Thought Leadership Series
One CEO Who Definitely Gets It and What We Can All Learn from One Purpose Driven Company
Chet Cadieux, Chairman & CEO, QuikTrip Corporation, Tulsa, Oklahoma
CEOs who get it:
1. Have successfully developed and implemented a vision and strategy that resonates with all stakeholders, including frontline employees and customers.
2. Have implemented people systems that effectively engage their workforces.
3. Have a firm handle on the operational effectiveness of their human and capital resources.
Each of the extraordinary leaders profiled in this series check each box above. Their leadership is manifested in outstanding financial results, excellent employee engagement, low turnover, and exceptional customer loyalty and retention. These folks are definitely in the top 1% and are willing to share their “secret sauce.”
Chet Cadieux greeted me in the lobby of the QuikTrip corporate headquarters in Tulsa at 10 o’clock on a cool, windy Thursday afternoon. He came down the staircase, called me by my first name, greeted me warmly, and led me back up the stairs. I was carrying a Styrofoam cup of QuikTrip coffee as we climbed the stairs, and Chet asked me if I’d like mine warmed up as we passed a break room, where he picked up a cup of his own. Now it’s not normal for a CEO of a company with over eighteen thousand employees to collect his own guests, escort them to his office, and offer this kind of personal hospitality; but then Chet Cadieux is no normal CEO.
Chet runs one of the best-led retail chains on the planet. He says that there is no “secret sauce” behind QT’s wildly successful financial performance, enthusiastic employee engagement, bulletproof retention, consistently stellar store conditions, and customer service and loyalty. While QT’s “sauce” may not be secret, it is most certainly rare. QT was founded in 1958 by Chester Cadieux and Burt Holmes with $15,000. Today QT is #30 on the Forbes list of privately held companies and was listed #24 on America’s Best Places to work.
QT’s Purpose, as it is proudly displayed on a thirty-foot-tall banner in their headquarters’ lobby: “To Provide Opportunity for Employees to Grow and Succeed.” Now, I know what you’re thinking…Yeah, I’ve heard stuff like that before. No, I mean it. QT’s purpose drives EVERYTHING.
The company was founded to provide opportunities for others, and today every single facet of QT, starting with their values, is driven by this Purpose. Even store growth is driven by the number of store teams that are ready to advance, which is completely opposite to the way it typically works in this business.
QT’s Purpose drives its Core Values which are:
1. Be the best. We want to be the best at everything we do. We are dead serious about it. If we can’t be the best, we won’t play.
2. Never be satisfied. We have institutional paranoia. If we are aren’t scared every day, someone will knock our block off. Mostly fear of a competitor we haven’t seen yet.
3. Focus long term. Being private makes this easier.
4. Do what’s right for QT. Right person, right job. We don’t believe in saving Private Ryan: we want to save the platoon.
5. Do the right thing. It’s not as simple as morals or ethics. What would your mother think about what you did today?
Among the five P’s of retailing—Place, People, Product, Price, and Promotion—Chet says that People and Place constitute QT’s core competencies. He doesn’t consider Product, Price, and Promotion core competencies because people wouldn’t be willing to pay top dollar for him to consult in those areas. Place and People conversely are world class. There are none better.
Values, values, values. When it comes to Place, QT’s site selection and store-design teams are world class. The stores are beautiful, and all have the same layout. This not only makes customers who shop multiple locations happy, as they can easily navigate the store, get what they want, and get out, it also makes the interchange of employees much easier, like Southwest Airlines flying one type of aircraft for which all flight crews are checked out. The average age of a QT store is 8.3 years, and stores are remodeled every three years at a minimum.
When it comes to People, QT’s values also drive hiring. Chet hires great people, period. In the QT model, this means hiring people who are ultra-competitive, never satisfied, and always striving for improvement. Chet says some claim QT is like a cult. The few people who do leave think the folks at QT are from a different planet. Their employment brand is so compelling and employee referrals so strong that they hire less than 1% of the people who apply. When it gets to the point where they’re hiring 2% or 3%, they hit the proverbial panic button and start making adjustments. 3%? Are you kidding me? When I was in the business, even the very best of us were thrilled if we had three or four choices for every hire. This kind of hiring scenario where you’ve hiring 1 out of a 100 is nirvana for the vast majority of retailers.
QT insists on hiring “nice” people who like people, because that’s a tough quality to teach; it’s either present or not. Other key qualities for QT hires include the ability to work in teams, the humility to learn from others, and an appreciation for diversity. But while it focuses on these intangibles, QT does not take a subjective approach to hiring. On the contrary, it puts applicants through a rigorous, structured process that includes a personality assessment designed to reveal specifics such as how patient or extroverted candidates are. The personality profiles are based on the qualities of QT’s most-successful performers across the company and are continually updated and refined.
While many C-Store companies start full-time employees at minimum wage, QT full-timers start around $45,000 per year based on a 48 hour week. The full-time/part-time mix is about 50/50. Most retailers want a part-time to full-time ratio of 80/20 or so to minimize the average hourly rate and benefits cost. Chet and his team know that stability in the workforce makes for happy employees, lasting relationships, and high customer retention. There is always plenty of help in QT stores. At any given time, QT may have as many as 30% more people on hand than they actually need. This allows for a degree of flexibility most retailers can only dream of. If employees have an unexpected illness, a family situation, or just want to take a day off because it’s sunny, they often can. Part-time employees can work pretty much when they like. Plenty of flexibility is built in and full-timers have set schedules, which is almost unheard of.
