Essay: Reward Management At McDonald's - Challenges & Effective Approaches.

You are required to write an essay on Retail Management.

Reward management procedures are generally established on reward philosophies and approaches and covers arrangement in the form of policies and approaches, guiding principles, practices as well as reward management structure. In this report reward management systems of McDonald have been discussed through identification of their current practise as well as challenges related to reward system and then recommending effective approach to develop strategies that can address issues that have been identified.   

According to Business Premium Collection (2016) McDonald’s is a reputed brand in fast food industry across the world and its operates in over 100 nations. Generally their approach is establishment of franchise system  to expand the business and over 90% of their business are owned and operated with franchisees. The main activity of McDonald’s is serving locally preferred fast food items and beverages with sharp focus on maintaining quality and is offered to customers at different price points. As stated by Azim and Azim (2012) the popularity of McDonald’s has been retained due to their business strategy that focuses on building brand strength through quality standards and wide range of food choices being extended to almost all markets globally. Also adaptation of food offerings and services according to preferences of geographies depending on localisation of food menus with local taste and preferences is also key business strategy of McDonald’s. Though the food offered in different geographical markets are localised but they still offer by and large some standardised menus. According to Mangelsdorf (2012) aanother strategy of McDonald’s is their focus on innovation where they regularly experiment with new product and flavours to bring exciting menus in market and they have consistently maintained their competitive edge with focus on affordable pricing, quality of food, customer convenience and innovation in flavour.   

Further McDonald’s currently has nearly 235,000 employees globally and they are equally responsible for their employees and offers them equality at work based on merit. Also as stated by Komanda (2015) McDonald’s maintains sharp focus on developing their employees as future leaders and rewards them according to their contributions and achievements.  Their existing reward management system is based on characteristics of team behaviour where a comprehensive reward structure is practised currently at McDonald’s that makes the firm acknowledge the advantages of establishing goals for entire team and not just for one employee. According to Spector (2013) in their current reward management system while some members of the team may dislike doing more work as compared to other members but over time it is ensured that each member should lend their efforts in ratio to their compensation.  This is because of the fact that McDonald’s strongly believes in team that is formed of properly skilled individuals with diverse background and experience so that together they could work with high sense of commitment to respond effectively to maintain organisational goals in highly competitive environment. As such success of overall team is vital for comprehensive reward structure that is practiced within McDonald’s. According to Komorowski (2016) some other characteristics that shapes McDonald’s reward management system and related decisions include individual employee factors, size of team, organisational structure and environmental elements.  Individual factors like personality, education impacts reward system like for instance some individual may respond better with extrinsic motivators like financial rewards like incentives, promotions while others may respond to intrinsic motivation like working in team which help them to attain personal satisfaction. Hence individual motivational drivers has correlation with rewards and accordingly on their design systems.  Other characteristics of reward management system of McDonald’s is composition of team size, skill level that influences design system of rewards. For example as teams advances through stages of development like forming, storming, norming and performing McDonald’s systematically offer rewards aligning to stage of team development that motivates members of teams to engage in team work, lends to productiveness and solves the procedure of improvement concerns. McDonald’s for instance offers medals or awards when teams are formed initially to motivate members to get involved in activities as well as engage with one another effectively which normally drives to productiveness in later stages. Further as stated by Uggla (2014) culture, industry and structure of organisation also shapes characteristics of McDonald’s reward management system approaches where for instance their corporate culture implements desirable rewards like offering monetary incentives, perks like free food, event voucher etc to members in team as reward for their contributions. Lastly environmental elements such as government norms, economic situation and competitive elements are characteristics of reward system at McDonald’s which normally governs the frequency and amount of reward that can be offered to team members. Moreover retention rate of team members also shapes reward systems of McDonald’s where compelling reward options are eventually decided based on evaluation of retention ratio and decisions are made on manner to reward teams likely with either money, award or with time off.    

Challenges in McDonald's Reward Management System

According to Martin-Perez and Martin-Cruz (2015) Reward management is basically about designing, executing, maintaining, communicating and evolving the process of design system of rewards that can assist firms to improve their performance as well as attain their goals. These are developed and maintained to offer and administer adequate forms and levels of pay, benefits and other kind of rewards and these consist of financial and non-financial rewards.

According to Marcela Lage Monteiro et al. (2016) it has been commonly identified that the primary challenges or issues that are faced in reward management systems includes ensuring if the reward management approaches are actually supporting attainment of organisational business tactics and fulfilling the needs and desires of employees towards security, stability and career progression. Others challenges that are generally faced even includes understanding the manner for achieving internal equity and external competitiveness and then incorporating such aspects effectively in designing of reward structures as well as evaluating actual response adequate to fragmented pay markets to maintain a reasonable and coherent pay structure. Further on going deeper into various literature it has analysed that interpreting the manner an organisation can actually reward individual performance and efforts as well as promote teamwork eventually is often a challenge. Based on these understanding it has been analysed that McDonald’s current Reward management systems has some specific challenges or issues which are as follows:

Issue 1: currently McDonald’s practices comprehensive reward management structure where rewards are more driven on contribution of overall team than on individual employee’s contribution. As result of this approach staffs often feel less motivated. Also many high performer staffs often complain that they lose motivation because due to comprehensive reward structure of McDonald’s it has been normally observed that low or average performers are similarly rewarded as their high performing counterparts which has resulted into situation where only some members of team have to regularly do hard work to drive overall team performance so as to get adequate rewards while few low performing members also enjoy equal reward benefits even when lending less efforts (Garavan, Carbery & Rock 2012). This has resulted into low motivation in high performers as they feel they are not adequately rewarded or recognised and get the same incentives or acknowledgements as low performing team members. Quality staff are also frustrated to work more continuously so as to cover up for team members who are regularly late at work or do  not respond as expected to customers in timely way.   

