'Undercover Boss': What Execs Can Learn Flipping Burgers

Last Updated Mar 3, 2010 3:11 PM EST

White Castle's Management SecretThere's a school of thought that in any business customers come first. Not that you should treat your employees like crap, but that satisfied customers mean successful business, and that's good for everybody, including employees. Well, some of you have questioned that wisdom, suggesting it should be the reverse.

Well, White Castle was founded on the belief that happy employees make for happy customers. The company's employee retention statistics are impressive. About 20 percent of its 11,000 employees have been with the company for over a decade, and about a quarter of those have over 25 years of service.

It's hard to believe that a $600 million company can be run like a family business, but besides the taste of its legendary Slyders, White Castle does seem to have a management secret -- although it's not so secret anymore. All was revealed in an interview with Dave Rife (pictured), owner and executive board member of White Castle and the oldest member of "the family's" fourth generation.
Dave struck me as an affable and extremely driven individual. When he realized he was "a heart attack waiting to happen," he lost 80 pounds in two years. As this week's Undercover Boss, Dave took on the equally difficult task of finding out what his "team members" experience every day of their lives as White Castle employees.

Tobak: I was checking out your menu on-line and I got hungry just looking at it. What is it about this stuff that makes people "crave" it?

Rife: I think it's primarily because of the people that make and serve the product, the amount of attention they give to detail and creating those memorable moments for our customers. That's what really gives us that extra something in our burgers. We really have a distinctive taste, it's kind of ritualistic, we've got people who just crave us and build traditions about coming to White Castle.

Tobak: White Castle was the first fast-food hamburger chain. Given what McDonalds and others have done in terms of corporate growth, do you have any regrets?

Rife: Our people are first, that's what it's all about for us. We have a slow and consistent growth model that has taken us from one restaurant in 1921 to 420 today. As well as the bakeries, the meat plants, the frozen hamburger facilities, and we've done all that without taking on any debt. That's a big key to survival especially in today's economy.

Tobak: White Castle seems to be a throwback to a time when employees were treated differently, like part of the family. How do you pull that off?

Rife: My great grandfather founded this company on the belief that happy team members make for happy customers and it still holds true today. That's the one thing that, as a company, we've been able to embrace, hang on to, and stay true to that course. We really do try to make everybody feel like they're part of the family.

Tobak: Can you be more specific about how you do that?

Rife: We try to treat everybody with respect, the same way we would like to be treated. We have a long term view of what we think our business should be, and that long term view enables us to focus on those people that are behind the counter. We don't sit back and talk about our earnings per share; we're looking way down the road.

You know, we sat down a long time ago as a family and came up with what we call our vision, values, and guiding principles, which is the cornerstone that we base our decisions on and run our company by. Our team members are the center of that.

Tobak: Undercover Boss seems like a risky proposition. With such a conservative business model, what was your motivation for doing the show?

Rife: When they first contacted us, we sat down as a family and had a discussion. We decided the opportunity to really find out what's going on and live the life of our frontline people and see what we can take away from that to make our organization stronger was huge. The more we can learn about that, their trials, their tribulations, and what we can do to make things easier for them, to help them succeed, the better off we all are.

Also, as a family member and owner, when I go out in the field, people know I'm coming. I'm not saying you don't see reality, but you see maybe a polished version of reality. To truly understand what your people go through, you've got to live their lives.

Tobak: What about the UB experience surprised you the most?

Rife: The people I got to interact with, I didn't realize how much they would touch me personally, what I would gain from a personal perspective about them and about myself. We found out some truly great things about our company and some opportunities we can build upon to make us stronger, and I found out some things about myself I think I can build upon.

Tobak: Like what?

Rife: I think I need to be a better listener. Sometimes you hear people but you don't truly listen to what they're really telling you. You don't always read between the lines to pick up the nuance of what they're telling you. Now I work hard to make sure I'm getting the true message that people are trying to send to me.

Also, we have some tremendously talented young people that come into our organization. These are the leaders of tomorrow; they're quick, intelligent, driven, and persistent and we've got to make sure that we don't lose sight of those folks. We're putting things in place now to help us develop and grow that young talent into the future of our company.

Dave Rife photo: Jeffrey R. Staab / Courtesy of CBS
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