Kerr: Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host, Bill Kerr. This episode is one of a series of special dispatches on the sweeping effect that Covid-19 is having on society, the economy, and the future of work. In addition to our regular podcast episodes, we’ll be bringing you interviews with business leaders, policy makers, and leading scholars on the coronavirus.

The economic fallout from Covid-19 has been especially damaging to the restaurant industry, although big chains have fared better than small establishments. Before the pandemic, when unemployment was low, service-sector employers sought to reduce turnover by offering workforce benefits, such as paying for education. Fast-food chain Chipotle credits its tuition reimbursement program, launched in 2016 with Guild Education, with increasing retention by 90 percent among participating workers. In 2019, Chipotle made its education benefit more accessible by covering tuition up front for programs in business and technology. How has this commitment fared during the pandemic, amid forced closures and the economic and personal hardships many workers have experienced? For this dispatch, I’m joined by Chipotle’s Chief Diversity Inclusion and People Officer, Marissa Andrada. Marissa is going to update us on the company’s response to the pandemic and its ongoing commitment to upward mobility. Welcome to the podcast, Marissa.

Andrada: Thank you, Bill. I’m excited to be here. Thank you for having me.

Kerr: Marissa, the coronavirus forced a lot of economic shutdown, and since then, we’ve had this erratic pattern across the country in terms of reopening and closures. So maybe just begin with telling us about how Chipotle’s handling this turbulence.

Andrada: Well, I would say—starting with the pandemic and the shutdown of a lot of folks who had to shelter at home and stay and work from home—in terms of impacting our restaurants, it was pretty minimal. So our restaurants—actually, most of them, the majority of them, except 100—remained open during the pandemic. We did close down our dining rooms, however. So what that means for our employees is, for those who were ready, willing, and able to work, we were ready to employ them and keep them employed, as Americans and our guests changed their eating habits. So instead of going to dine in at restaurants or going to pick up, many just enjoyed delivery or ordered ahead to pick up. And so, how that’s impacted us? There were about 100 restaurants that were attached to malls, where the malls were closed, and we had to figure out how to redeploy those employees off to other restaurants if they wanted to work and/or put them on leave if they chose not to work. And so it was an interesting time. And by the way, we do have some restaurants in Europe, which the government mandated fully closed. So we had to make sure that we sent them all home and put them on leave for a while. But back in the US, really, the work for us was, how do we continue to maintain our world-class food-safety culture and also our commitment to overall well-being of our employees and our guests, because our restaurants remained open. And so it was just making sure we focused on that.

Kerr: Were there any very significant sort of drives or policies you were trying to put into place, particularly to improve that safety aspect inside of the establishments?

Andrada: Well, I think the good news about the specific policies or protocols is that, look, as a company, we learned … we had some good learnings that have occurred as a result of some incidents that happened back in 2015. And since then, the company has pulled together a world-class food-safety council. So if I think about the overall well-being and food-safety practices we have in the restaurants—things like wellness checks on the way in—that’s been happening for the last few years. And what I mean by that is, before an employee could step in and begin working, that employee receives an overall wellness check from their manager on duty, and it checks for certain symptoms. And then we layered in the Covid-19 symptoms—including how are you doing, how are you feeling—before they can even go to work. So I think it’s just making sure we were diligent with that. The good news is, it’s part of our culture and our practice of doing that. But then all the other things around safe food handling, increased hygiene practices—in terms of just making sure we sanitized high-frequency touch areas—but then even down to our air-filtration systems in the restaurants. We have a pretty upgraded air-filtration system in the restaurants that have been in place and that go in every new restaurant. And so all of those things really helped us to maintain that commitment to a food-safety culture and to make sure that we are taking care of our employees. And then, one thing I did want to mention, too, is, with the food-safety culture and well-being, any new employee—so even day one—employees have access to sick pay. So in that way, they’re not encouraged to go to work when they’re not feeling well. And so that’s kind of a key thing, too.