In order to address this situation of challenge within the existing reward management structures of McDonald’s they need to change their approach from comprehensive reward structure to performance based reward structure where individual performance are given precedence over entire team performance. In the period of competitiveness and changed aspects of environment more firms today show high level of commitment for reinforcement of new reward practices that are competitively aligned with other HR approaches as well as overall organisational aim to attract, retain and motivate high performing employees. As new reward management practises like performance base reward structure are more effective in attracting result driven employees who can adapt and succeed in performance based current environment so it is vital motivation aspect and more effectively lends toward increase of productiveness of high performers when executed appropriately (Neeti & Sharma 2014).  Hence with change in exiting reward practices through incorporating performance linked rewards McDonald’s can bring in more effectiveness in their reward structures and approaches by linking it with performance development systems. This will help to practically respond to expectations of high performer employees where they can see real contrast and acknowledgement for their hard work through performance linked pays that will help them get more incentives which are not same as that given to all in general even to low performers which is being practiced as of now under comprehensive reward systems.  Also performance linked reward will give more opportunities to build a competitive and healthy work environment as variance in rewards will actually play a vital role in motivating performance of employees specifically high performers instead of giving them a fixed standard reward packages.  Reward approaches like gain/profit share, employee stock ownership plans will be helpful to deal with exiting issue identified in McDonald’s respective to their existing reward management systems.   

Effective Approaches to Address These Challenges

Issue 2: according to Altuna et al. (2017) comprehensive reward management structure currently practiced at McDonald’s has brought about issues in low customer satisfaction with some of the customers registering complaints about employees attitude and commitment for task in hand where some have been observed as being more interested in talking to their friends than handling the customers during their work schedules. Such situations or challenges have emerged because under comprehensive reward systems the overall performance of team is assessed and acknowledged so it has made some of the employees laid back in their attitude and commitment to their tasks in hand. This on other hand has resulted some high performers facing more constant pressure to cover up for low performers in an attempt to meet with overall team performance which has led to frustration amongst high performers while on other side low performers dragging their baggage over shoulders of others in absence of adequate measures that can instil sense of ownership among them as equal to high performers to boost their performances and contributions. This challenge can be responded with implementation of more effective administration of reward system that can have beneficial impact on performance equally in different manner and amongst all employees to promote long term focus with continued improvement of low performers that can even lower operational costs, facilitate team work, reduce dissatisfaction in employees and boost their interest (Schiemann & Ulrich 2017).  As such modern approaches of reward management like performance linked pay can bring in essential transformation in attitude of employees thus enhancing their interest in financial performance of McDonald’s so that benefits like profit sharing can be received in form of reward practices. Also it will be rewarding as low performers would get interested to change their attitude to attain new skills which may add value to overall organisational performance as well as even add benefits to their own rewards structure thus aligning competitive expectations with organisational performances as well as individual performance and even facilitating overall team performance to attain long term benefiting outcomes and wining overall employee commitment more equally within organisation.   

According to Bosua  and Venkitachalam (2013) as reward can be primary source for motivation of employees so these must be governed with right conditions aligning to changes and expectations of rising competitiveness in environment so that highly skilled resources are retained and simultaneously improvement can be administered for even low performers under more appealing and effective reward management approaches.  One of the modern approach of reward systems is performance based reward and pay benefits as these are linked to variable pays depending on individual performance. As such these are seen to drive better performance not only amongst high performers but also low performers as a visible contrast can be seen in reward practices where some of the approaches like gain or profit sharing of organisation based on individual level of performance are appealing enough to drive motivation to perform equally among all employees (Baird, Su & Munir 2018).  Hence it is recommended that McDonald’s redesign their comprehensive reward systems to performance linked rewards systems so as to drive effectiveness through link between reward and performance with more relevant reward values for employees. Example, reward management practitioners at McDonald’s can address the concerns related to existing reward systems by developing more competitive and holistic approach through implementation of performance linked reward systems that are efficient not only to hold good resources but also helps to check out unexpected outcomes of administration of reward practices by adding relevance and value to reward practices. For instance, McDonald’s can provide profit sharing to top executives based on firms overall performance whereas for frontline staffs they can offering earning bonuses on basis of sales or targets attained in outlets to ensure effective reward management strategic approach.     

