Leading McDonald's Boardroom Forward and Upward
Enrique “Rick” Hernandez Jr., CEO & President of inter-con security systems, inc. & chairman of the board of mcdonald’s corporation.
Opportunity. That is what Enrique Hernandez Jr. learned to spot early on in his teen years. Sent by his parents to a private Catholic high school run by strict Jesuit priests in Los Angeles, he viewed his rigorous education as a gift. When a high school friend encouraged him to apply to Yale University, a young Rick did just that, along with submitting applications to a number of other Ivy League schools. He got into Harvard University, graduating with a BA in business and economics and a JD from Harvard Law School.
Today Hernandez is a top U.S. corporate leader. The businessman and lawyer leads a multi-million dollar international security firm with thousands of employees working across three continents, has served in the board of directors of Fortune 500 companies, and currently serves as the non-executive chairman of the world's largest restaurant chain: McDonald’s.
A Golden Arches board member for 25 years – the last six as Non-Executive Chairman – Hernandez is still loving it.
According to the businessman, the keys to his success in Corporate America are two personal qualities he’s held from a young age: being a hard worker and a good listener. “I have always tried to measure up to the responsibility that I have, whether it’s as a student at Loyola High School or as a corporate director,” he told us. “I truly try to do the best I can. So even from an early age, I would get up really early to be thoroughly prepared... I work hard at it, whatever I happen to be doing.”
Lending an ear is also crucial for Hernandez. “I am very respectful of others,” he says. Of those leaders that believe they already know and have all the answers to problems, he adds, “basically, they are not good listeners.”
The Harvard alumnus prides himself on fostering a boardroom atmosphere that aims to “harness the collective wisdom” of its members. It is a practice he has brought with him into the boardrooms of some of America’s biggest businesses, from Nordstrom to Chevron to McDonald’s. To unlock that “collective wisdom,” Hernandez structures meetings to hear from every board member. Ample time is allotted at the end for fellow directors to express any misgivings and share ideas and solutions to move forward. Such actions, Hernandez says, in turn build collegiality.
For Hernandez, adding this secret sauce to boardroom dynamics is something that has always come naturally to him, but which he acknowledges, “isn’t present all the time” on corporate boards.
Board service has been part of Hernandez's professional life for nearly four decades. Freshly graduated from Harvard Law School in 1980, he went to work for the now-defunct Brobeck, Phleger & Harrison in the firm’s Los Angeles office, but left after four years to join his father’s business, Inter-Con Security Systems, also in L.A.
While working in the family business and living up to his Jesuit education mantra of being a “man for others,” Hernandez also joined the nonprofit Los Angeles Children’s Hospital board. A fellow board member recruited him to join the corporate board of Great Western Bank, a New York Stock Exchange company that was the nation's second-largest savings and loans company at the time. He likens working for such a big corporation so early in his career to “breaking into the big leagues” for a baseball player. “That was the beginning,” Hernandez says. “Once I was there, it seemed like other opportunities just came my way.”
Great Western eventually was acquired by Washington Mutual, where Hernandez became one of three directors. Other board appointments would follow, including Nordstrom Inc., and the Tribune Company. Then came the McDonald’s board of directors, which he joined in 1996. Hernandez was appointed non-executive chairman ten years later.
Much has changed in America’s corporate boardrooms since Hernandez took a seat at the table as a young, ambitious director. Corporate social responsibility stands out for Hernandez. He recalls a time when some people challenged the notion of the board of directors making donations to non-profits, which some investors considered a misuse of corporate assets. The Supreme Court settled the matter, and today, corporate giving is table stakes.
McDonald’s has a history of being ahead of the curve when it comes to giving back, and its brand has long been synonymous with Ronald McDonald House Charities (“RMHC”). Established in 1974, RMHC is a children’s charity that enables, supports, and facilitates family-centered care. With 360-plus houses in 64 countries, RMHC provides the comforts of home to the families of hospitalized children receiving care in nearby medical facilities. The charity also deploys mobile care units providing dental, medical, and healthcare resources to underserved communities.
