MM HR Payroll McDonald Human Resource Management Practices Analysis

HR practices at McDonalds

Question:

Describe about the Analysis of McDonalds and its Human Resource Management Practices?

In recent times, human resource management has become one of the critical administrative areas in organisations (Bratton, 1999). This department deals with the employees of an organisation. In order to ensure, employees provide best services to the company, various human resource management practices are undertaken by HR managers. By definition, human resource management practices are strategies undertaken by HR managers to ensure all the processes related to employees are up to mark, from their recruitment to training (Bratton, 1999). Alternatively, human resource management is defined as the process of acquiring, training and compensating employees. It also includes attending to labour relations, health and safety of employees and their family concerns. The rapid development of technology, communication and information has urged organisations to adopt innovative human resource practices (Bratton, 1999). Different types of approaches undertaken by companies to build strong human resource practices include contingency approach and configuration approach. This report aims at analysing the human resource practices undertaken at McDonalds.

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This report will throw light on the HR practices undertaken by HR managers at McDonalds to ensures employees remain motivated and committed. Further, the report analyses the various Employee Retention program that McDonalds has chosen to undertake. It also specifies the various activities, benefits, programs that the McDonalds has introduced, why they have decided to go down that path and how successful have they been in not only implementing the program but also to retain and attract new talents to the organisation. Towards the conclusion, the report will look into the McDonalds' hiring process, training and development, salary, career planning and development, work environment, performance measurement, appraisal and compensation.

McDonalds is one of the leading chains of burgers across world. The food restaurant is serving around 68 million customers daily in 119 outlets across different countries. Besides burgers, McDonalds also sells hamburgers, French fries, cheese burgers, soft drinks, desserts etc (Boxall, 2008). Being operational across globe, McDonalds is also one of the largest employers in USA and other countries. Previous records states that the annual sales of the company in 1993 were 23 billion dollars. Employees at McDonalds fall into three key categories, namely, corporate employees, franchise owners and restaurant workers. The most operational category of employees include restaurant workers. For a company to run smoothly, its operations must be managed by employees working diligently for its success and customer satisfaction. This can be achieved by an army of enthusiastic zealous workforce which can contribute significantly and deliver best performance while they are working (Boxall, 2008). For obvious reasons, the employees are a backbone of the company which makes or breaks for that matter and keeping the employees in business is a significant and crucial matter for the company. Functions of HR managers at McDonalds are:

Fig 1: HR Functions in McDonalds

Source: Boxall, 2008

Employee Retention programs and activities

McDonalds has understood the needs of the employees and offers several benefits to the employees and thus, takes care of those working tirelessly for it. The first & foremost consideration is the employee health and McDonalds has incorporated well planned medical benefit plans for the employees which cover the medical requirements from various aspects (Armstrong, 2003). It is well known that dental treatment is amongst the expensive ones but the employees are not required to be stressed about it because the company covers orthodontic expenses not only for the employees but also for their children as per the policy rules. In addition to it, optical treatment and equipment like glasses and contact lenses are also a part of this plan. At the choice of the employees, they are also given options to opt for such a plan which give reduction in amount for getting Lasik Laser surgery. McDonalds is famous for providing the PPO that is the Preferred Provider Organization medical plans (Towers, 2010). There are several plans which provide the employees with variable benefits & medical covers. The plans cover the employees, their family members for their health examination, baby care and their vaccinations. McDonalds respects the disability rights which are the inspiration behind the company offering benefits to the disabled employees in two broad categories viz; short term and long term disability plans (Armstrong, 2003). Moreover, accidental death insurance is also a significant benefit which gives twice the amount of the salary which the employee has been drawing. There is yet another benefit which is similar in values and pays twice the base salary; this benefit is aimed at covering the travel accidental incidents if any of the employees is on a journey being undertaken for professional or his own personal reasons.

