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How digital transformation is changing the hourly workforce

How digital transformation is changing the hourly workforce

Technology is revolutionizing the way we hire and retain hourly employees, and there’s much more change ahead. How can you be prepared for the digital transformation around the corner? We invited Dan Gertsacov to tackle this exact question. Dan’s impressive background includes being the CMO at the world’s largest independent McDonald’s franchisee and Chief Commercial Officer at Focus Brands. Join Dan to learn:

  • How our relationship with technology influences what hourly workers expect in the workplace
  • Why automation is a net positive for hourly workers
  • What the future of digital transformation could look like, and how you can be prepared

Transcript:

 Daniel Blaser (00:00):

It's great to meet you, Dan. Could you start off by sharing just a brief overview of your experience and background? I know brief can be hard, you've got so much, but I'd love to hear kind of what broad strokes,

Dan Gertsacov (00:12):

I've done a bunch of random things. That is true. No, so broad strokes, I mean the last 10 years I've been in restaurants, but the last 25 years I've kind of been at the edge of what seemed like trend lines that were going to continue. 25 years ago I started a nonprofit, one of the first of its kind around corporate social responsibility. Now ESG before that was a big topic. We started a nonprofit in Latin America post-business school. I got in on the early days of digital. I was at Google right after the IPO and their big growth spurt kind of 2006 to 2012 or so. And then I shifted from digital into food. Now as I said, about 10 years ago, initially on the franchisee side at the largest independent franchisee in the world of McDonald's, which this gentleman with 2,400 McDonald's in 20 countries of Latin America and the Caribbean.

(01:14):

And then about now, almost now, four years ago, I came up back to the United States and I was based with Focus brands who's a franchisor of about 6,400 restaurants across seven brands. And I was in a global CMO role. So a lot of my background has been in kind of the edge between marketing, digital, digital transformation, and that's the work that I do. I am not full-time with McKinsey. I'm an external advisor. I help them and their clients, as I said around the future of food and restaurants. I do angel investing in these topics and I do board and advisory stuff. A lot of nonprofit board, getting back to my earlier roots. So I work with the Giving Kitchen, which is an Atlanta based charity. I'm doing some work for the James Beard Foundation. So a lot of my interests is the intersection of food, social, economic, and the future of technology.

Daniel Blaser (02:12):

Wow. I feel like we could chat about some of that stuff, just one little point of that for an hour. But one thing that really stuck out to me as you're talking about your background is that interesting time that I think you spent four plus years or so at Google before transitioning into the quick service restaurant industry, and to me that's a really interesting story. Could you talk about why that time you spent in tech naturally led to a good transition into quick service restaurants?

Dan Gertsacov (02:45):

Yeah, and I've had a hobby around food for a long time. When I was younger, I thought I wanted to be a chef and I ended up going to culinary school only to realize that what I really liked to do was cook and entertain my friends, not be a chef. So I've been dedicated to the art and science of hospitality, but not in a professional capacity until this mentor of mine, this gentleman with the McDonald's, he was just someone I looked up to and respected When I had left Google, actually I did also in between Google and McDonald's, I ended up doing a startup, a tech startup, and he was an investor in that company, so he was the one who basically said, look, our business is going digital and I want to get there first. And so it wasn't my imposition. He is like he saw that I was passionate about food, said, look, this is a need in our industry.

(03:39):

This is in 2014, and gave me a pretty broad canvas with which to paint. And the idea being that digital affected three big areas of their business and I would say any restaurant business and really important to workstream because one of those is specifically related to the culture and environment you create in the workplace. And so my role as a chief digital officer for the couple thousand McDonald's focused on digital, what we call digital engagement, which is what you can imagine for a lot of the marketing driven, do we paid earn on media and how do we use digital for that digital experience, which has a lot more to do with products, apps, websites, ordering all those experience of the future within the restaurant and then what we call digital culture. And that was thinking about how do we recruit, train, and communicate with our crew, with our staff, how do we create a great place to work in the office environment?

(04:42):

How do we attract young people into work not only in the restaurants but also in the office? And then also how do we think about digitalization of our or the digital IQ, if you will, of our board of directors. This is a publicly traded company and if you think that we're at the first five minutes of the game compared to digital and technology, the board of directors and senior management need to be pretty well attuned. So I was responsible for that suite of digital responsibilities, if you will, and worked across the organization. So the head of hr, they knew that they were putting ads in the newspaper and nobody would show up. They used to, and the conversation was like, look, the youth, whether they're in Sao Paulo or in San Francisco or in Des Moines, Iowa, they're not reading print newspapers like they used to.