Kerr: You mentioned some of the differences between Europe and the United States. There’s also differences across the country in terms of local practices. Have there been any salient differences that you guys have been building around, or did you try to adopt an approach or policy that would be consistent across all the jurisdictions?

Andrada: Well, I would say, I was just talking about our food-safety practices and our commitment to overall employee well-being. That is consistent across the company, regardless of where you are in the country. Now, if you want to layer in local jurisdictions, we made sure to follow not only CDC guidelines from a nationwide standpoint, but then there were very specific city and county guidelines around food safety and health in general. And so, it was just following those. An example of that would be, in certain jurisdictions, all retailers and restaurants required customers, as well as employees, to wear a mask. Some were sooner than others. And so we made sure that–that’s the one example–that when masks were required ahead of some other jurisdictions, that that was in place.

Kerr: Chipotle is company-owned stores. Did that control provide any extra leverage during the virus response?

Andrada: Almost 2,700 restaurants are company owned, and so it was a consistent practice of our food-safety culture and overall wellness protocols.

Kerr: So as you’re thinking about it, we’re recording this now in August, and obviously various parts of the country are at different waves of the crisis. What are you hearing from your employees and store managers are some of their more significant concerns right now? Or what are the things that you need to be preparing for the fall ahead?

Andrada: So what we’re hearing from our employees and managers, in terms of their significant concerns, so the good news is we’ve all experienced this together, and we have all learned our way through ensuring an overall environment of well-being and safety, food safety, for our customers and our employees. So the learning has been, the good news is, that working in the restaurant is one of the safest places to be, especially during this time. As we go into fall, I think everyone is really navigating this challenge. And I think about the employees who are parents, right? Whether they’re working in the restaurants or they’re working remotely because they’re office-based. And I think the biggest concerns are twofold. One is, if they are parents with school-aged children—meaning not even teenagers—or even have children who they normally rely on daycare, it’s just being able to balance that. So balance the needs at home, because everyone’s at home. And then balancing their ability to work. And when I think about it, the restaurant employees, what they need is the flexibility to do both, right? To get the hours that they need, to remain working, but also to get the hours that they need to take care of and support the family at home. Whether it’s going to school or daycare’s not available, that there’s someone at home, of course, supporting the family.

Kerr: And Marissa, is this a reapplication of flexibility that the hourly employees would have already had, or is this something new that you’re putting in as a response to the pandemic? And then, obviously, the pandemic is going to unfortunately be with us for a while. But projecting out into the future, would you think that this will become a permanent kind of option that people have to be able to schedule hours around family-based needs.

Andrada: Well, I think it’s just a different application of the kind of flexibility we’ve had as an organization. And here’s what I mean about that. So that our 91,000 employees? Understand that a majority of them are restaurant-based and work part time. And the first part of working at Chipotle is communicating with your hiring manager your availability. And so it’s part of the scheduling routine. So if I’m a manager, I am diligent about not only when the employee comes on board, but because life changes altogether, just making sure we’re checking and adjusting availability—I’ll just start there—of employees to work. So I’m a manager, and I will make sure to check with my staff—I might have 25, 30 people in my restaurant—and just checking their availability. Is it the same, or is it different? And understanding that. How many hours to work, and which days, and during what part of the day are people available to work? And then from there, the manager can build the schedule. And so I think we’ve had that flexibility before, and now with Covid-19, we can just apply around that as well. And that helps us, too, with understanding the staffing levels that we need, if we need to augment it by hiring more people.

Kerr: That’s great. Let me turn also to what we began with the introduction describing, which is you have a tuition reimbursement program. Perhaps start us off, Marissa, by telling us a bit about the way the program is set up. And then what I’d love to kind of point toward next is, as the pandemic has come upon us, has this changed the participation of your employees in the program, and are you making modifications to the program as a consequence of Covid?

