s coming frequently?
Josten: I think keeping up to date with what is going on is one of your only chances of getting ahead of it. At the risk of sounding like a commercial for AFP, one of the best ways we’ve found has been making sure everyone on our team is a CTP and that they maintain their CPE credits. The conferences are a phenomenal place to either learn about what is going on, or at least get that introductory course in what it’s going to take to keep up to date on what’s facing us all. There has to be a way to learn what is coming at you, and for us, the AFP Conference has been the best place to make sure that we can see ahead.
Don’t miss John Josten’s session, The Pace of Change: Leadership’s Change Management Challenge, at BreakThrough Treasury & Finance, May 6-8 in Nashville, sponsored by Bank of America Merrill Lynch. Register by April 6 to save.