HUMAN RESOURCE MANAGEMENT AT McDONALD'S
Category : McDonald's
Human Resources Management at McDonald’s
McDonald’s is a company which has a colorful history and developed the culture associated with the Fast Food Chain today. In 1937, the McDonald’s brother Richard and Maurice opened the first McDonald’s restaurants in America; it was a freestanding business that offered until then an unthought-of concept. The main items they then sold were beef or pork burgers, fries and drinks. Their restaurant were set up differently to the restaurants of those times, with open kitchens the customers could see right through, and counters with many operational cash registers. Under a high degree of customer satisfactory contributed for business expansion, McDonald today has over than 30,000 restaurants over than 100 countries in the world and it has maintained the top position in the Fast Food Industry for the past 50 years.
McDonald’s has been pursuing a growth strategy for the last decade. McDonald’s foreign operations amount for more than half of the company’s revenue today and all have been marked by ’s (1995) basic vision of selling the maximum. However, in the late 1990s and early 2000s, the giant experienced problems owing to external environment changes. In 2002, the company experienced huge embarrassment with law suits, negative media coverage, and 15 percent drop in its stocks making it the third biggest loser in the Dow Jones Industrial average. This roller coaster ride has largely been attributed to the leadership of , who has instituted strategic changes and made the Company soar once again.
Among the blows that McDonalds took was the obese-causing and loser-employer issues. McDonalds has been hammered for providing people with unhealthy food that makes them obese and is an indirect contributor to other health problems (, 2004). Based on figures rising in US and UK, the cultural changes are also taking place, the anti American sentiments in the rest of the world has had negative impact on McDonald’s sales. The biggest challenge that managerial level faced was changing the mind set of the people from being a loser to employees of a growing Company. Even the company strategy announced, not many people were influenced by the ’s confidence.
To battle it out, a growth of 6-7 percent annual growth which was not much considering the huge size of the food chain was pursued. The challenge was to increase the sales and revenues of the Company and retain its status back. However, the growth had to be reengineered as well, i.e. not from new restaurants but from the improvements in the existing restaurants. Moreover, another factor which drives ’s attention is the destruction of the food market. Due to the growing number of immigrants, the variety of tastes was also increasing and the exotic cuisines from Asia and Latin America were attracting consumer preferences rather than McDonald.
As stated by (1997) in her article, "What McDonald's need to do is consistently drive same-store sales.” , a Natwest Securities analyst, counters it with: “The only way in which they can do that is take a long, hard look at their product line." The organizational development focused upon generating revenues from the existing operations. The biggest change is the expansion in the menus based upon the product development strategy and market expansion strategy that wants to follow ( , 2003). The menus now responded to the consumer behavior and included more healthy food items like Happy Meals for adults like salads and fruits. McDonald’s also went on to acquire a few sandwich and coffee chains in UK and Australia. Though these changes were a positive step towards incorporation of consumer demands, but it also put the burger giant in competition with a different set of restaurants like Subway offering fresh salads and sandwiches. In order to increase the market share in mature markets, McDonald’s has innovated ideas like the introduction of gourmet coffee in Australia with coffee lounges and net cafés-the message, a place for high-teens spend their money.
A strong organizational management can build up a good well between strategy and culture, as lead successful corporate strategy implementation; and build up a common goal between employees and organization reaching high level of motivation. & (1997) states that “the mission must determine the basic goals and philosophies that will shape its strategic posture.” This fundamental purpose that sets a firm apart from other firms of its type and identifies the scope of its operations in product and market terms is defined as the company mission” Mission is essential for organization to create cohesion, which makes employees have clear direction to meet requirement and loyalty.
A strong organization is an intangible force to maximize the contribution from each member and makes organization going to success. In this article, we will discuss a well-known organization “McDonald Corporate”, how its managerial role plays in their organization, and how their management strategies lead them into businesses.
Importance of HRM
So what is the importance of HRM in business strategies and decision-making processes within an organization? The new competitive reality facing organizations calls on new and different capabilities. How can one create an organization which adds value to its clients, investors and employees? And how can HRM help to realize this? What is the role of HRM in the organization of tomorrow? When the importance of flexibility and productivity is emphasized, how can HRM add significant value to the strategic decision-making process? Is there a role for HRM at this strategic level? Or is its added value rather situated at the level of the implementation of these strategic decisions?
