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From the Inside Out

From the Inside Out

Management lessons from the quick-serve world.

By William A. Schiemann & Mark Blankenship

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William A. Schiemann is CEO of Metrus Group and the Metrus Institute. Mark Blankenship is senior VP and chief administrative officer at Jack in the Box Inc.

How hard could it be to make a hamburger the same way over and over again? Harder than you might think—which is why your local quick-serve restaurant can be a surprising source of great management insights.

The quick-serve industry is one of the most challenging for a variety of reasons: tight margins, highly competitive pricing and menu offerings, and employee turnover often exceeding 150 percent annually. Quick-serve companies and their franchisees are continuously challenged with fickle customers and morphing markets, abrupt competitor pricing and menu moves, and the need to drive brand promises quickly to the field of engagement—that is, your local restaurant. All of which can lead to huge—and undesirable—variability from restaurant to restaurant.

Jack in the Box is a quick-serve industry leader with more than two thousand restaurants, an appealing brand icon, great advertising, and a unique menu. A few years ago, the company realized that if it could optimize its talent better than its competitors, executives could execute their strategy more quickly and effectively, creating a competitive advantage. The company was positioned for growth but needed something more: highly productive employees who were hitting their stride, delivering consistent quality, and engaging restaurant guests. In addition, in an industry with mind-boggling turnover rates, retention of good performers is a distinct advantage.

Some years back, research identified individual restaurant managers as the biggest fulcrum for profit or loss. Either these managers quickly build individual and team capabilities that are engaged and aligned with the brand promise or they sub-optimize talent—a deadly outcome in a low-margin business. Nothing can be wasted, especially talent.

The company’s efforts have paid off. Since focusing on optimizing talent, Jack in the Box has achieved increased consistency of service delivery and significantly lower turnover, and has become an attractive place to invest for franchise operators. A big part of this story hinges on three intangible but crucial areas of focus and improvement:

  • • Increased alignment of people and functions throughout the organization
  • • A steady focus on growing the “right” capabilities
  • • Enhanced employee engagement

Where did the plan come from? A few years ago, Jack in the Box executives came across the Metrus Institute’s People Equity model and wondered how it might leverage it to achieve higher performance. Over the past three years, the company has been able to up its game by focusing on alignment, capabilities, and engagement—the three components of People Equity—adapted in a way that made sense for the business.

Digging Deep

Company executives began with some serious introspection. Customers already offered plenty of useful feedback, but what could Jack in the Box learn from employees? The company had the usual temperature-taking information: engagement surveys, guest complaints, turnover, and operational white-outs. But as a good physician would do, executives needed to see an organizational X-ray or, better yet, an MRI of the soft tissue behind the structure, roles, and responsibilities.

After all, when you think about it, employees hold a great deal of information in their heads about relationships with customers, the effectiveness of operations and processes, teamwork, leadership capabilities, and how well the brand promise is being executed. Jack in the Box commissioned Metrus Group to begin a programmatic diagnostic effort to assess and track alignment, capabilities, and engagement in the context of the company’s unique strategy to find out if improvements in ACE could help improve guests’ ratings, visits, and per-visit spending and, hence, the company’s financial performance.

Through a series of employee surveys and interviews, along with a review of performance data, executives not only obtained an X-ray of how well they were aligned (the head), capable (the hands and legs), and engaged (the heart)—they scanned for the drivers of ACE as well, providing the organizational MRI that provided clear information about why any of the indicators scored high or low, and what could be done about it. Like good doctors, executives first checked the symptoms but then got behind them with sound diagnostic evidence before prescribing actions and investing corporate resources. For example:

  • • They were able to pinpoint key alignment gaps—in the understanding of key brand promises, in communications flow, in synchronized support-function priorities, and between restaurant managers and crew members. Some of these gaps were systemic across the organization; others were unique to specific geographies or operations.
  • • They quickly learned about capability gaps that needed to be closed in managerial skills, communication effectiveness, resource sufficiency, employee skills, and corporate support.
  • • Engagement varied greatly across restaurants. Why? Different drivers of engagement—supervisory behaviors, some corporate policies, and initiative overload—were strangling higher performance.

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The Conference Board Review is the quarterly magazine of The Conference Board, the world's preeminent business membership and research organization. Founded in 1976, TCB Review is a magazine of ideas and opinion that raises tough questions about leading-edge issues at the intersection of business and society.