(05:35):

That's just the reality. So if a tree falls in the forest, so they're going to hear it, they weren't seeing the ads. So we incorporated different tools. We actually followed suit of, actually, I think it was Australia did it first, and we followed behind of using Instagram and other methods to get people to know that we've got openings and how to do an Instagram interview to get a job at McDonald's. We also try to create, and I think the restaurant experience was part of it, a more fun place to work, like having the self order kiosk and changing the dynamic of the job where people would come in and say, the script was, welcome to McDonald's, can I take your order with no eye contact with the consumer. It changed where we got people from behind the counter into the lobby reading people as they walked in and saying, look at this huge iPhone, the self-order kiosk.

(06:32):

Let me explain to you how it works. And that kind of breaking down what the restaurant worker person does with the guest also made their jobs more interesting and more fun versus just the typical order taker kind of stuff. And so I think that there is a big, which is why I've been such a big fan of workstream, is that I think that there is, we are in the early moments of what it means to work with hourly employees in a way that fits their needs, their schedules, their professional interests and how to grow and develop and give them the flexibility. And I don't see how you do that without technology.

Daniel Blaser (07:20):

Yeah, a lot of super interesting stuff in what you just said. One thing I wanted to ask you about is we all collectively kind of have a different relationship with technology than we did even three, four or five years ago. You mentioned that insight of like, well, no one reads newspapers anymore. How do you think that all of our relationship with technology, how does it influence what hourly workers expect when they're applying for a job, when they're engaging with their employer?

Dan Gertsacov (07:49):

Yeah, and I'll correct myself, it wasn't clear. I said young people don't read newspapers anymore.

Daniel Blaser (07:54):

Fair enough.

Dan Gertsacov (07:54):

Clearly newspaper readership is down, but all you have to do is have your name show up in the newspaper and you'll realize how many people still read it. So the announcement of its death is kind of a little premature. That being said, coming back to your question, yeah, I think there is coming out, and this was happening, these trends were happening before the pandemic, but I think the pandemic put a prioritization around people's time and their flexibility in their prioritization of what's important. I don't believe either personally or the folks that I've had the opportunity to coach or give some advice to that people are lazy. The great resignation is if people, this generation is lazier than the last, I would call it the great reprioritization where they see work as one of the balls that they're juggling in the air alongside other balls, their own physical health, their mental health, their family, their friends, or even their hobbies and other things.

(09:05):

And I think that that's a net positive for society. And I think that we need to provide people the tools to do it. Businesses need to adapt to that reality and create jobs. And this is also related to the issue around automation. People always jump on technology as this evil arrival in the room that's there to take everybody's job, just look in a restaurant what it was like before and after installing a dishwasher, the job of being the dishwasher. And that was my first job, 14 in a Newport Creamery in Cranston, Rhode Island where I'm from, being the dishwasher, physically washing all those plates with no dishwasher machine, it was a really crappy job and you got paid very little for it. It was hot in the back room. It was a difficult job and it is not the best use of labor or really anybody's time.

(10:07):

And the idea that the restaurant said we could buy a dishwasher and have one person be able to with the assistance of the machine do the work of three, not only made a better job or sorry, better efficiency for the restaurant, but it made the person's job better. Who was that dishwasher? And even look in a restaurant today where there are dishwashers being the dishwasher, feeding that dishwasher is still not one of the best jobs in the restaurant. It's still hot and difficult, and so we're not there yet. So I do think if you look in the restaurant space and look at all of, like I said, the job welcome, can I take your order? That's a crap. Nobody wants to be doing that. It's boring, it's rote, it's every day. It's not, I don't think, and I don't see a lot of people whistling to work when they're taking at the toll booth.

(11:05):

Being a toll booth taker is not that fun of a job. It is not that interesting. And the fact that we know technology read your license plate and you flow through, that's a good use of technology and I think we should be applying that technology in restaurants and making the hospitality part of restaurants a better job, making the chef's job as a creator a better job, making waiters and wait staffs actually engaging with people rather than hauling heavy plates. The jobs that will need to be automated I think are net benefit for the people that work there. And I think that that is natural and part of the evolution of technology and society and every industry, and it'll be the people that create, contribute, engage, make people's experiences better, make people laugh, all of those things that I believe will be a long way off for technology to be able to do.

