Jack in the Box CEO: Aligning HR, Finance and the CEO for Business Success

Among the many fascinating presentations planned for the i4cp 2016 Conference: Next Practices Now, one we're most looking forward to is People Deliver Strategy Jack's Way, co-presented by the Chief Executive Officer, Chief Financial Officer and Chief People Officer of i4cp member organization Jack in the Box.

This presentation will focus on how organizations can enhance and accelerate strategy execution by aligning C-Suite leadership, and how Jack in the Box CEO Lenny Comma, CFO Jerry Rebel, and Chief People, Culture and Strategy Officer Mark Blankenship work together to ensure that their organization drives strategic execution in alignment with stakeholder needs.

To get a preview, we sat down with Lenny Comma to discuss business strategy execution, how HR and Finance must work together (and overcome differences), and the challenges of driving culture in a franchise-operated model.

What are the one or two most effective elements or actions needed to ensure that your direct reports work together to effectively execute business strategy?

In my mind it really starts with the CEO clearly identifying who the key stakeholders are and how I expect decisions to be made on behalf of the stakeholders. So in my case, I've identified our stakeholders as our employees, our guests, our franchisees and our shareholders, and what I essentially discuss with HR, Finance and other functions is that when we make decisions, we can't be in a position where we're making decisions that are hurting one stakeholder on behalf of another.

We have had situations in our past where those stakeholders had not been identified and the expectations around making decisions that are positive for all four stakeholders had not been set--where we would make, say, a financial decision that helps the shareholder but really hurts the employee, or one on behalf of employees that hurts the franchisees.

So we had to get into a situation where we said, 'let's make balanced decisions that should be positive over the long term for all four stakeholders.'

The second element is that one of my jobs as the CEO is to help my direct reports understand their decision making authority. I have empowered Mark, Jerry, and others to make decisions as individuals, but I've encouraged them to make decisions collaboratively. HR does not report to Finance, so ultimately if HR needs to make a decision that is going to cost some money, but Mark believes it is the right thing to do, he has the authority to do that.

Now, they don't typically make decisions like that where they haven't collaborated or aligned, but I like them to know that they can because in the absence of them knowing that, in most companies, the common pecking order is the CEO, the CFO, and then everyone else. Here, Mark can represent employees as a stakeholder, Jerry can represent the shareholders as a stakeholder, but they must work together to make balanced decisions.

Do you see room for further alignment between HR and Finance?

Where I think there are opportunities for greater alignment really fall into two categories: accountability and driving culture or purpose. I don't necessarily use 'culture' and 'purpose' interchangeably, but they cross over quite a bit.

Regarding accountability, on the HR side of things, what I have found in several organizations is that there is a lot more comfort with a lack of direct accountability for outcomes, whereas in the Finance world, everything is really black and white, so there is a lot of comfort with accountability.

Where I see clashes, you'll have an HR organization saying, "We need to drive culture. We need to build a purpose-oriented organization," and the CEO is really aligned to that and wants to drive that agenda. But you'll have an HR organization that won't want to put together a business case that has associated with it expected outcomes, financial or otherwise. Typically in HR, it gets verbalized as 'this is the right thing to do, this will really engage our employees.' For the typical finance guy, that's not enough: 'So what if it engages my employees--if it ends up with worse results, why would I do it?'You have to associate these things with results.

In general, what don't chief HR officers in other organizations think about (that they should) when it comes to driving strategy execution?

They're not thinking about the financial return, and if they are thinking about it, they haven't calculated it. And they are really comfortable with giving a SWAG [scientific wild-ass guess], whereas the finance person wants real estimates and accountability for those estimates.

The thing HR needs to think about is that finance may be hardcore about financial returns and accountability, but they also live in a world where a lot of those estimates don't get met, and they can be very reasonable and supportive to help you achieve your target. They can also help you analyze what's going on so you can drive better results next time.

If you don't give Finance a concrete way to play in this space, it's very tough for them to operate. You have to step up and do that.

For HR officers, what they need to realize is 'if I do this, what it allows me to do is quid pro quo bring in some of these groups that have been historically less sensitive to people issues to help address people issues.' That's what I think HR officers should be thinking about that they aren't.

Where do they often fail?

