At that time, Enrique Hernandez Sr. was a retired LAPD officer and founder of a fast-growing company called Inter-Con Security Systems. “Even after my father had founded a very successful company, if somebody asked him what he did, he’d say, ‘I’m retired from the Los Angeles Police Department,’” recalls Hernandez.
Enrique Hernandez Sr. died 16 years ago, but honoring his memory remains paramount to Hernandez, and doing so requires something other than distinctive titles or record profits. It requires character. “I’m the eldest son,” Hernandez says. “I’d be sitting at his knee, so to speak, and he’d tell me, ‘Look, integrity, honesty, it’s the absolute foundation for everything. No one has use for a corrupt policeman. And the corruption starts with the first lie. You can’t restore integrity once you violated it.’”
Hernandez pauses. “I’ve always tried to live up to that.”
Hernandez believes that acting with integrity means not only avoiding lies but also sharing possibly unpopular truths. In the interview that follows with Brunswick’s Jayne Rosefield and Kevin Helliker, he demonstrates a willingness to do so.
A Director of McDonald’s since 1996 and its non-executive Chairman since 2016, Hernandez served for many years as a director on the Board of Nordstrom and still holds a seat on the Board of Chevron and the University of Notre Dame Board of Trustees.
He also long ago succeeded his father as CEO of Inter-Con, a privately owned provider of high-end security and facility support services to government, utilities and industrial customers. Hernandez earned a bachelor’s degree in government and economics from Harvard University and a law degree from Harvard Law School.
How has the responsibility of boards changed and evolved over the last 25 years?
When I started, the expectations for the board members were to really focus on the business. It was more internally focused. And your preparation and participation was more intermittent, episodic. Boards would meet four, maybe six, times a year. Nowadays, it’s an expanded role and a much quicker, continuous environment. Being a director means understanding what customers and stakeholders are saying in real time, and being proactive rather than reactive.
Companies have to view themselves as global citizens, as national citizens—they’re responsible to a much broader constituency than only the shareholders. So, in addition to focusing on the business and understanding the regulatory framework you’re operating within, it’s delivering on those wider responsibilities.
Has that expanded role and accelerated pace altered a board’s priorities?
At the highest level, I think the priorities are the same. To operate and be a strong business 25 years ago meant being a good corporate citizen. It’s just articulated in a different way today.
But I would say the priorities or the attributes you would look for in a new board member have changed. When I started, there was a tendency to try and populate boards with CEOs or people who had business experience that resonated with the board. Now, CEOs on public companies can sit on only one board and you have to make sure that, given the demands on every company, each board member can bring something unique while also participating fully and prioritizing the board responsibility.
As the chairman and CEO of a family-owned security firm, how has your experience leading a private company guided your approach to sitting on boards of public companies?
One of the things that distinguished me as I joined boards was that I had a law degree, not an MBA. In a law firm, we made decisions by sitting around a table and honestly talking about a subject. It was collaborative, collegial. That was part of my background.
And there was also an entrepreneurial spirit. It’s what inspired my father to start a security company, Inter-Con, after he left the LAPD. That was a value he instilled in me. I came into Inter-Con after years of practicing law, and then my younger brother came into it. Together we invested in Spanish-language television. And so we were the forefathers, if you will, of Telemundo. And my brother became CEO of that company, which was public.
I was able to compare and contrast his experience with mine. Frankly, I remember remarking to the people in Inter-Con how fortunate we were to be a private company and able to advance our business without seeking public capital markets support.
When I eventually joined public boards, I think I brought that family business background and entrepreneurial experience. I tried to ask, “Why can’t we do that?” and think creatively about solutions and opportunities.
And I’ve tried to foster the collaborative spirit I mentioned from my time as a lawyer. What I still say within the boardroom today is that we need to have each person participate fully to realize the collective wisdom of the board.
I end each meeting, and have done so for many years, requiring each member of the board to speak to what’s transpired. What caught their attention? What concerns arose because of something they learned in the meeting? What advice, or expectation, do they have?
That’s not the common model, but I think it’s the responsibility of each board member to be able to do that. I’ve heard of situations, and experienced them at different points in my career, where board members will sit quietly, then the CEO leaves and directors discuss some aspect of business, or talk about what the CEO didn’t do, or what the CEO should be doing.
I’ve been chair many times in my career and I think it’s often expected that the chair carries that water to the CEO. But I see it as a matter of courage really to do your responsibility: If you have something to say, you’d better say it to the CEO directly.
That’s how we do it at McDonald’s. It works well for us. It builds a confidence in the relationship and a confidence in the quality of the communication between the CEO and the members of the board.