Andrada: So our existing tuition reimbursement program works actually in a couple of ways. During the intro, you talked about our debt-free degrees, which we are so excited about. There are five universities that we partner with for 75 programs in both business and technology. And the requirement is that an employee needs to have worked with the company for at least four months, and on average that they’re working 15 hours a week. And once they hit that four-month hurdle and they’re maintaining at least 15 hours on average a week—and we do look back for a couple of months—then they can actually apply for that program. And so that’s the enhancement that we introduced last year. We also have a traditional tuition reimbursement program. But I think what’s not traditional about it is that we do reimburse up to 100 percent to our limit of $5,250 a year. And it’s on any program. And so our company used to have a “Here are in-network schools that we will reimburse for, and here are out-of-network schools that we won’t.” We just decided all schools are in-network. And then also, if I am an IT person or even a professional, like a human resources professional, and I need to get a certification to continue to stay current, we will reimburse for certifications as well under that tuition reimbursement program. So that’s kind of how the programs work. And if you want to talk about, well, how has it impacted eligibility and/or participation during this time of the pandemic? As a company during just the middle of a pandemic, when we were all still navigating through it, the question was, how do employees maintain eligibility if they’re not able to work 15 hours a week? And I’ll start with our restaurant employees. And what we decided as an organization through Covid—as we were learning through it, and we weren’t sure what the stability would be of the schedules and of the business—is that we would waive that during the Covid-19 pandemic period of time if employees weren’t able to fully work those 15 hours a week. We just need to know that they were employed and that they were able to work. And for that period of time during Covid, we’ve kind of gotten through that, and we’re back to getting back to our normal rhythm of the business, believe it or not. So for the first four or five months, we actually waived those requirements of those minimum 15 hours a week, just so that employees wouldn’t lose their eligibility, especially if they were mid-program. So if they’ve already started the program—whether it’s debt-free degrees, or they are enrolled in a class and asking for tuition reimbursement—we certainly didn’t hold it against them, because those were circumstances beyond their control. Now that we’re kind of back into our normal rhythm—and I know we’re still navigating Covid-19—our restaurants have really grown in terms of our digital business. So if you think about the digital business, we have grown that business over 200 percent, because it used to be people would walk in, walk the line, get their food, and then sit in the dining room and eat. And now a lot of guests are actually ordering ahead and picking up, or ordering for delivery. And so that’s required to staffing to provide that support, and also staffing just to support the restaurants that we have continued to open during the pandemic. So what I mean by that is, new restaurant openings … in the last quarter, we opened 37 new restaurants in the United States, and we had to staff all of them.

Kerr: About the training reimbursement, itself, help us think about how Chipotle thinks about the return on investment from such a program, because investing more than $5,000 potentially in an employee, that’s not a trivial amount of money.

Andrada: Yes, that’s right. And so let’s talk about the ROI on why we would even invest in a debt-free degree program and the 100 percent tuition reimbursement. So we employ over 91,000 employees. So think about that. And the ability to attract and retain someone who has a great service orientation and invest in their, just, skills, right? So it’s not an easy job. We prepare food fresh every day. And so think about the retraining skills, too, that are required if we lose employees. And the industry—restaurant hourly workers—typically there’s a high turnover rate that occurs in the first 60 to 90 days. And then it occurs on an annual basis, right? You want to get them through that 90-day hurdle, and then you want to get them through that annual hurdle of staying with the company. So if I think about our key performance indicator of retention and/or turnover rates, we look at those two areas and say, if we can lengthen the time of an employee to not only finish their training, but also then be productive and work in the restaurant, and if we get them for at least a year, that really does save on so many things—not only just improving the retention rate, but then those retention rates, every point increase, does translate to hiring costs, onboarding costs, and training costs with those employees. And so that’s why you want to invest. And then for the longer term, it really is about investing in the future of leadership. So if you look at our 2,700 restaurants, they’re all run by general managers. And our general managers, 80 percent of them have started off as crew members, so hourly crew. And so if you think about that and investing in them, overall—I think about investing in future leadership—there’s a longer-term ROI in helping cultivate their best selves. I think about that, along the way, while they’re contributing to the company, and helping them kind of grow up to not only become a general manager, but also for however long they’re here and whatever they move on to, just to become a better leader in the world. And so that’s one way of thinking, or a few ways of thinking, about the ROI on why we would even in invest in some kind of education program for employees.