(12:04):

That's the things that we should be focusing and in between, we still have hourly, we don't have drones dropping off of our food. We have people that pick up the food, put it in their car and deliver it. I think we've created a flexibility in that job that has net better than the person who is dedicated only to one restaurant and just had a 30 minute cycle time and had to be back and had to be back. Now people can turn on their app and be working, turn off their app. So I think there is a transitionary period where technology can facilitate whether your job is better, how you get paid faster, you have better control of your schedule. You don't have to waste your time and interviews if you don't think the company's going to be a fit. You get a sense of what it's like in the culture before you show up. You don't have to be six months in. I think there's so many uses of technology that'll make it better, both for the hourly employee and for that employer.

Daniel Blaser (13:06):

Yeah, I really like kind of that repositioning of automation because it definitely makes sense. How long will it be before you can automate a good interaction at a restaurant with a server or really putting the finishing touches on a good meal? Like you said, that's probably far away in the future, but some of those less appealing jobs are easier to automate and some of them already have been. Like you said, I'd love to hear from your time in the restaurant space with workstream, we're all obviously really focused on hourly employees. What did you learn from your experience about maybe what hourly workers want out of their jobs or what encourages them to stick around or some of those insights?

Dan Gertsacov (13:52):

Yeah, so first and foremost part of in the roles that I've had in the restaurant space, I myself model the behavior that I require of my team is working at least once a quarter in a restaurant and doing a shift because you don't get any of that sitting in the office. We don't make no restaurant makes money in an office. All restaurants make money in the restaurant. And there was a quote when I first started at McDonald's and the McDonald's old headquarters from Ray Crock, the one who wasn't the founder, but the founder of at least the modern McDonald's that said, it's not real until it's real in the restaurants. And given being the digital person, I took that to heart and said, what I need to understand what it looks like in the restaurant. And that is both consumers or what I realized serving people is that we could take their orders and even produce their food faster than we could take a payment, especially with cash.

(14:53):

And this is kind of now it's improved. People have whether mobile order and pay or they can tap with their credit card, but generally with at least a cash experience when we were, we'd have trying to get out a hundred tickets in an hour, you would fumble more in that moment of trying to accept payment than you would and be able to take somebody's order or even get the food out the door. So that's an insight and I'm responsible for integrating payment opportunities. I wouldn't have known that unless I was on the front lines. I would also say flexibility. As I talked about earlier, most folks that I met in McDonald's in Latin America is not necessarily the way it's in McDonald's in the US or McDonald's in the US is different in the east coast, west coast, north, south, like every micro region has its labor market, whether it's, we were about 90% under the age of 24.

(15:47):

There are markets where the hourly worker is early retirees or it's all different. So I don't want to make assumptions from one to the next, but I would say with 90% under the age of 24, they wanted flexibility. This was their first formal job and they were studying, so they were fitting their work hours around their class schedule. And that's a reality in Latin America. Latin America is a little bit different in that regard that people usually live at home, they're going to schools in their home city. I mean, there are some people that travel, but it's not like the university system in the United States where you go and live there and it's a destination and people don't work while they study generally, at least in our segment of hourly workers. And so that gave us a lot of insight into providing people flexibility, providing people also upward mobility.

(16:42):

We realized that most people wanted the job for one year, and what we also realized is the best of those people with after a year wanted to be up for assistant manager and then they wanted to be manager and they wanted to be district manager. And to this day, that franchisee in Latin America, the CEO of the company who was somebody who started 35 years ago or so in the restaurant as a 17-year-old, and now he is running the company. And so it is not needing to be for everybody that it's a 35 year career, but for the people that it is a passion and they can grow with the company, the company needs to grow with them. So that's one thing that I also recognized is rather than, oh, we don't want people, we don't train people in three months later lose somebody, that's not a good experience for them nor for the company.

(17:39):

But the fact that people after a year said, you know what? I learned a lot. I learned how to put on a uniform. I learned how to smile when somebody looks at me, learned how to greet somebody on the way in those life skills. I now am now in college. I want to work in sales, I want to work as a teacher, I want to work in different fields. And their McDonald's experience as an example, their hourly worker experience was a springboard to that. And that was also a change. So we were able to change both the expectations we had, the kind of contracts that we drew, how we interacted with them on their schedule, obviously via their phone and not a print calendar. The need even for in the back break rooms having charging stations. So we wouldn't have anywhere to charge your phone.

