On April 6, 2009, Texas Roadhouse CEO G.J. Hart appeared on NBC News to defend the company's decision to hold a five-day incentive event for restaurant managers in San Francisco. The event was the company's annual Managing Partner Conference, which brings roughly 1,000 restaurant managers (called “managing partners”) and their guests together for five days of fun activities,, and charity work. With incentives in all industries coming under fire in news outlets, Hart chose to shed some light on the benefits that events of this kind provide to corporations, their employees, and the economy as a whole. Senior writer RACHEL ECCLES caught up with him to find out what sparked his decision to speak out in this way, and the role recognition and reward programs play in his corporate strategy.
CMI: What made you decide to speak out in defense of incentives at this moment?
G.J. Hart: All hotels have been hurting and The Ritz-Carlton [one of the host hotels for this conference] actually asked me if I would consider speaking out because they know what kind of events we put on; they are for our frontline folks. Of course we said yes.
This conference is a way to recognize and reward our people and it is a once-a-year event. Our culture is [based on the premise that] if we take care of our employees, they will take care of our customers, and we believe in putting our money where our mouth is. So we invest in our people just as you would invest in anything else. That is the only way to get returns. During times like these when everyone is feeling the pinch, it is even more important to recognize and reward folks.
CMI: What kind of feedback have you been getting since appearing on national television?
Hart: We were kind of surprised. Anytime you do something in public, someone is going to criticize you or take a shot at you, but in this particular case we have yet to hear one negative comment about it. This has really gone viral and spread all over the world, and quite frankly, we were really surprised by how much positive feedback we received. To me, that says that people were looking for somebody who has the courage to stand up and say how important these events are.
One of the things I pointed out in my message was that the hospitality industry is a huge employer — second only to the federal government. So I don't know what people are thinking [by condemning incentives]. We have to take care of this business!
CMI: Why is it so important for CEOs and upper management to back these types of programs?
Hart: Well, I have a saying: “So goes the leader, so go the rest.” If you don't act like a role model and set the standard, then no one else will. It really goes along with what I believe, which is if you get people's hearts right, this business becomes much more than just serving meat and potatoes. It's about making a difference and creating a legacy and that starts from the senior leadership of any company.
CMI: You mention making a difference. How do you do that?
Hart: As a company we believe in giving back and providing an environment that is positive and one that makes a positive impact on the community. For every conference we hold, we spend one full day giving back to the local community by doing humanitarian work.
This year, we built Habitat for Humanity homes for injured war veterans, we stuffed 15,000 [care] packages for United Service Organizations, and we helped the Glide Foundation [a San Francisco-based nonprofit organization dedicated to helping the area's poorest residents] by serving food and painting their building, as well as participating in various other projects. Between the labor and materials, we usually give about $1 million back to the community we are in. Most important, we do that because, in my mind, it changes people's hearts.
CMI: How else does the company motivate and recognize employees throughout the year?
Hart: I do a tour twice a year throughout the U.S. It's about 25 cities over a couple of weeks where I go out and meet with all of our managing partners in groups and hold a town hall-type meeting. We spend some time talking about where we are at as a company and the state of the business. But most important, we get feedback from the managing partners as to how we're doing. We share best practices and also incorporate a fun event as part of that meeting.
In addition to the Managing Partner of the Year Award [see box below], we also have recognition programs in place for our meat-cutters, bartenders, and “hot-preppers.” We do seminars for them, and we reward them for their achievements.
CMI: Let's talk about the business benefits of incentives. Do you see these as a competitive advantage for Texas Roadhouse?
Hart: Of course. Our business may be about serving food, but it's also about the people that do it. It's funny because so many of our competitors are focused on what we believe to be the wrong things. Motivation is not just about money. It's a pat on the back, it's about making sure [employees] feel valued. And if you can get them thinking about things in the right way, it's amazing what can get done. I think it's a competitive advantage — no question.
CMI: Do you see a return on investment for running these recognition programs?
Hart: I always use our meat-cutter program as a great example. We cut meat in every one of our restaurants. That means we have someone in a 36-degree room cutting every steak that is served that night. And about 10 years ago, we looked at that and said, “OK, do we want to do it like everyone else and get pre-packaged steaks delivered to the restaurant, which makes it a little easier, saves space, doesn't require a meat-cutter role, etc.?” But we believe it's a competitive advantage to have a product that tastes better when it's cut that day. And if you're going to do that, then you need to be committed to the people who do it.
So we developed our meat-cutter program to recognize and reward these folks monthly, quarterly, and yearly, and it's our highest dollar award we give out. As a result, we have lower turnover and higher yields, meaning our food costs have gone down. We have similar programs in place for our bartenders and local marketers and our training coordinators in each restaurant. Our industry has been notorious for passing through a lot of talent, and this is a way we can get people interested in staying in this business. So there are really all kinds of benefits associated with these recognition programs.
CMI: Do you track these benefits?
Hart: Oh, of course! I can tell you that turnover was reduced by two-thirds [after we launched] our meat-cutter program, and it continues to be successful.
When you create a program and share it with the operators and give them the freedom to come up with ideas and change things, it's amazing. So our programs have continued to grow because our operators believe in them. And as they evolve, turnover goes down, quality goes up, and satisfaction and employee engagement just get better and better.
CMI: How involved do you personally get in planning and executing the annual Managing Partner Conference?
Hart: Very! If you ask people around here they'll probably tell you I'm too involved. But honestly, I believe it is important for me to be involved more in setting the tone and setting the direction of the conference, and then we have internal teams who — in addition to their regular jobs — serve on the conference planning teams to help execute the event. We use some outside vendors, of course, such as production companies for staging, but we don't hire a; we do all the planning ourselves. So I am very involved in getting that all going, and then we have a great team who work on this and execute it.
CMI: Can you give us a preview of what's in store for next year's event and beyond?
Hart: Next year we'll be in New York City at the Waldorf Astoria, which will be our second time in an urban market for our group. One of my goals is to give our folks a lifetime experience they cannot get on their own, so we move this conference around to different places where they may not have ever been before — and many of our folks have never traveled to New York City.
We're also starting to plan the humanitarian efforts for the event. In a city like New York, you really have to start about a year and a half in advance. We haven't formally announced our location for 2011 yet, because we like to surprise our folks, but it will be in Florida. And we are starting to work on 2012 and 2013 right now also.