Performance Matrix and Continuous Improvement

DavCo Restaurants is one of the largest franchise organizations of the Wendy’s brand with 150 restaurants operating in the areas of Baltimore and Central Maryland, Northern Virginia, District of Columbia, and Eastern Shore of Maryland. With 4,600 employees and $217,000,000 in annual revenue.

This is the story of an organization and how a devastating blow to the culture and results of an organization were reversed using a new strategic approach to individual development. By creating a method which accurately determines the competences needing development, based on the results and behavior of each individual manager, a tailored development plan was put in place for every multi-unit and general manager.

Operations evaluations were conducted by the brand to ensure a consistent scoring matrix across the entire system. The average system results generally were 37% A-rated, 58% B-rated, and the balance C or F-rated. DavCo’s results were consistently better than the system.

Toward the later months of 2014 it was apparent that our results were declining at an alarming rate, and I was hearing very troubling information from our Wendy’s Franchise Directors who were assigned our region for support. During field trips, the communications from the SVP and his direct reports did not reflect the information I was hearing, but the decline in results was real. I later learned that certain individuals were “strongly advised” not to report certain situations.

I immediately set up and conducted numerous individual meetings to uncover the true facts. During the meetings I was able to piece together a consistent pattern of disruptive leadership practices to the point of learning that our culture was eroding, and managers were more focused on avoiding pain as opposed to what they could accomplish to affect positive change. This explained the rapid decline in operating results.

We ended 2014 with only 13, or less than 10%, of the restaurants A-rated, 109 or 73% of the restaurants were B-rated and 19 were C-rated with 1 F-rated. This was the result of a short-term management style, which featured an over controlling approach and a focus on the negative.

During the first quarter of 2015 an organizational change was made. Because the declines in operational performance could be directly attributed to the behavior the former leader, it was incumbent upon me to take full responsibility of this situation, and ultimately the actions needed to reverse our trend. The position was eliminated, and the 3 Division Vice-Presidents would now report directly to me.

It was critical that moving forward our focus had to be on long term behavior change with singular focus on individual development priorities.

Old System

  • CEI and OE results declined in 2014
  • Focus was on short term results
  • Systems were good but disjointed
  • Multiple competing operating metrics
  • Store specific (problems were identified in terms of operational metrics such as speed of service or labor control)
  • Eroding culture – Focus on avoiding pain

New System

  • Focus is on long term behavior change
  • Systems are all inter-related
  • Singular focus on development priorities
  • Person specific Competencies (behaviors are identified in terms of individual development such as planning and organizing or conflict resolution)
  • Individual Development plans
  • Positive culture – “What positive affect on change can I accomplish today”
  • Situational Leadership – developing leaders

The organizational change was made on a Monday and on Thursday of the same week the entire multi-unit staff and corporate support staff attended a refresher workshop on Situational Leadership.

Situational Leadership equips leaders with the skills necessary to drive behavior change and increase productivity through 4 steps;

  1. Diagnose an individual performance readiness to complete a specific task.
  2. Adapt leader behavior based on that diagnosis.
  3. Communicate an influence approach in a manner that followers can both understand and accept.
  4. Advance by recognizing that a leader adds value by accelerating development and reversing regression.

The basic premise of Situational Leadership is that managers have different levels of ability, or readiness, for different tasks or assignments. In order to determine how best to lead a manager you must assess their readiness level for each individual task you are asking them to accomplish before determining the appropriate leadership style to manage them for that task.

This reboot, so to speak, was critical as a baseline to begin to correct the culture erosion and to ensure that managers were focused on what actions they could take towards their own personal development.

The next step, we needed to transform our culture to one that more closely mirrored the culture during our successful years, one that embodies continuous improvement. We needed to find a new and better approach to ensure personal development.

While competency development is widely regarded as the key to personal development, we needed to find a new and better way to ensure that a continuous focus would be top-of -mind in both the leader and individual seeking development. Sure, we touched on competencies in our annual or semi-annual reviews but in most cases the discussion, and more importantly the focus, was not there after the review session. The document was tucked away, and the focus went back to improving key operating metrics.

Unfortunately, this is true across many business models where people are the key drivers that affect change. Most supervisors focus on key metrics however do not address the link to competency development when managing performance. Key metrics are obviously critical to any business and focus must be placed on achieving targets. The point is, highly successful organizations know that high engagement generally equals high returns. Individuals who have an accurate personal development plan are more likely to be fully engaged in organizations mission.

With this understanding, we needed to develop a system that would tie operating results and competency development together and a process that would keep the development top-of -mind.