There have been many programs introduced by McDonalds to pull customers towards its business and has also brought out many schemes for its staff to keep them in business and deliver better performance every time they serve. The first program was focused on advertising techniques with the program named “Look for the Golden Arches” (Cross, 1972). The Golden arched smile icon and the Clown popularly known as Ronald gave a great boost to the sales of the company. It has also come up with ideas unique to the geographical locations where the McDonalds store is operating (Jonathan, 2010). In the United States, personal choice of the customers are being given a priority and lately, McDonalds had decided to make custom burgers which will let the customer choose his or her own burger by using an interface via a touch screen (Armstrong, 2003). Another classic example can be taken from two places in Asia where places named Vaishno Devi and Golden Temple are famous for getting tourists from all around the world. These places have got spiritual significance in the culture of the aboriginal populace (Steele, 1998). Hence, McDonalds opened stores which offered vegetarian items only and this not only ameliorated the natives but this experiment also drew many food lovers to explore these unique stores. In addition, many native tastes have been tried to give a homely touch and match the local taste expectations of the people. The marketing team had sensed that the Americans need a quick and convenient way of attaining a healthy breakfast which paved the way to the introduction of Egg McMuffin. The concept of drive thru has gained lot of popularity and penetrated as a favourite food pick-up concept in all the continents of this world. Though it has given more than half of the revenue to McDonalds’ services McDonalds is also aiming at its original promise which stated “providing meal within 50 seconds or less” (Marchington, 2002). There were many programs launched for the employees as well like mcSave market fund and direct shares as a stock buying plan so that the employees can develop sense of belongingness and be made to feel closer to the company.

Benefits and programs for employees

There are additional benefits also offered to the employees which are based on the performance of the employees at the company. At the outset, it is the incentive under Target Incentive Plan which is paid to the employees when they meet the targets and by their sheer hard work, intelligent marketing & customer service sometimes exceeds the goals as well (Ulrich, 1997). The top 1% of the employee which is the cream of the workforce gets additional awards like the President award which is considered to be a prestigious reward given only to a handful of employees because they are evaluated by taking into consideration all the McDonalds employees worldwide (Brand, 2006). For those employees who have shown commendable performance throughout a longer period are rewarded with long term incentives which adds value to the company and the business. Not only incentive based features are given to employees but time based advantages are also essential for an efficient working of the human resources (Buyens, 1997). There are many vacations and holidays offered to the employees which are paid vacations and also offer other causal leaves. The weekend is awaited by the employees of McDonalds just like those by any other corporate and McDonalds came up with an innovative idea which gained applause and was widely praised by the employees. According to it, for the period of mid-May to mid-September, the employees can come 30 minutes early to work and are allowed to leave on Friday which extends the effective time of the beginning of the weekend. To establish and strengthen family bonds, when the employees get an anniversary of the multiples of fives like fifth anniversary, fifteenth anniversary, twenty fifth anniversaries and so on, they are provided with additional week off which is a paid vacation for them. For the welfare of the progeny of the employees, their education, health expenses are also covered as the policy terms. Family needs are given utmost care which can be estimated from the fact that if any employee wishes to adopt a child, he/she is also eligible to get up to 80% of the expenses of such adoption. For mental recreational purposes, a program named “beyond work” can help them get online as per the employees’ convenience in order to catch up with savings & services where they can find attractive discounts (Purcell, 1999).

These HR practices have definitely help the McDonalds become a leading food chains across globe. One of the key reasons for the success of human resource practices undertaken at McDonalds is its ability to weather storms. The food chain has been able to sustain in difficult times due to innovative HR practices and capability of the workers. Since McDonalds has a lot to do with food quality, customer satisfaction and hygiene, the company has seen its workforce as a key strategy to accomplish these. The innovative HRM practices help the company to deliver its philosophy, maintain its brand image in competitive food industry and achieve growth and profitability. Further, workers at every location of McDonalds remains motivated since motivation is an ultimate ingredient to be successful (Hughes and Julia, 2002). Motivation urges the employees remain committed, remain learning and keep improving by enrolling into frequent training sessions conducted by HR managers.