(1995) clearly favours the strategic role of HRM in the organization. But this does not mean that other HR domains have to be neglected; for example, the outsourcing of administration should not mean a neglect of this area. Personnel administration remains an important area of responsibility for HRM. Furthermore, the facts and figures provided by personnel administration form an important base from which to develop HR policies in other domains and to evaluate their effectiveness. Another model for the added value of HRM is provided by (1997), (1995) and . (1995). They distinguish four key roles for the HR professional. HR has to deliver results in each of these domains, since the four of them are equally important. The focus may be short term or long term: HR professionals have to be operational and strategic. Their activities vary from managing processes (HR tools and systems) to managing people. The combination of the two results in four HR roles:
1. Management of strategic human resources: this role is focused on the synchronization of HR strategies and practices to the business strategy. In this role, the HR professional is a strategic partner who helps realize the business strategy by translating it into concrete HR practices.
2. Management of transformation and change: a second key role in which HR professionals can deliver value to the organization. HR professionals have to assist in the identification and implementation of change processes, being catalysts as well as guards of cultural transformations.
3. Management of the employees: this role refers to the daily problems, expectations and needs of employees. HR professionals have to stimulate the employees’ contribution to the success of the company by understanding their specific needs and ensuing that these are met.
4. Management of the administration of the organization: the HR professional has to ensure that the administrative processes concerning hiring, rewarding, training and evaluation, promotion, etc. are designed and delivered efficiently and correctly. (1997) emphasizes the importance of this role. Although many organizations and HR professionals tend to underestimate it due to a growing focus on strategic HRM, the successful deliverance of administrative aspects of HR will prove to be an added value for the organization.
Human Resources Management in McDonald’s
and (1987) suggest that different types of organisations adopt different approaches to the control of their workforce, depending on how they compete. They argue that there are three main bases for competitive advantage-innovation, quality and cost-whereas strategies revolving around quality and innovation are usually associated with a committed workforce. For organisations where costs are the most important part of the question, control is likely to be a more important factor than commitment. Although some level of consent is always necessary, control is high on the agenda at McDonald's. Control at McDonald's is not merely achieved by direct supervision, machines, the physical layout of the restaurant and the detailed prescription of rules and procedures but also through recruitment.
Even unskilled workers have some power to disrupt the efficiency of the operation by withdrawing co-operation from the production process, disrupting the process or by simply leaving the organisation. Employees may submit to the authority of the employer, but are always likely to retain a strong interest in the use of their labour. Employees and management are, therefore, to some extent interdependent; management cannot rely solely on coercion or even compliance to secure high performance, management also needs to secure active employee consent and co-operation.
When workers' efforts are extracted through an elaborate systems of rules, including rules about grounds for promotion and for punishment, employers arguably establish more control over workers' personalities and values than when their efforts are extracted through direct exhortation or force or through the design of equipment (, 1979).
(1983) argues that questions of subjectivity are not separable from the analysis of actual work practices in interactive service work because employers actively manage workers' identities. Workers and customers vie with management in a three-way contest for control and satisfaction. (1983) emphasises the distress felt by workers subjected to organisational exploitation of their feelings and personalities; however, (1993) argues that not all workers resist the extension of standardisation to their inner-selves. Rather, many attempt to construct interpretations of their roles that do not damage their conceptions of themselves. (1993) also argues that in some situations service routines provide workers and customers with benefits which help account for their frequent acquiescence in managerial designs. However, (1993) does not suggest that the routinisation of service work and the standardisation of personality are benign, nor do workers, customers and employers necessarily benefit from these processes in a happy congruence of interests. These manipulations are often invasive, demeaning and frustrating for the workers and sometimes for the customers who experience them.
The importance of emotional labour in interactive service work, even of the limited kind found at McDonald's, should not be underestimated. Employers who standardise the service interaction exert a cultural influence that extends beyond the workplace. (1983) and (1989) argue that when workers are estranged from their own smiles the company is laying claim not just to physical motions but also to their emotions. Their organisational control strategies reach deeply into the lives of workers, encouraging them to take an instrumental stance towards their own personalities and towards other people. McDonald's employees working on a till, for example, although only involved in limited service interactions, are expected to control themselves internally by being pleasant, cheerful, smiling and courteous to customers, even when customers are rude and offensive. This applies to all McDonald's workers and their relations with fellow workers and supervisors, with whom they are expected to show obvious pride in their work and employment.
When asked how they motivated employees, both UK and German managers at restaurant and senior management level stressed the importance of good communication. Managers are encouraged to apply and concentrate on 's (1966) 'motivators': 'achievement', 'responsibility', 'growth' and 'recognition'. This may take the form of 'employee of the month' awards, day trips and cash bonuses or of encouraging workers to strive for promotion and take on responsibility.
