KFC initiates employee-incentive program

Nation's Restaurant News, April 1, 1996 by Louise Kramer

LOUISVILLE, Ky. -- It might not be long before restaurant managers at Kentucky Fried Chicken start driving to work in pink Cadillacs.

Taking a cue from Mary Kay Cosmetics Inc., the direct-sales cosmetics company that built its business with an incentive-driven sales force -- recognition includes pink Cadillacs, diamonds and luxury trips -- KFC has launched its own incentive program as one part of a $3 million reorganization of its corporate field operations.

This week, to show the general managers of the 2,000 company restaurants that they play a crucial role in the success or failure of KFC, for the first time the PepsiCo division is bringing them all to its headquarters here for three days of meetings and seminars.

"These are the people who day in and day out see the customer," said Gregg Dedrick, senior vice president of human resources for the chain, which has 5,000 units in the United States. "The great way to have great teams is to focus on the restaurant leaders," he said.

The changes stem from a survey the chain conducted last August, revealing that managers wanted more support from corporate headquarters to carry out the company's growth initiatives. They include product launches, such as the new Tender Roast roast chicken being rolled out this spring, delivery and dual brands with KFC sister chain Taco Bell.

Dedrick said 1,700 of the 2,000 managers filled out the 120-question survey, which also indicated a desire for more help with repair and maintenance of store facilities and more support in executing new marketing programs. The general managers also wanted recognition. "They want to know that they are valued," he explained.

The new structure emphasizes close contact with individual stores and puts a stronger focus on staff training and hiring practices, all with the aim of providing better customer service and a better work environment that will reduce turnover, Dedrick said.

KFC looked to several companies for inspiration, including retailing giant WalMart, Mary Kay Cosmetics and Harman Management Corp., KFC's largest franchisee, with more than 350 units.

"They are right on target," Jackie Trujillo, chairman of Harman Management, said of the new program for corporate stores. "If you are going to succeed in this industry, you have got to get people to buy into the program, because who waits on customers? Where does everything happen? If you don't have everybody buying into that, you're not going to make everyone happy."

Trujillo said in her company KFC managers are eligible to buy into their units. "Since 1958 at Harman's there has been an ownership program for the restaurant general manager," she pointed out. "We think that's one of the secrets to our success. We have other incentive programs that recognize their achievements and reward them for running exceptionally good restaurants."

Before the new program KFC's corporate field organization had six divisions headed by general managers responsible for 300-to-400 company-owned restaurants. Now there are 18 regions headed by individuals with the new title, director of operations and recognition. Each oversees 100 restaurants with a three-person training staff. There also is a marketing coordinator for each region to help coordinate print ads and proper set-up for point-of-purchase materials and a facilities coordinator who manages repair and maintenance of the stores.

Each region has 10 multi-unit supervisors who oversee restaurant managers. "They are the people who manage the restaurant managers," Dedrick said. "Those are now called market coaches because the job is to lead and support the restaurants."

The employee-recognition program is being developed region by region, with no-cost, low-cost and moderate-cost awards, Dedrick said. Already, the regions are giving out rubber chicken awards, which are signed by KFC president David Novak, and bulldog awards for tenacious employees, which are presented by Chuck Raleigh, the chain's chief operating officer. A new budget item allows for local cash rewards.

While no pink Cadillacs have been ordered yet, the company is looking into special vacation trips for highperforming managers. "Every restaurant manager will be in a contest, and the top 10 percent or more essentially will win a chance to go on a once-in-a-lifetime event," Dedrick said. "We really want to have something they would never be able to do if it weren't for KFC."

The changes in corporate store management do not ignore franchisees, Dedrick continued, adding: "I talked to about 10 of them when I was in the process of putting this together. We now have several committees with franchise representation. We are building that by design."

The chain, which has been on an upswing -- in a tight fast-food market, comparable-store sales rose 7 percent last year and 14 percent for the fourth quarter -- also increased its franchise-support staff from two to 12. "They look to us to provide some leadership in our operations," Dedrick said. "Again, a big issue for them is training. We're trying to design programs they can participate in. We're moving more and more in the partnership mode."