HR functions at McDonalds

McDonalds started with the name “The Airdrome” as a food stand which renamed to “McDonald's Bar-B-Q”. The marketing strategy of advertising by using the animated Mc character long ago was such a unique idea that the yellow smile emoticon became a cult figure being exclusively identified with McDonalds. To develop its image as a family restaurant, it was necessary that children must be drawn to the restaurant which obviously will attract their parents as well. McDonalds not only focused on giving business products in the form of its flagship food items but also offered several gifts and toys to the children with designs changing every time they visit McDonalds. There have been many new items introduced by McDonalds and this trend had started way back in by the product “Filet-o-Fish” with the tagline the fish that catches people (Hughes and Julia, 2002). Though many other experiments were also made like offering a burger with some pineapple pieces but this product did not see much success. As per prevalent notions which usually oppose the advent of any type of fast food in the lives of people, McDonalds also faced the harsh treatment from several sections of the society in different countries. The reasons varied heavily ranging from the allegations that eating on McDonalds is responsible for their obesity, their health issues have worsened due to continuous eating at McDonalds, the children were not advised to eat at McDonalds because it may affect their well-being in the longer run and calorie content of the meals. McDonalds responded to the concerns and made a comeback in the market with concrete procedures and new food items. At the beginning of this, it is pertinent to be mentioned that McDonalds formed a body of experts in the field of food and its effects on the health of consumers. This was formed in the year 2004 and named “Global Advisory Council” (Gilmore, 1999). The major rationale of this Global Advisory Council was to assist McDonalds by giving it valuable insights related to health and nutrition of the children who will be consuming food items provided by McDonalds. In addition to making changes in the material by which the products were made, there were many new products launched by keeping in mind the demand of healthier items along with maintaining the standards of McDonalds. For making French fries, more standardized and healthier oil was started to be used. Entrée salads came into the menu, the sandwiches made by using pancakes and chicken nuggets came into picture. Proceeding with the same trend, some stores around the world also came up by bringing in fruits & vegetables as options in Happy Meals.

Each McDonald’s restaurant is responsible for hiring its own employees. Numerous recruitment avenues are used as a part of the recruitment process, including the advertisements in the individual restaurants. It is usually the recruitment manager of each individual McDonald’s restaurant who is responsible for holding interviews and hiring staff to fit in the job requirements in the best possible way (Human Resource Department, 2010).

Hiring, training, and development

The hiring process at McDonald’s comprises of three simple steps. Step one requires filling up of an online application form, Step 2 is an interview and the last step is the reference check.

STEP 1: Application form and quiz

In the first step, the candidates are required to apply for the desired post by simply filling in an application form followed by taking a quiz. Each candidate can apply to a maximum of 10 restaurants within single application. The application form includes a section demanding personal and a few other details of the aspirants and another section comprising of a short quiz comprising a set of multiple choice questions. The quiz section helps McDonald’s assess the knowledge of the candidate.

STEP 2: The interview

Incidentally, the first step generates more applications as compared to the positions available. All the resumes and applications are carefully examined and the applicants whose applications look good are called for the interview via electronic mail. The interview takes place in the individual restaurant and does not last for more than 30 minutes. It is a face-to-face interview conducted to check the personal skills and competencies of the candidate.

STEP 3: Reference checks

As a part of the final step of the recruitment process, the managers of individual restaurants carry out reference checks of the documents provided by the candidates as a proof of their qualification or prior experience. After the reference checks are done, the managers select the qualified candidates for various job posts.

The recruitment & selection process is pictorially represented as:

Fig 2: Recruitment & Selection Process at McDonalds

Source: Johnason, 2009

Each McDonald’s restaurant considers its crew members as their biggest assets. McDonald’s chooses the best of staff members for each of its restaurants and train all of them really well for higher consumer satisfaction. Once the hiring process is completed, the unqualified candidates are notified well in advance. On the other hand, the newly hired employees are notified about the welcome meeting (Collings, 2009).

The first stone of training and development is laid during the welcome meeting wherein the new employees attend the meeting at their respective restaurants. This meeting usually lasts for an hour. The meeting aims at engaging and providing significant information about the restaurant and its policies to the newly hired crew members. A DVD containing the important data and milestones of McDonald’s and its individual restaurants is played during the welcome meeting. The screening is followed by a compulsory orientation programme. The purpose of the orientation is to guide each new starter about various aspects of health and food safety after which each one of them has to take an online Health and Safety, and Food Safety test and complete it in the given timeframe (Collings, 2009).  The training at development programmes ensure that the employee and McDonald’s are right for each other and that the new starter is well versed with the vision and mission of the restaurant.