Conclusion

Hence from the discussion it has been inferred that financial rewards elements of reward management systems commonly integrates practices and process of tracking market rates, evaluating value of jobs, developing and administering pay structure, paying rewards based on performance, expertise and competency and offering employee perks accordingly. Also reward management is not only limited to monetary forms but even comprise of non-monetary rewards that offers intrinsic and extrinsic motivation. Hence depending upon identified goals of organisation and needs or expectations of employees an appropriate reward systems can bring in desirable outcomes as well as support in retaining top talents.

References     

Altuna, N, Claudio Dell’Era, Landoni, P & Verganti, R 2017, ‘Developing radically new meanings through the collaboration with radical circles’, European Journal of Innovation Management, vol.      20, no. 2, pp. 269-290, viewed 20 Nov 2018, Proquest,   DOI:https://dx.doi.org/10.1108/EJIM-06-2015-0045

Azim, P & Azim, S 2012, ‘Impact of constructive marketing strategies on return (revenue & profitability): a case study of McDonald’s’, Journal of Asian Business Strategy, vol. 2, no. 7, pp. 153, viewed 20 Nov 2018, Proquest,     https://search.proquest.com/docview/1417738500?accountid=30552 

Baird, K, Su, S & Munir, R 2018, ‘The relationship between the enabling use of controls, employee empowerment, and performance’, Personnel Review, vol.     47, no. 1, pp.257-274, viewed 20 Nov 2018, Proquest,   search.proquest.com/docview/1995249399?accountid=30552   

Bosua, R & Venkitachalam, K 2013, ‘Aligning strategies and processes in knowledge management: a framework’, Journal of Knowledge Management, vol.        17, no. 3, pp.331-346, viewed 20 Nov 2018, Proquest,  DOI:https://dx.doi.org/10.1108/JKM-10-2012-0323

Business Premium Collection 2016, ‘McDonald's corporation : leisure and arts - company profile, SWOT & financial analysis’, Progressive Digital Media: London,  viewed 20 Nov 2018, Proquest,  https://search.proquest.com/docview/1820065604?accountid=30552

Garavan, TN, Carbery, R & Rock, A 2012, ‘Mapping talent development: Definition, scope and architecture’, European Journal of Training and Development, vol.      36, no.1, pp.5-24, viewed 20 Nov 2018, Proquest,   DOI:https://dx.doi.org/10.1108/03090591211192601

Komanda, M 2015, ‘McDonald's as a cultural brand in the landscape of attitudes of polish customers’, Trendy Ekonomiky a Managementu, vol. 9, no. 24, pp. 33-43, viewed 20 Nov 2018, Proquest,   https://search.proquest.com/docview/1770210158?accountid=30552 

Komorowski, J 2016, ‘Business model and its dilemmas of choice’, Copernican Journal of Finance and Accounting, vol.    5, no.2 ,pp. 109-123, viewed 20 Nov 2018, Proquest,   https://search.proquest.com/docview/1888662009?accountid=30552 

Mangelsdorf, ME 2012, ‘What it takes to be a serial innovator’, MIT Sloan Management Review, vol.  53, no. 4, pp. 95-96, viewed 20 Nov 2018, Proquest,   https://search.proquest.com/docview/1023761953?accountid=30552

Marcela Lage Monteiro, D C, Mário Teixeira, RN, Cláudia Aparecida, AF & Jorge Filipe da, S G 2016, ‘Values, motivation, commitment, performance and rewards: analysis model’, Business Process Management Journal, vol.     22 no. 6, pp.1139-1169, viewed 20 Nov 2018, Proquest,   DOI:https://dx.doi.org/10.1108/BPMJ-09-2015-0132

Martin-Perez, V & Martin-Cruz, N 2015, ‘The mediating role of affective commitment in the rewards-knowledge transfer relation’, Journal of Knowledge Management, vol.     19, no. 6, pp. 1167-1185, viewed 20 Nov 2018, Proquest,  DOI:https://dx.doi.org/10.1108/JKM-03-2015-0114

Neeti, L C & Sharma, S 2014, ‘Employer branding: Strategy for improving employer attractiveness’, International Journal of Organizational Analysis, vol.        22, no. 1,pp. 48-60,  viewed 20 Nov 2018, Proquest,  DOI:https://dx.doi.org/10.1108/IJOA-09-2011-0513

Schiemann, W A & Ulrich, D 2017, ‘Rise of HR--new mandates for I-O’, Industrial and Organizational Psychology, vol.        10, no. 1, pp. 3-25, viewed 20 Nov 2018, Proquest,  DOI:https://dx.doi.org/10.1017/iop.2016.76

Spector, B 2013, ‘The social embeddedness of business model enactment’, Journal of Strategy and Management, vol.  6, no.1, pp. 27-39, viewed 20 Nov 2018, Proquest,  DOI:https://dx.doi.org/10.1108/17554251311296549

Uggla, H 2014, ‘Make or buy the brand: Strategic direction of brand management’, Strategic Direction, vol.    30, no.3 , pp. 1-3, viewed 20 Nov 2018, Proquest,  DOI:https://dx.doi.org/10.1108/SD-01-2014-0001