QT reimburses college tuition up to $4,400 per year. It has a number of employee development programs in place, including a mentoring program for new supervisors, career counseling services, and one-on-one meetings between store managers and employees every six weeks. The company makes it a priority to promote from within. To help employees learn the skills they need to succeed, QuikTrip offers free, on-site college courses in collaboration with a local community college. All of these perks are extremely rare in food retailing and nearly nonexistent in C-stores. In another parallel to Southwest Airlines, QuikTrip takes costs out of the business where the customer can’t see them. To keep store level expenses in check, every full-time associate is trained to read the store’s monthly financial statements and earns a bonus based on the store’s operating profit.
Corporate turnover is nonexistent at QT, and key employees will not leave. People who want to work in the QuikTrip legal department one day must be willing to work and come up through the stores before they go to law school. QuikTrip is open to hiring talented people from the competition, but there is no fast track to the higher levels. Everyone starts on the graveyard shift. It’s a culture thing.
In many retail environments, talent is generally viewed as a commodity, and employees are basically expendable. Chet wisely rejects that outlook. Studies have repeatedly shown that employees rise or fall based on the expectations set for them, whether it be schoolchildren achieving more when their teachers are told they’re especially bright or employees outperforming their colleagues after being labeled as fast-trackers. QT gets more from their people because they expect more. One way they communicate expectations is through training.
In most retail environments, training is minimal—seven hours, on average. Training is typically conducted off-site, and if it’s done inside a store, it’s usually in a low-volume outlet, where the new employee is less likely to be in the way. At QT, the process looks very different. Each new full-time employee is partnered with a personal trainer from the regional office, who actually recruited and hired them and has previously held the same position. The two work the same shifts, in the store where the new hire will work, and the trainer acts as a buddy and mentor for two weeks. This allows interaction with colleagues and provides the best preview of life after training.
When it comes to the third P, Product, Chet doesn’t claim it as a core competency, but I’m here to tell you, QT is plenty good. They’ve built a superior gasoline brand by guaranteeing the quality, and consumers in mature QT markets typically view the brand as equal to or better than the majors. When they decided to get into food in a big way, Chet said he intended to do it as well as they’d done fuel. Suffice it to say that I’ve been in QT stores in five major markets and view their product mix and presentation as A+.
Convenience store retailing is one of the most-difficult formats around. I’ve heard people say that C- stores are simple, not rocket science. So if they’re so simple, why do so few companies run them well? My position is that there are not necessarily fewer complexities in C-stores; they’re just different. The five most-important things in convenience retailing, by conventional wisdom, are good curb appeal, clean well-stocked stores, friendly helpful employees, clean restrooms, and tight expense controls.
Most C-store operators struggle mightily with brand differentiation, staffing, turnover, operations, inventory losses, and crime. Most also have a customer base that is comprised predominately of 18 – 35 year-old blue-collar male shoppers. Not so with QT. Because QT stores are all located on prime corners, are well lit, and have great curb appeal, a phenomenal selection of fresh foods, friendly helpful employees, and a coffee bar that would make Howard Schultz proud, QT’s customer mix includes plenty of women and white-collar men. QT competes very effectively, not only with other retailers in its sector, but also with quick service restaurants, ice cream shops, and food stores.
An age-old problem with C-stores is that most don’t do enough volume to justify any more than one or two minimum wage people working on a shift. Because QT’s purpose is providing opportunity for employees to succeed, and because they work very hard to provide a great working environment and uber-competitive compensation, Chet isn’t interested in hearing what’s not possible. They’ve just figured out ways to generate enough gross profit to justify this unprecedented investment in people and service.
QT’s employees know that their safety and well-being are of paramount importance to top management, which deploys technology in addition to staffing models to create a sense of security. Every store has a raised checkout stand and uncluttered front windows to ensure visibility from the street. The company sets the industry standard in the number of sophisticated alarm and video monitoring devices in every store.
Chet and his team have created and fostered a strong sense of community. Customers often talk about the fact that QT employees seem glad to be there, and they seem to like one another. The perceived sense of community among store associates spills over into a sense of community with customers. QT has strong commitments to local charities and causes. They allocate 5% of their annual net profits to charity. QT partners with Safe Place, a nonprofit that helps get runaways and other troubled youths off the streets. They are also proud to support military families, employees, and customers. QT partners with The Folds of Honor Foundation to provide scholarships to military families in the cities where they operate stores, commissaries, and distribution warehouses.
At QT, the community feeling extends to the customer-service appraisal system and the reward structure. The emphasis is on the team’s performance in satisfying and delighting customers. If a mystery shopper—someone who visits a store anonymously and reports on service—is especially impressed with a particular employee, everyone on staff at the store during that shift receives a bonus, because the company believes that individual rewards would undermine the message that all employees contribute to the customer’s experience. Outstanding individual contributions are recognized with a note from Chet.
QT is one of the most-innovative retailers around, and executives are quick to admit their mistakes and are open about product and initiative failures. This practice encourages innovation by conveying the company’s tolerance for well-meant mistakes. Chet tells employees that as long as the company hires smart and caring people, no employee can make an error from which the company can’t recover.
I’m amazed when I visit a QT store and the clerks on duty actually know what’s going on in the company. Store employees understand the company’s purpose, values, and strategy. They know how many stores the company operates, how many they’re about to open, and which markets are being opened. Chet communicates everywhere he goes; “Here’s the play, and here’s how we’re going to win.”
Chet is clearly a pretty humble, down-to-earth guy. He’s not into power clothes or ego offices. Their facilities are very nice but very utilitarian, without a hint of ostentatiousness. This company, this CEO, and this brand of leadership is so compelling, I almost wish I were 21 again, so I could go to work for QuikTrip. Additionally, I can’t wait until Chet decides to start building stores in Houston. QT offers an extraordinary shopping experience. It is a real thrill to see the effects of a CEO who “gets it” up close and personal.