McDonald’s provides its employees with innumerable benefits. There are over 300 job titles at McDonald’s. Employees working under different job titles are offered different salaries. The concept of salary in McDonald’s is usually on hourly basis which varies between USD 8.5 (for a crew member) to as high as USD 44 (for a general manager). Quarterly bonus provided to each staff member acts as the icing on the cake. In addition to this, there are various benefits that McDonald’s offers to all its successful employees (Paauwe, 2009). Some of them are:

• Life insurance cover
• Performance bonuses
• Healthcare cover
• Company car or cash alternative
• Around five weeks holidays per annum

Salary, career planning, and performance appraisal

McDonald’s helps its employees to grow and flourish. The payroll and employee benefits at McDonalds from the 2005-12 are pictorially represented as:

Fig 3: Payroll and Employee Benefits

Source: Paauwe, 2009

Career planning and development process includes all activities that we carry out in order to contribute to learning, competency enhancement, growth, or perhaps movement from job to job. McDonald’s motivates and trains its employees to perform best in any industry.

Fig 4: Career Development

Source: Klerck, 2009

The career development programmes at McDonalds’s encompass career planning, learning and succession planning.   It trains around 60,000 employees every year. In addition to this, McDonald’s also invests and dedicates a huge amount of money to ongoing staff training hence instilling in them a set of valuable skills each year (Merkle,   2005). It provides a wonderful work experience to all its employees. McDonald’s provides a job which offers unending training which proves to be a concrete career investment for each crew member wherein they become well equipped with the mantras and elements of success. The career development programmes at McDonald’s combine an emphasis on individual growth and development. This helps employees in giving best performances and experience career satisfaction.  

The overall process includes the following:

1. Helping each employee introspect and know about himself
2. Helping each employee explore his options
3. Helping each employee create his career plan
4. Helping each employee learn and develop as an individual
5. Helping each employee build successful networks with others

McDonald’s has been long known as a great place to work in. It believes that its employees are its biggest assets. It is proud of its food and customers, and just as proud of all its employees. McDonald’s provides its employees with wonderful job experiences and aims at providing them with best of facilities and satisfaction (Mayo, 1945). It ensures healthy, as well as safe work environment for all employees and aims to make safety a part of everything its employees do.

The first and foremost metrics used by McDonald’s to measure company performance includes its stock price, return on investment (ROI), earning per share, and the operating income generated from all its company-operates, as well as franchised restaurants. It is usually the management that reviews and evaluates business outcomes in constant currencies. The compensation decisions are based on these outcomes only (O'Brien, 2009).

However, in order to evaluate the individual performance of all employees, McDonald’s considers numerous qualitative factors such as comparison in previous year’s results and the results achieved by employees in the present year.

The appraisal of each employee is at McDonald’s is directly or indirectly dependent on the individual performance. The company applies a performance evaluation criterion that involves assessment of employee qualities and behaviours such as honesty and trustworthiness, punctuality, timely accomplishment of tasks and goals, and productivity (HR, 2007). All employees in the organisation receive a formal performance appraisal at least once a year. The appraisal is provided to motivate them and encourage them improve their performance.

McDonald’s provides immense benefits and compensation to all its employees. It provides worthwhile opportunities to all employees to develop and advance over many years. This helps the company appeal, retain and engage skilled people who could deliver solid performance and help McDonald’s achieve its mission and goals (Ulrich, 1996). The welfares and compensation offered by McDonald’s include:

1. Medical care
2. Dental care
3. Profit division
4. Sabbatical programmes (usually 6-8 weeks leave per annum)
5. Employee and family life insurance cover
6. Incentives
7. Recognition programmes

Conclusion

Conclusion

In nutshell, it can be concluded that the HRM practices at McDonalds is one of the key reasons for the success of food chain across globe. The career development offered to employees at McDonalds keeps them motivated, committed and satisfied from their job due to which they deliver best services. At McDonalds, employees are given wide-ranging opportunities to move around from one function to another to get experience in all areas of business. The company has been undertaking best HRM practices related to promotions in terms of position and pay, service recognition awards and private medical care.

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