Discuss about the Employee Recognition and Employee Retention.
Human resource management is an important component of the organization, which includes activities such as recruitment and selection of employees. Through human resource management, organizations are able to drive the realization of organizational goals and objectives. This argumentative essay considers human resource management within the context of McDonald’s as presented in the case study. The essay answers three questions related to the case study about McDonald's use of recognition as a key driver of its corporate culture and strategy. The main argument advanced is that McDonald's human resource approach is consistent with many of the human resource practices that are recommended in the literature and that it is a highly effective approach.
The Importance of Employee Recognition Towards Employee Retention
Employee recognition is an important avenue towards the retention of employees. This is because employee recognition plays an important role in ensuring the employees are satisfied with their current jobs. In fact, recognition is one of the factors that has been explicitly identified in the literature as contributing to employees’ dissatisfaction with their job positions and their consequent decision to exit an organization (Gregory, 2011). Thus, by having a recognition scheme, organizations are able to reduce the rate of labour turnover in their organizations. As shall be discussed in the ensuing paragraphs, the retention of employees is essential for a wide range of reasons, which include the retention of key talent. In the case of McDonald's the significance of retention is corroborated by its indication that up to 80% of its business managers began as crewmembers with the company. This high proportion is also evidence of McDonald’s ability to retain its employees, which can partly be attributed to its practice of employee recognition,
The recognition of employees contributes to employee retention by increasing the satisfaction levels of employees. Employee satisfaction is one of the most commonly discussed paradigms within the business literature. In the context of employee retention, employees’ dissatisfaction with their jobs is one of the most commonly cited reasons for high rates of labour turnover (Tracey & Hinkin, 2008). Typical issues that employees will be dissatisfied with include their relationships with supervisors, the job content, job conditions and pay practices amongst other factors. Employees’ dissatisfaction with their jobs leads to outcomes such as lowered productivity, which in turn curtails the ability of the organization to realize its objectives. This is because employees who are dissatisfied tend to be unmotivated and non-committal, and are thus counterproductive to the organization (Gregory, 2011). It is therefore in the best interest of organizations to ensure that their employees are satisfied, as this will lead to an increase in motivation and in turn, enhance the productivity of employees. Ultimately, the positive effects will translate into the realization of organizational objectives. For McDonald’s, one can argue that the company is able to satisfy its employees, given its high retention rates. However, rather than merely inferring McDonald’s ability to satisfy employees, one can also demonstrate that this is the case, by analysing McDonald’s practices from the context of theories of motivation.
One of the ways in which employee satisfaction can be understood is through theories of motivation. Coomber & Barriball (2007) highlight Maslow’s hierarchy of needs and Herzberg’s two-factor theory. Maslow’s theory presents needs in a hierarchical form whereby lower level needs must first be satisfied before higher-level needs are satisfied. This theory is discussed in the next paragraph. With regard to the job satisfaction/dissatisfaction paradigm and the role of recognition, the two-factor theory presents a more explicit exemplification. The approach categorizes job factors into dissatisfiers and satisfiers. Dissatisfiers are those factors whose absence leads to job dissatisfaction, but whose presence has little impact on job satisfaction. They include factors such as pay and benefits, organization policies and the work environment (Coomber & Barriball, 2007). Indeed, it has been noted in the previous paragraph that these are some of the factors with which employees tend to be dissatisfied. Alternatively, job satisfiers include recognition and achievement, as well as self-satisfaction (Coomber & Barriball, 2007). Evidently, recognition practices such as those exercised by McDonald’s are vital in promoting retention, since, in their absence, employees will not be satisfied with their jobs. At the same time, McDonald's also astutely manages the dissatisfier components which otherwise have the capacity to cause employees to be dissatisfied.
The other important theory is Maslow’s hierarchy of needs. Unlike the two-factor theory, whose moderating effect on employee retention occurs through the satisfier-dissatisfier paradigm, Maslow’s hierarchy considers the various levels of need that employees have, and the ability of the company to meet these needs. Thus, according to Coomber and Barriball (2007), the key activity within a Maslowian approach is to identify what needs and values need to be realized so that an employee is satisfied. The hierarchy is presented in the form of a pyramid, whereby the number of needs at each successive level reduces, but the needs increase in their complexity (Dubrin, 2011). The five levels of needs are further classified into the two categories of physiological and psychological needs. Factors such as recognition are related to the psychological level of needs. Employee recognition contributes to the satisfaction of self-esteem and self-actualization needs of employees. The satisfaction of these needs contributes to employee job satisfaction, which in turn enhances the ability of the organization to retain its employees. Employee retention provides important support for organizational cultures such as that of McDonald’s, which seeks to secure its talent and have them serve in top positions.
