AI success demands honesty about incentives, incompetence, and apathy.

McDonald’s learned this tough lesson—relatively painlessly—when two cybersecurity researchers accessed the Golden Arches hiring platform using the username and password “12346.” This shocking oversight exposed the personal data of over 64 million job applicants.

The ethical hackers, Ian Carroll and Sam Curry, responsibly disclosed the vulnerability to McDonald’s and its AI vendor, Paradox, allowing for a swift technical fix. Had malicious actors discovered this flaw, the fallout would have been catastrophic and highly public.

Will this fast-food titan treat this as a wake-up call to strengthen its tech governance? Will others use this incident as a catalyst for overdue reflection on responsible AI practices? It remains to be seen. The widespread yet silent issues in AI deployment require difficult solutions that many executives are unwilling or unable to confront.

Big opportunities

Workplace crises can be avoided—or at least better explained—by addressing incentives, incompetence, and indifference with accountability, skill, and diligence.

This near-miss at McDonald’s serves as a timely case study. While PwC reports that 88% of executives expect increased spending on agentic AI this year, many still struggle to explain how AI will deliver competitive advantage. Nearly 70% say less than half their workforce uses AI agents daily. Simply throwing money at AI initiatives often creates more problems than it solves.

Here’s a better path forward.

Scrutinize incentives. Talent gaps, cultural inertia, and bureaucratic hurdles hinder innovation in large firms. Agile startups step in to fill these voids but chase revenue and credibility. Stalled AI rollouts only increase their appeal.

Usually, it's the big companies making headlines when partnerships fail. How many leadership teams seriously evaluate third-party risks from an incentive standpoint? Or do they prioritize quick wins to boost executive compensation and prestige? Who truly weighs who has more (or less) to lose?

Over 95% of McDonald’s 43,000 locations are franchised. With over two million employees and ambitious expansion goals, automating hiring makes sense. Choosing Paradox.ai—an AI-powered recruitment tool branded as “the assistant for all things hiring”—seemed like a logical fit. But what hidden trade-offs were overlooked?

Effective strategic partnerships demand an “outside-in” view of a partner’s motivations. Three out of seven members on Paradox’s board are private equity professionals, including chair Mike Gregoire. As Steve Andriole, professor and tech thought leader, writes in Startups Declassified, “There is no more crucial startup activity than sales—especially securing ‘lighthouse’ clients who publicly vouch for your product. Logo power is [essential] for startups.”

“Remember: investors won’t buy startups unless they own killer IP or have a base of repeat customers. Profitable, recurring revenue is gold. Exits happen when startups prove themselves empirically,” he adds.

Evaluate capability and commitment. Despite its global scale, digital ambitions, and high-volume operations, the 2025 McDonald’s proxy reveals three glaring AI-era governance gaps: lack of cyber expertise on the board, absence of a dedicated technology committee, and relegation of cybersecurity oversight to the audit function. These are alarming red flags.

In fact, the term “cybersecurity” appears just nine times in the 100-page filing. In the section outlining director qualifications, IT is lumped together with cybersecurity under a broad description: “contributes to an understanding of information technology capabilities, cloud computing, scalable data analytics, and risks associated with cybersecurity matters.” Only four of eleven directors are labeled accordingly.

Of those four, three had prior roles in tech—but none possess credible cybersecurity or IT credentials. Notably, Cathy Engelbert, a former Deloitte CEO and current WNBA commissioner, may have the strongest background to push for stronger governance. Is she willing to take on such contentious challenges? She could start by consulting longtime McDonald’s CFO Ian Borden and auditors EY to improve board composition.

When tech failures occur, blame usually falls on the IT department. But responsible AI development and implementation demand cross-functional leadership and shared accountability.

McDonald’s CEO Chris Kempczinski frequently promotes a 4D strategy (digital, delivery, drive-thru, and development), calling the company’s tech edge “unmatched.” That confidence sets high expectations—and he likely isn’t thrilled about the embarrassment caused by the “123456” breach. With annual pay nearing $20 million, he also carries a responsibility to uphold ethical AI standards for McDonald’s workers earning, on average, 1,014 times less—as well as for the 40,000 franchisees.

Valerie Ashbaugh, currently SVP of commercial products and platforms, steps into the role of US CIO next month—a perfect opportunity to implement stronger policies and controls around third-party access.

Alan Robertson, UK ambassador to the Global Council for Responsible AI, commented sharply on the situation: “The damage was done not by hackers, but by sheer negligence. McDonald’s blames Paradox; Paradox says they’ve fixed it and launched a bug bounty program. This raises broader questions: Who audits the vendors we trust with automated hiring? Where does liability lie when trust is broken at this scale? What does ‘responsible AI’ even mean if basic security measures like password protection aren’t followed? We talk about ethics—but sometimes it’s just about setting a password.” That reflects classic indifference—especially when the login is “123456.”

Likewise, HR leaders have a critical role in shaping AI adoption. “HR must resist the temptation to simply go along. Many HR leaders will wait for existing software providers to add AI features. That would be a missed opportunity. AI will shape employee experience, and HR needs to help define it,” advises Mark Jesty, SVP of customer solutions at AthenaOnline. At McDonald’s, EVP and Global Chief People Officer Tiffanie Boyd holds a unique chance to elevate responsible AI on the board and executive agendas. Will she seize it?

Knock, knock

The McHire incident exposes how ill-prepared many boards and executive teams remain when it comes to AI design, deployment, and oversight. Speed and technical brilliance should never come at the expense of proper stewardship. “If you deploy AI without basic security hygiene, you’re not innovating—you’re putting people at risk. Security is non-negotiable,” warns Ivan Rahman, CEO of Avistar.AI.

Who wants AI governance served drive-thru style?

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