Kerr: Yeah. Let me link that also back to some of your earlier comments about increases in the digital nature of your business and how that’s reshaping your restaurants. A lot of people talk about Covid-19 as having accelerated—especially around automation and touchless environments and so forth—trends that were already present for the future of work, but maybe taken what would have been 2030, and now it’s going to be 2022. So maybe talk us through a little bit about how has your vision of the store operation in the future changed, and how would you think of that future staffing? What part of that may come through different types of hiring programs, different types of people that you’re bringing into the organization, and what part of that comes through this reskilling, rebuilding skillsets for your existing employee base?

Andrada: Yeah. So if I think about the impact of Covid-19 on the digital business, I think for us, before we even went into this pandemic, the focus of our company has been to build this infrastructure to support our digital business. And what I mean specifically about that is that second line or that second digital kitchen that we’ve built out in the back of the house. So I think about the back-of-the-house skills, where actually you can fully see it. If you’re a guest, and you walk into Chipotle and you walk the line and you can customize your bowl and/or your burrito or tacos, that all happens at the front of the line. And what also has been happening, before we went into Covid, is actually building that second line—in what we’ll call the “digital kitchen” in the back of the house—so that we’re not impacting the guest experience for those who happen to be in the restaurant, to fulfill our digital orders. And so the skillset that we’re looking for is exactly the same as the skillset that we have been looking for pre-Covid. So we can take someone who was an hourly worker, just over minimum wage. And let’s say they have no skillset in restaurants, but they have a great service orientation, and they want to learn. We can take them through our training program, starting with tortilla. So the person who greets you at the beginning of the line, and then how they work through that and serving the guests and customizing their order, all the way through culinary and knife skills. So preparing the fresh food every day, to cooking the food, to managing the team, et cetera. Those were all skills and very robust training programs that we’ve put in place before Covid. And with the onset of digital and our crazy growth in digital, it’s just actually hiring more of the same people that we can put through that training. And so, I don’t know so much that it’s reskilling. It’s really more about amping up our existing training programs and making sure that we are finding talent who can continue to go through and get through their validated training. So not a lot of reskilling required, even with the change that’s happened with Covid. So I think we’re pretty fortunate in that regard. Now, as we’ve reopened or begun to reopen—so we’re still in process, not everything has reopened—there are certain restaurants where the dining rooms are partially open, let’s say max 50 percent. What we’ve needed to do is kind of pivot one of our manager roles. So you can have a service manager role, or you can have a lead role. And now we have this dining room steward, right? And so how do we pivot that person? They still use all the great food-safety protocols and sanitation that we’ve already had, and just focus on ensuring that anywhere there’s a high-frequency or high-touch area in the dining room, that we’re taking care of that immediately so that guests feel like they have a clean, safe place to dine. I think that’s the only thing I could think of where we’ve had to pivot, but not really a lot of reskilling. It’s just utilizing the training and tools that, really, at the foundation most employees get on their way in. So we’ve been really fortunate.

Kerr: So Marissa, given this growth in the digital business, are you experimenting or thinking that an important part of Chipotle in the future will be only places where you pick up preorders, that there won’t even be a dining room for in-store consumption?

Andrada: We’re not all the way there yet with actually opening up a restaurant where there’s no in-room dining experience. I think the closest to that is, we’ve opened up Chipotlanes, which has been a big percentage of our new restaurants that we’ve built, which is the ability to order ahead, not even get out of your car, and pick up. We’ve also added on walk-up windows to certain restaurants. So if you go into Chicago, you can walk up and not even go into the restaurant. But we haven’t tested one yet where there’s just no dining room at all.