Last November, McDonald's launched the campaign #HereForRMHC, committing $100 million to Ronald McDonald House Charities over the next five years. It’s a campaign that Hernandez is deeply proud of – and one he says is rooted in McDonald’s values.
2020 proved to be a challenging year for corporate directors.
To Hernandez, the coronavirus pandemic accelerated a trend he’s already seen taking root in corporate boardrooms across the country. “In the last year, with COVID serving as a kind of umbrella, it has become more apparent that directors serve not only the shareholders but also the communities of people that work within the company, and the communities of people with which the company interacts.”
In November, amid the Coronavirus pandemic, McDonald’s unveiled a refreshed corporate purpose to “Feed and Foster Communities.” Says Hernandez, “We have to be actively engaged in trying to make a better community. At McDonald’s, that’s exactly what we’re doing.”
He adds that in addition to serving food, the restaurant chain also serves people. “It's a company that's really made up of local people,” Hernandez says. “The franchisees live and work in the communities, the same communities. They are serving their neighbors. I think that's a powerful thing. It's not that we're estranged from the customers we have; we are amongst our customers.”
Hernandez suggests the COVID-19 health crisis and other recent social and political events point to a paradigm shift in boardrooms, as companies awaken to the need to be more engaged.
He also warns that corporate board members must be forward-looking or face the consequences. “You have to think proactively or you're going to be a dinosaur company.”
According to Hernandez, the increased proactive mindset of corporate boards that has developed in recent decades has also led to new dynamics in the boardroom. Adding to that is the relatively recent rise of activist shareholders, which Hernandez says are keeping Boards more accountable.
One example Hernandez cites is the matter of political contributions by corporations. Following the Capitol riot in early January, a wave of companies halted contributions to federal lawmakers who objected to the presidential election certification.
In January, McDonald's CEO Chris Kempczinski condemned the riots in the nation's capital and endorsed a statement from leaders of large corporations that denounced President Donald Trump and other politicians. That was followed by the company's announcement that it would suspend its political donations.
"We have already paused all of our political giving while we review our policies and procedures," McDonald's said in a statement provided to media. "Going forward, we will ensure that all contributions continue to align with our values and the purpose of our business.”
Hernandez says that corporations are looking at political contributions differently, asking how they fit into their values.
While serving on corporate boards, Hernandez has also turned his family business into a global force. Inter-Con Security Systems was established by his father, who retired from the Los Angeles Police Department, and his mother, who worked as a secretary at Sears. “They started the company from the kitchen table of our three-bedroom house,” he recalls.
Hernandez joined Inter-Con in 1984 as Executive Vice President and Assistant General Counsel and became President two years later. Under his leadership, the small business grew to become one of the largest of its kind worldwide, with over 25,000 employees. According to the company's website, the Pasadena-based company offers security personnel and management, executive protection programs, risk assessments, tactical exercise plans and programs, emergency medical services, classified information safeguarding, and investigations.
Now the family company is in its third generation of family leadership. Hernandez’s son Henry - also a graduate of Harvard University and Harvard Law School – is Chief Executive Officer.
Being Latino has informed business decisions made by Enrique Hernandez Jr. throughout his life.
When Inter-Con wanted to go international, it first looked south of the border. “We saw opportunity there, and we just kept on going all the way down to Chile,” says Hernandez, whose grandparents were from Mexico.
The company also operates in Colombia, Dominican Republic, Guatemala, Mexico, and Venezuela. The growth in Latin America served as a roadmap for expansion to other countries around the world, including Benin, Canada, Ghana, Liberia, Togo, and Tunisia.
With a deep understanding of the Latino community, Hernandez and his brother Roland saw tremendous potential growth in the Spanish language television market back in the early 1980s when there was just one network – Spanish International Network – later renamed Univision.
As early investors, the brothers were instrumental in the founding of NetSpan in 1984. Three years later, the network was rebranded as Telemundo – today a Spanish language media powerhouse. Roland would go on to lead the company, serving as CEO from 1995 -2000.
That early investment was no accident. Of his prescience Hernandez says, “We understood this market that other people weren’t focused on. We were able to understand it, we were able to serve it.”