(18:28):

And that's not a reality for the folks that were on break or whatever. They were naturally on their phones just like all of us are. So those were some of the changes that I saw once I worked in the restaurant. So I would encourage anybody that works in the restaurant space, specifically if you're in the tech side of the restaurant space, is to get out of your office, get out of your cubicle, get out of your rework and go work a shift, put yourself in those person's shoes and you'll start to understand the products you need to build the features to prioritize the revenue levers to pull to be able to be more successful. And I do believe I've had this conversation with Desmond and the team that is strong part of the workstream ethos, and I think anybody within the company or outside of it should follow.

Daniel Blaser (19:15):

Yeah, that's fantastic advice. I want to dial into what you said about upward mobility being really important that you identified that as one of the big incentives among the hourly workforce. What are the most important traits that successful managers have and how much of those traits can be taught versus how much of those traits need to be kind of hired for or it's just kind of innate?

Dan Gertsacov (19:47):

So first I would say one is that there is a subset of people where the upward mobility is a priority in the hourly world that they're in. And that's good and it's good for the people that said, I want to be here for a year and I want to move on. And not passing judgment on one of those things was one of my learnings. That being said, for the person that likes the pace and the energy of a restaurant and could see themselves as a manager and building themselves up within the company for that subset, what I most respected when I was again working the shift is that the managers that were there that were once, some of these people are 24-year-old managers with seven years in the company. So they started at 17 and now at a relatively young age are running a three $4 million business.

(20:37):

This is a pretty big responsibility. If the lunch hour hit it's 12 o'clock, there's a line, they jumped in the line, they jumped in the, so where I'm going with this is that leading by example, that ability to, and it's not conceptual empathy, but literally putting yourself in somebody's shoes and be able to jump in and do their job and show them how to do the job that they've taken on is a huge trust builder. And you can then start to project when I'm 24 and I'm starting to project into this company, I can have that. I can be that kind of person. The other thing is, and I do think that you're asking about what needs to get learned and what needs to be taught, if you will, I think that the skills can be taught, the values need to be implicit. If you don't share a value around hospitality, a place like McDonald's is not a good place.

(21:45):

And the best McDonald's are revolved around hospitality. And I can say the success of McDonald's in Latin America is that you walk in and people are smiling, they're happy to be there. It's a family restaurant and that is the culture they create. I think in the US at least, I don't think it's everywhere, but this is the stuff you hear about why I like Chick-fil-A so much or why I like a certain restaurant is that they feel that the energy of the staff is that they really want to be there. I think those cultural values cannot be taught. They're either shared, they're either explicit by the company so that when the employee's attracted to it, there's a natural connection and you don't have to try to, can't teach that now how to use a fryer, how to balance a p and l, how to hire effectively.

(22:36):

All those skills can be taught and anybody with a beginner's mindset, and this is a beginner's mindset. If you're the CMO with a beginner's mindset and you come in saying, oh, how do I learn? I've never had to work in your shoes. How can I learn that? I think that beginner mindset, all those skills can be learned. Look, I went from Google into the restaurant space and while there were some things that I did learn about or no understand about digital marketing and tech development and things like that, I had to sit back and learn how does pricing work? How do we think about menu develop? How do we think about supply chain management? I've been in a 10 year learning curve that I'm not even in the steepest part. There's a very scaled business and I try to be a student of the game.

(23:25):

So I'm continually curious and trying to learn and relearn, and I think, I guess that moves what I just described, that beginner's mindset or the growth mindset that also fits into something you cannot teach. Either the person has had role models or that's the family of the home that they grew up in or not. And by the way, some of the most, I was part of the wave of digitalization at McDonald's and I did meet, I'm just using McDonald's. The same is true at focus brands or other places I've worked. I met as many people. That's who told me, Hey, I've worked here for 30 years. Don't tell me how to do my job. Which is the opposite. That's a fixed mindset that I met people that were like, I've been here for 30 years. What can you teach me? How can I learn and adapt?