Kerr: Think a little bit more about upward mobility, and as you’ve described it, kind of a future focus and building some leadership for the world. How do you thinking about that in the midst of this very large, first off, health crisis, an economic crisis, that’s going to be reverberating from the health crisis for some time to come. What are you prioritizing for the long term with Chipotle?

Andrada: Our priority is really just to continue to build great restaurant and operations leaders. If you look at our growth, again, we just opened 37 restaurants. On average, in the company, we’ve opened at least 200 restaurants a year. And so there’s always going to be a need to hire great leaders, whether it’s operating at the leadership or the restaurant leadership level or the above-restaurant level. So we’re always thinking about that. We have a process in place and rigor in place with our field leaders to always be assessing the health of our workforce and really doing talent planning. Who’s ready now, who’s ready to get promoted at every level in the company—up to the GM level or at the patch level, which is above GM, or the regional level, which is above the patch. So we’re always constantly thinking about, are we growing our talent for the future? And, ideally, we would love to have the majority of people come in internally so that we can figure out, all right, and then externally, what is our recruitment strategy? So how we’re thinking about that is, again, I mentioned earlier, that for restaurant general managers, 80 percent of them come from crew. And so since we know that, it is about making sure that we are moving people through the system. And then, as they get into management, that they are getting the robust management training that they need to be successful, general manager leaders. And then, as we get into above-the-restaurant-level training, again, we’ve got very robust training. And even some of that training, if I’m an employee, and I’m taking advantage of a debt-free degree, or I’m taking advantage of tuition reimbursement, they can also count their management training for up to 36 units in their education program.

Kerr: So Marissa, with such extensive hiring—I mean, you’re approaching 100,000 employees, and you’re at a massive scale often with younger employees—maybe you can help us with that magical question, which is, for the younger generations—Gen Z, the next gens, millennials—what makes them tick? What helps get them in the door for you at Chipotle?

Andrada: I think the biggest thing that this next generation of employees, the next future leaders, are really looking for is, if they’re going to go join a company, that they want to be part of a company that has a purpose. And so a lot of these young generations and young people joining us today are so purpose driven. Which is great for us, because I think what resonates for them is they’re joining a company that believes in cultivating a better world through food, so food with integrity. But also what you and I have been talking about in the past hour, people with integrity.

Kerr: And how would that also then, I guess further, once they’re inside the organization, be impacting the management practices as you approach them at Chipotle?

Andrada: Well, I think it’s a chance for companies to really rethink their people policies and practices. What the next generation really wants today is different from all of the classic management practices up until this decade. So an example is, employees do want to join a place where they can grow and learn. And it’s not so much they need a manager who’s going to tell them what to do on the job. They really need a leader who becomes a coach to understand what they’re all about and helps the employee … they will help to bring the best out of their employee while they’re at work. So you think about the role of manager as coach, but then if that’s the case, as a coach, bringing the best out of your people. That means you need to rethink some of the people practices, like performance management, for example. Performance management is the classic “At year end, we’re going to go through a pretty detailed performance review.” You can’t wait these day. You can’t wait until the end of a performance year to have a conversation with an employee along the way. I think the role of performance management is about manager and employee having in a conversation ongoing about what’s expected, but also how they’re doing and in what way they can be supported in their growth and development. And so companies need to rethink their people practices, and growing and supporting and retaining employees.

Kerr: Marissa, I want to turn to one part of your role, which is about promoting diversity and inclusion at Chipotle—obviously extremely important in the Black Lives Matter movement and us overcoming systemic racism in the country. What are some of the practical wisdom or advice you can give to us about helping to really promote diversity in the workforce?