This doesn't just apply to HR, but all non-profit-generating leaders need to gain enough business acumen to approach situations as business partners first, and as functional leaders second. If you can understand your business partner's perspective and concerns, their goals and their challenges, you'll maximize your opportunities to succeed, but if you're the emperor with no clothes who shows up to the party with a narrow perspective, all functionally based and you can't even walk a quarter mile in their shoes, you're a horrible business partner and it becomes very difficult to deal with you. This is where I see failure, especially in HR.

Does Jack in the Box rotate people into HR from other business functions?

The answer is yes, but I think we could do it more often. In the last couple of years we brought a director of operations into a senior HR role in the corporate office and he did that job for a little over a year for his development, but in truth, it also helped with the development of those he was leading so they could gain a broader perspective. It worked, it was like magic. It was such a great thing to do for all of those employees. One of Mark's direct reports today, Melissa Corrigan, who used to report to this former ops person, I think a lot of her success stems from the fact that she saw this broader world by working for this person.

What's an example of how HR and Finance have worked together to benefit multiple stakeholders?

We decided a few years back that we wanted to retire our pension plan. This is mainly a financial decision because pension plans create a fair amount of earnings volatility for us. It became really hard to predict what our quarterly earnings would be because there would be these wild swings in our pension that were often non-cash, but nonetheless you had to report these huge swings in your earnings.

Finance was looking for a way to remove that volatility--they weren't necessarily looking for a way to save money. Meanwhile, what HR wanted was a benefits program that would help us attract and retain employees. So what they did was come together and create a new 401(k) plan--don't ask me the details--and everyone can participate, regardless of income level. It's also a richer plan where the company participates at a higher level of matched investment and it vests immediately.

So why would you do that? We had this plan to replace our retirement plan, we needed to get good retention, and to attract employees and we knew this would do it, but also we were able to recognize that the programs that drive retention today are different than the programs that drove retention in the past.

In the past, you might think I might stay here until retirement age so a pension plan makes sense, but today's employees are thinking 'I'll be here three-to-five years, and so if you want me to stay three-to-five years, what am I getting?' So a 401(k) plan that vests immediately is a great way to attract employees, and if you're only keeping employees for so long, you can't afford to have a five-year vesting period.

If HR had said we have to replace this pension plan with something similar because that's what we believe this stakeholder [employees] need, you'd have a big conflict. And if Finance were to say, 'We're able to get this pension plan out of here and who cares about retention and attracting employees,' that would have been an issue. When you have a broader business acumen than just from your function, you're able to work together in a more appropriate way.

Do you face limitations or unique challenges in executing your people strategy at the franchise level?

That is very challenging but what we've learned over time is a couple things:

First, the senior-most people have to expect quality time directly with franchisees. You can't delegate the responsibility of setting the tone on these types of things. Last year, Mark and I were at the National Franchise Association Conference for Jack in the Box and we presented back-to-back, me about building a purpose-driven company and his was on driving a positive culture that drives engagement and results within your organization. So we deliver those types of messages directly to the franchise group and spend time each quarter with the franchisees, whether it be in their advisory councils or out in the field, to continuously reinforce these messages.

What we found is that if we don't do that, we're saying it’s okay to have every one of these organizations be misaligned. You're better off setting the tone, but what you think is important to the organization--reasonable things that they can buy into--it gives them some behavioral parameters around the leadership we expect and the behaviors we expect in our restaurants.

The second thing we learned is that franchisees can't necessarily carry that message to frontline employees. Some of them are just not equipped as leaders to carry that message, and they told us that. So what we have to be prepared to do is find other vehicles to get those messages directly into the restaurants.

For example, I do two-minute videos every two weeks called 'What's on Lenny's Mind?' and it goes out to everyone in the restaurants and out to corporate. Most of it is around culture and people and leadership and ethics and those kinds of things where I'm constantly setting the tone. That way, if the franchisees can't carry the message, you have the voices from the top directly touching the frontline employees.

How similar in personality are you to Jack the CEO?

I am a big goofball. People know--I dance in the hallways, I'll randomly break out in a song, I joke around and laugh, I'm very affectionate and hug everybody, and in those ways I'm very aligned to Jack.
Jack also has a history of being a challenger, where he's always challenging the big guys, and I have a passion and appreciation for the underdog, regardless of how well I've done in my career, I've always considered myself an underdog and it keeps me motivated. We have that in common.

Where we're not 100% aligned is Jack is snarky as heck. We've changed his voice a bit, but his old voice is really snarky. I'm not as snarky as him, but I do find everything funny. I share his insensitivities, but I'm not as snarky as he's traditionally been.