Jack in the Box is a quick-serve industry leader with more than 2,000 restaurants, an appealing brand icon, high-quality advertising, and a unique menu. A few years ago, the company was positioned for growth, but needed something more—it needed employees who were hitting their stride, delivering consistent quality, and engaging restaurant guests, and who were highly productive. And in an industry where 150 percent turnover rates were common, Jack in the Box also sought to improve retention for a distinct advantage. It was a Mount Everest–sized challenge.
Since then, 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. The company’s success hinged on three major areas of improvement: increased alignment of people and functions throughout the organization; a steady focus on growing the “right” capabilities; and enhanced employee engagement.
Using the People Equity model developed by the Metrus Institute and a commitment to execution, Jack in the Box has been able to up its game by focusing on alignment, capabilities, and engagement (ACE).
The company began with some serious introspection. It already had feedback from customers, but wanted to learn from its employees. The company commissioned the Metrus Group to begin a programmatic effort to assess and track alignment, capabilities, and engagement in the context of its unique strategy to find out if improvements in ACE could help it improve guest ratings, visits, and spend, and thus improve its financial performance.
After a series of employee surveys, interviews, and reviews of performance data, Jack in the Box acquired important diagnostic information to leverage its talent and achieve its goals. For example, it was able to pinpoint alignment gaps in the understanding of key brand promises, in communications flow, in areas of corporate support, and between restaurant managers and crewmembers. It also quickly learned about capability gaps that needed to be closed in managerial skills, communications, resources, talent requirements, and corporate support.
Finally, it discovered that engagement varied greatly across restaurants. Why? Different drivers of engagement, such as supervisory behaviors, some corporate policies, and initiative overload among others, were strangling higher performance.
One of the “a-ha” moments Jack in the Box observed is that despite uniform hiring, pay, training, onboarding, performance management, and other human resources systems, business performance varied greatly across its restaurants. It looked at the various combinations of high or low alignment, capabilities, and engagement and realized that it had examples of nearly every type of profile across its restaurants—very low and very high engagement, alignment, and capabilities—but not always in the same configuration.
Metrus Group partnered with Jack in the Box to statistically look at the service-profit chain, a model for connecting people, service, customers, and profit. The findings validated the effort put into ACE improvements. Alignment, capabilities, and engagement were shown to be highly related to employee turnover, discretionary effort, and both revenue and profit per restaurant.
Statistical modeling, for example, revealed that while all three ACE factors predicted guest satisfaction, the capabilities factor had the greatest relative importance. Understanding this greatest point of leverage is critical, since guest complaints were 32 percent lower in high ACE locations compared with those in low ACE locations. The company found one half of its restaurants, divided about equally, in the “high risk” and “optimized” profiles. The high ACE locations provided great places to find best practices and significant opportunities to increase guest satisfaction.
Furthermore, by “getting the red out”—moving units out of the “sub-optimized” profiles—Jack in the Box was able to increase revenue and profit per restaurant.
Turnover, one of the biggest costs in this labor-intensive industry, was 25 percent lower in high ACE locations than their ACE-impoverished counterparts. For hard-pressed restaurant managers, less time spent on talent acquisition and training means more time available for effectively running the operation. On the intangible side, it means more brand clarity to guests and employees alike, and more cooperation and alignment across functions.
Based on Jack in the Box’s experience, organizations should consider taking a few important steps. First, measure the right things through the eyes of your workforce; alignment, capabilities, and engagement all contributed to understanding and predicting important business outcomes. Second, validate how ACE works in your organization. Will capabilities be the largest driver of turnover, as it was with Jack in the Box, or will it be engagement?
Third, dig deep. If you design your employee survey well, you will also understand the drivers of ACE. Then, if you are low in an area such as capabilities, you will know whether it is due to training, teamwork, or some other issue. Get data and move beyond old assumptions, such as the belief that engagement alone is enough to manage and measure your workforce.
Finally, understand that you will have a lot of variance over different managers and restaurants; the key is not only having the ACE information, but following through with targeted improvements.