Andrada: And I think about the role of diversity and inclusion, it starts with leadership, and it starts with culture and values. We have been on a journey. I’ve been with the company now almost three years, so two and a half, three years. And early on in our journey, and in the role that I play as a leader of this company, it is about codifying your purpose. And so our purpose is cultivating a better world. And it is also codifying the values—who we are and what we stand for. And those values really drive the behaviors around making sure that you have a diverse workforce, but also that it is an inclusive culture where everyone feels like they can bring their best and full self to work. And so, if you haven’t started that work yet—and I know there’s a lot of people starting that work now—It’s really important to get that straight, because I think those leadership foundations, the culture that you are setting, will then reinforce your success around attracting and retaining diverse experiences, backgrounds, races into the organization. The second thing I would say is, be intentional. And so I think a lot of companies are learning that now. I think about the journey that I’ve been on specifically with Chipotle. Once I joined the organization … and part of our transformation in the past three years is that we made the decision to move from Denver, closed down our restaurant support center there, and relocated them to either Columbus, where we already had a centralized support group and expand that and then put a stake in the ground in Newport Beach and hire a bunch of new people. Because when we invited people to move with us from Denver to these two new locations, many people said, “Nope, I think I’m entrenched. I’m going to stay in this community that I know.” And so we’ve had to rehire an almost entirely new restaurant support center in both locations. And so when I talk about being intentional, be really clear about if it’s diversity that you want in your organization, understand where you are, and understand where you want to be. And so if I look at our journey in the last two and a half years—again, I start with leadership—when I talk about the senior leadership of the organization—so the executive leaders who report into the CEO and then their direct reports, the senior leaders—we have increased our diversity in terms of gender and ethnicity by 50 percent in the last two and a half years, which is quite a journey and phenomenal, right? But I think you have to be intentional to do that, because one of the key reasons we did that is, look, if you look at our workforce across the 2,700 restaurants, 70 percent of our workforce is diverse. And so we want to make sure that, as we grow talent for the future, our employees can look up and say, “That person is someone that I look like, and I can be them someday,” if that makes sense. So that’s the second piece of advice is, be intentional about the goals that you set from a diversity standpoint. And not all of that started a few months ago. And I get, let’s just fast-forward to all the social and civil unrest that’s related to Black Lives Matter. I think the advice I would give there and the work that we’ve been doing at Chipotle, again, is just really putting that spotlight or that microscope—whatever analogy you want to use—to look at the values, and are we living them or not? When the George Floyd killing happened, I think one of the most important things that we did as a leadership team was really understand the feeling and the pulse of our Black employee workforce and understanding from their perspective what it is that we needed to be doing more of or differently as an organization to really support them so that they feel successful, that they feel seen and heard as part of our organization. So there’s that part. And I would say, in terms of how we continue to end systemic racism, I start with institutional racism, right? What we have control of within our world at Chipotle, with 91,000 employees, is to make sure that we hire, that we train, we reinforce, and we reward behaviors around those that support our values, which is creating an inclusive workforce. And so we double down on that, right? If I think about what we’ve been doing in Covid, with everyone having to learn how to work differently in these crazy times, I think a North Star for us has really been focusing on our values. And I say that, again, when you start with that, that is such a good compass, but also a good guiding light or North Star for how you behave during these times. I talk a lot about organization and culture. Certainly, there are a lot of things that we have done, too, as a result of Black Lives Matter, that we can support specifically black community, since that all happened.

Kerr: Marissa, thank you very much for walking us through that as a, I think a wonderful way for us to end this podcast, as you’ve talked about both your tuition reimbursement program and the ways that you’ve been trying to further the reskilling of your workforce, but then also making sure it’s a diverse and inclusive environment. Thank you so much for coming on the podcast with us.

Andrada: I enjoyed our time. Thank you so much Bill.

Kerr: Thank you for listening to this special episode of the Managing the Future of Work podcast, to find out more information about our Project on Managing the Future of Work and for more information on the coronavirus’s impact, visit our website at hbs.edu/managing-the-future-of-work/ and sign up for our newsletter.