Another manner in which McDonald’s employee recognition supports its culture and programs is through employee empowerment. Employee empowerment is an important feature of performance management, which enables organizations to get the best out of their employees. According to Meyerson and Dewettinck (2012), there is a direct link between employee empowerment and issues like performance, job satisfaction, and commitment. As has been noted, employees who are satisfied with their jobs are likely to be more productive, and less likely to want to leave a company. Klidas, van den Berg and Wilderom (2007) highlight four features, which they contend, are antecedents to empowered employee behaviour. The first of this is training, which commences with the selection and recruitment of the right candidates for the job (Klidas, van den Berg, & Wilderom, 2007). The assertion by Gregory (2011) that where there is a poor fit between an employee and a particular job, then dissatisfaction is most certain to follow, underscores the importance of proper selection. Secondly, there is reward practices, which play an important role by embedding particular practices and attitudes in employees. These include responsibility and innovativeness (Klidas, van den Berg, & Wilderom, 2007). The third and fourth antecedents are the organizational culture and management practices. These antecedents are now considered in the context of McDonald’s.
A review of McDonald’s practices reveals a consistency with the aspects of employee empowerment that have been outlined above. The first factor is training. McDonald’s engages in an extensive and elaborate training of its employees, with the company being a registered training organization. Moreover, the company has an annual training budget of above $40 million. Further aspects of training include the significant amount of time spent by Frank McManus on training and development. Specifically, this senior vice president spends about 30 to 40 percent of his time on executive development and talent management. Secondly, there is reward practices, which McDonald engages in an elaborate reward scheme, which involves not just the payment of employees, but further, recognizing them for their exemplary performance. Employees receive a gift voucher as well as formal recognition in front of their peers. Also related to reward practices is McDonald’s endeavour to guarantee transparency by ensuring that its employees have a proper understanding of its pay decisions, and ensuring that there is equity between various roles. Here, there are two important aspects to note. One is the endeavour by the company to ensure fairness, and the second is its endeavour to communicate these practices to employees. Both of these aspects are important since according to Gregory (2011), they have the capacity to lead to employee dissatisfaction.
Organizational culture and management practices are closely interrelated features, which affect employees’ motivations and job satisfaction. The corporate culture of a company influence the company’s strategic direction and its ability to meet its strategic objectives. According to Rugman and Collinson (2012), human resource managers usually utilize organizational culture to embed certain practices such as innovativeness in their workforce. The organizational culture is closely linked to the management style adopted in a particular organization. According to Mosley and Patrick (2011), leadership styles contribute to a particular organizational culture, while conversely, the organizational culture tends to reinforce a particular leadership style. The management approach, through the leadership style adopted, is an important antecedent of employee empowerment. Certain leadership styles tend to empower management, while others tend to empower employees.
Employee empowerment has been linked to those leadership approaches that are participative in nature (Bass, 2008). In particular, the transformational leadership approach is closely associated with employee empowerment, through its dimensions such as individualized consideration (Harms & Credé, 2010). McDonald's corporate culture is one that places emphasis on people. While there is no clear-cut evidence that the company offers individualized consideration to its employees, one can nonetheless contend that the leadership approach is a transformative one. This is as opposed to a transactional leadership approach. This contention can be corroborated by considering the fact that transformational leadership approaches emphasize on people, while transactional approaches emphasize on tasks (Bass, 2008). Consequently, given McDonald’s recognition of people as part of its culture, it is evident that the management approach conforms to a transformative leadership style.
One of the most compelling challenges for organizations in the contemporary world is the attraction and retention of talent. This is the case for business institutions as well as non-profits such as the Spastic centre. One of the ways through which organisations cope with this challenge is using compensation packages. According to Tangthong, Trimetsoontorn, and Rojniruntikul, (2014), this use of compensation packages and benefits is a viable strategy. The approach by McDonald’s, however, does not rely on compensation packages or benefits and is instead embedded in the use of practices such as recognition.
While the use of recognition is successful within a business setting, it is unlikely that the direct application of such an approach would suffice for the retention of volunteers within a non-profit. This is because of the significant differences in the structure of a not-for-profit organization and that of a business organisation. For starters, the motivations that drive volunteers to enlist in a non-profit organisation are likely to be different from the motivations that drive individuals to apply for employment positions. While seeking volunteer opportunities, individuals may either be driven by altruistic motivations or by egoistic inclinations (Shye, 2010). Consequently, it is imperative that non-profit organizations first understand the motivation behind the decisions of individuals to volunteer. If individuals are driven by altruistic inclinations, then it is unlikely that recognition will further increase their level of satisfaction with the organization. According to Tomazos and Butler (2012), the motivation belying the engagement of deep or altruistic volunteers is an affinity to satisfy the psychological and altruistic needs. Alternatively, there are also shallow volunteers, whose main motivation behind volunteering is personal self-development. Such volunteers may seek rewards that can be translated into monetary value (Chen & Chen, 2011). Consequently, it is imperative that non-profits first understand the nature of volunteering individuals. They can then classify these volunteers and assign them different roles according to their needs. In this way, they will satisfy the needs and expectations of volunteers and enhance the chances of volunteer retention.
Organizations today face the prospects of increasing competition at both ends of the supply chain, meaning that they not only have to contend for a space in the market but also, have to engage more aggressively when seeking resources. One such resource is the human resource component, which is an important source of competitive advantage. Organizations can enhance the retention of top employees in a number of ways, including the use of compensation packages and through astute management practices. The most important consideration for organizations, however, is to ensure that they guarantee the satisfaction of employees, and reduce employee dissatisfaction. This is because employee satisfaction/dissatisfaction has a great capacity to prompt an individual to either stay at or exit and organization.
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