(24:17):

And it was really important as being the Google guy in that workspace that I didn't walk in presumptive that a person that was there for 30 years or 10 20 years was one or the other. I let their behavior and the folks that were fixed mindset, I did the best I could. But they generally the change. I was reading a quote earlier today that said, change is inevitable. Growth is optional. I think that that's Socrates, and I think if you think back to Socrates time, so I think that that is an important factor in your choice of how to actually, I just completely botched that quote, so I'm glad. No worries. Cause I used two quotes in the presentation, change is inevitable, growth is optional. That's John Maxwell who's an author, but I do have a good Socrates quote, which I'm also using. The secret of change is to focus all of your energy, not on fighting the old, but on building the new. So I think from a growth fixed mindset, there were people that were focused on from outside or inside the company fighting the old rather than building the new. And I invite companies like Workstream and your clients to join together to build the new.

Daniel Blaser (25:44):

Yeah, I love that. And two great quotes as well. If you have time, I'd love to ask one more question. Is that okay? So we've talked a lot about technology, digital transformation. That's obviously where you focus so much of your time. If you were to look five, 10 years in the future, how do you think that specifically the nature of hiring and managing the hourly workforce, how will that continue to change because of digital transformation?

Dan Gertsacov (26:14):

Digital transformation? Wow, that's a big one. So there's another great quote from Bill Gates to say, we tend to overestimate the change in three years and underestimate the change in temp. So picking a five to 10 year how things are by nature going to underestimate. I think Bill Gates has proven himself pretty insightful. I do think it's funny, I was having this conversation with a friend that today have two teenage daughters, almost one second one's almost a teenager, acts like a teenager. And when I explained to them when I was their age, we'd go on an airplane and people would smoke on the airplane and they'd look at me like, that's impossible. How could that be? And looking back at it, I think the same. It's like crazy, but that was true. What are the things that their kids are going to say to them?

(27:05):

It's like, I can't believe it's that way In the same way that we think about it, one of those things I think will be the paper resume. One of those things I think will be tests that try to capture your skills or your character versus having more ongoing diagnostics of the things that you're learning or that you're good at, that you're still learning. I think that there will almost be, and I'm kind of playing a little bit of futuristic, but you will almost have a resume, fingerprint that you'll be able to, whether figuratively or literally log in and they say, oh, it's Daniel Blazer. He is got all these software languages, marketing aptitudes, whatever it may be, here's the things that he is working on language wise. Here's what he's really passionate about in the world. Here's the cultures where he can really fit. I think some of that talent assessment, just like we're seeing it is funny in I'm wearing a ring to monitor my sleep and which is ongoing diagnostics.

(28:16):

I think we're going to have ongoing diagnostics about our skills, about our passions, about our curiosities. We're going to be able to communicate that much more quickly with potential employers, and there's going to be a more natural fit of whether it's a mutual fit and we're going to mutually opt in. It is not going to be like the employer saying, I love you. I want you to work here forever. And the employee saying, I love you too. I want to work here forever. And both of them lying because the company may shift its strategy and no longer need that role. The employee may say, now I want to go on to grad school. I no longer want to work here. So we're going to have a very much more direct, honest conversation of I'm looking for 12 months. I want to grow my abilities or skills in these areas.

(29:02):

This fits because we're in a mutual agreement what Reid Hoffman's called the Alliance, which was what I really believe in going forward. People are going to be much more mission driven and even hourly workers. I think also, and I hope, I don't know if I'm predictive here, one of the biggest challenge in hourly worker environment right now is backwards immigration policy. I think if we can improve and have a much more constructive immigration policy, I don't want to drive into politics here, but I think that that does impact this debate around hourly workers and the formality informality based on what I think our systems and concepts from decades past. And I think once we can modernize those policies, there are going to be folks that want to have the flexibility of hourly work. There's going to be folks that want to go on a mission for three, five years in their career, and there's folks that are going to have a lifelong mission around a field of study like medicine or food or technology or whatever it may be. And I'm very anxious and appreciative of that world that will be for my teenage daughters. That'll be the world in which they're entering, and I don't think there's ever been a better time to be part of this change. So I'm excited about it.

Daniel Blaser (30:23):

Well, that's a great, really interesting perspectives. I appreciate you sharing those. And with that, I think I'm out of questions. So I really, once again, thank you so much for your time and kind of sharing all your knowledge. I think our audience is really going to love this.

Dan Gertsacov (30:39):

Awesome, great pleasure. Thank you everybody. Thank you Workstream.