The result was the Performance Matrix Process.

The Performance Matrix has 2 components:
Results – We detail the Financial, Operational, and Human Resource results accomplished by the management team as directed by the General Manager.

Competencies – We assess the management and personal skills exhibited by the manager that influence the management and crew to accomplish the results listed. The baseline are the pre-established core competencies for each position.

Note: It is critical in assessing the behaviors to determine Competency scores, that the supervisor identifies actual performance and not assumed knowledge or the “readiness level” of the individual in terms f Situational Leadership.

The actual Core Competencies for the District and Unit level Management are listed below.

DM Competencies

  • Change Mastery
  • Communications process
  • Financial Analysis
  • Planning and Organizing 
  • Performance Management
  • Problem Solving & Decision Making
  • Results Orientation
  • Talent Management 

GM Competencies

  • Constructive Conflict
  • Financial Analysis
  • Planning and Organizing
  • Performance Management
  • Problem Solving & Decision Making
  • Results Orientation
  • Talent Management
  • Business Acumen

The Performance Matrix process consisted of a peer meeting with each division, separately, along with the Training and HR Department staff in attendance. Each district manager presented the results, by manager, and addressed the results in terms of competency strengths and those competencies that needed to improve.

The meeting was conducted on a quarterly basis and progress was documented, as well as situations that saw no improvement. The group discussions were dynamic and a great tool for educating the group on new ways to associate competencies with results. Since this was a new process, and it was clear that the district mangers were somewhat uncomfortable with the process, it was important that the district managers knew that the group was non-threatening and there to help them learn as they were the key link in the transfer of information.

This process also taught us how critically important identifying the correct competencies for each managers development plan is for the success of the program. For example, if you diagnose that a manager needs to develop problem solving skills due to an ongoing slippage problem, but the managers real issue is a deficiency in constructive conflict skills due to the inability to deliver an effective communication to his or her subordinate managers to fix the slippage problem. In this example, by focusing on the wrong competency the manager will become frustrated, the slippage problem will most likely not improve, and most important the manager will not improve their constructive conflict skill, a critical competency that is surely affecting performance in other situations.

The key takeaway here is that it is important to identify the correct competencies needing development so the personal development plan sets the manager up to succeed.
We also addressed role and routine opportunities with this new approach. When conducting store visits it is important that the district managers addressed operating results but also important to find ways to connect the competencies that the manager had on their plan, to the results. This serves to create the environment where the importance of key metrics and operating results are clearly understood, but as important, the competency development is kept top-of -mind as well. After the first 6 months of this process the feedback was consistent that the general managers appreciated the fact that their district manager was as concerned about their development as achieving the operating results. The culture was on its way to recovery.
Admittedly, I could not have predicted the speed in which our results recovered, but the results speak for themselves. Our 2015 results were a 300% improvement in A-rated restaurants, 53 vs. 13, B-rated restaurants declined slightly by 16 restaurants due to the jump to A-rated, and several C-rated restaurants jumped to an A-rated level as only 3 remained from the 19 in 2014, and we eliminated the F-rated restaurant. 

The improvement was so dramatic that the Wendy’s QA Manager, who conducted the restaurant evaluations, was called to the Wendy’s Corporate Office in Dublin, Ohio and questioned as to the validity of the evaluations.  Wendy’s also sent other QA Managers to the Market to spot check several restaurants.  The results were upheld.

In summary, the method used to arrive at the appropriate competencies for the managers individual development plan is the critical key to the success of the process.  We developed a process to clearly identify behaviors associated with competencies, to take the guess work out of the assessment.

Our experience also exposed a major leadership misconception.  Why should we assume that as managers are promoted to the multi-unit ranks that they become experts in competencies and the personal development of their people?  We teach them, throughout their single unit experience, to evaluate operations and relevant metrics, and to set targets for improvement.  Then we anoint them as multi-unit managers and expect them to be experts in personal development.

The results were clear, management evaluation scores improved, quarterly bonus payouts increased, and the culture became the strongest in the history of the company. Our EBITDA also increased to the highest level in recent history.

I don’t believe that our situation is that unique. When I was asked what business I was in, I would respond by saying, “I sell hamburgers, but I’m in the people business”.  In most business models, people are the most important asset. 

Imagine in your situation, what if you had access to the tool we developed and every member of your organization knew exactly what they personally needed to improve, to be their best at affecting positive change, and had a plan to get there. I think we could make a prediction!

When personal responsibility and personal development come together, that’s what separates the strongest organizations from the average players.

Rick Borchers
President & COO, DavCo Restaurants, LLC
June 2016