On the one hand, the striving for promotion locks managers' and employees' loyalty into the system; on the other, it may offer real opportunities for advancement which may be hard to come by for those with poor academic backgrounds. Managers are encouraged to discount the importance of 's (1966) 'hygiene' factors, such as pay and conditions of work. Managers have no control over these issues because they are dictated by the system. Training reinforces the view that pay and conditions do not really matter; what really does matter is their 'positive' management style and leadership. Job satisfaction is thus defined as a phenomenon determined through the area of psychological concepts, not through good pay and conditions. A good manager will therefore 'solve' the problem of resistance or discontent through good communication. Managers in the UK refer to the three Cs (in Germany, the three Ks), co-ordination, co-operation and communication, as the basis of the solutions to all problems.
Identification with the restaurant and other crew members is fostered through the creation of a new form of collective. If 'us and them' is still recognised, it is reinterpreted to mean 'us' as the management and crew and 'them' as the customer. Workers are encouraged to think of themselves as part of a team and managers are encouraged to equate restaurant management with coaching a team. The result of this form of 'teamwork' seems to be that individuals are often loath to be seen by their peers as making extra work for other people by not doing their share. Even the more resentful employees, who had what management saw as 'negative' attitudes, would still work hard to keep the respect of their peers. A typical feature of management style was the repeated use of certain kinds of language, with paternalistic expressions such as the 'McDonald's family'. Management and employees in both countries used the term to describe their work environment. Many responses reflected the strongly paternalistic nature of the employment relationship which management worked to foster.
We examined the organisation and the nature of the work in the McDonald’s restaurants, the employment relationship and the characteristics of the workforce in various countries. The detailed study of the German and UK operations and additional evidence from other European countries suggests that virtually the same kind of restaurant hierarchy and organisation is in use in every country. Although there appeared to be some differences in the numbers of workers employed in restaurants in different countries and differences also in labour turnover, this could be explained by a broadly similar employment 'strategy'.
Various authors suggest that all of these workers have something in common; they are unlikely to resist or effectively oppose managerial control. In effect, McDonald's is able to take advantage of the weak and marginalised sectors of the labour market, in other words, young workers who lack the previous experience, maturity and confidence to challenge managerial authority and foreign workers who are very concerned about keeping their jobs. Furthermore, employees in all 'categories' may have no long-term interest in the company, in which case contesting management prerogative may simply 'not be worth the trouble'. Many of the foreign workers in Germany and Austria have a lot of previous work experience and come from a wide variety of backgrounds, and many have qualifications from their country of origin. However, these workers are effectively marginalised in the labour market and find it difficult to find other work elsewhere for several reasons: first, because of problems with language; second, because of problems with the recognition of their qualifications; third, because these labour markets are extremely competitive in terms of qualifications; and, fourth, because the number of foreign and other migrant workers in Germany and to some extent Austria is increasing and unemployment remains relatively high.
The work offered by McDonald's may have some positive elements, but workers are often choosing employment at McDonald's in the context of having few other attractive options. Almost regardless of what people think of the work itself, working at McDonald's could be said to offer advantages for some employees who want flexible hours and are engaged in other activities and responsibilities. For those marginalised in the labour market who have few chances of a job elsewhere, McDonald's offers much needed work.
However, the employees' dependence on McDonald's and/or their tendency to see their employment as a short-term strategy makes them vulnerable to management manipulation. Those with minimum interest simply leave if they do not like it, and this is clearly reflected in high labour turnover. Perhaps they are attracted by the combination of fairly secure employment, familiar 'family' surroundings created by a highly paternalistic approach to management and lots of employees of similar age or temperament. This may help to explain how the corporation sometimes retains individuals who could probably obtain better paid and more skilled work elsewhere. As (1986) puts it, it is 'recruiting as means of control'. As already suggested, however, whether this is a deliberate 'strategy' or something else is not clear (, 1994).
The employment relationship at McDonald's is managed by a complete spectrum of controls, from simple, direct and bureaucratic controls to the management of subjectivity. At one end of the spectrum, restaurant managers are disciplined to accept tough work schedules and must prove themselves 'up to the challenge' of punishing schedules. Long hours and loyalty are locked in, with young managers being persuaded not only to accept as the norm many hours of unpaid work but also to gain a perverse satisfaction from surviving these tough and uncompromising work routines. In addition, young managers who may or may not get similar 'opportunities' elsewhere in the labour market are romanced by offers of promotion and career development. At the other end of the spectrum, more direct methods are used to maintain control. However, this still leaves unanswered the question of how the corporation has managed to sustain the uniformity of its employee relations practices despite major differences across societal cultures.