Human Resource Strategies of McDonalds Corporation - Essay Example

"HUMAN RESOURCE STRATEGIES SHOULD BE UNDERPINNED BY ORGANIZATION DEVELOPMENT THEORIES WICH SUGGEST WAYS THAT PEOPLE IN AN ORGANIZATION SHOULD BE MANAGED" A DICUSS. (2006) INTRODUCTION The significant role of Human resource (HR) in contemporary organizations cannot be over emphasized. Thus, human resource is considered as the most vital organization's resource; since it carries out all the functions of financial planning, strategic planning and the actual management and carrying out of production processes, in order to meet the organization's objectives and long term goals. Since the 1980s' the development of Human Resource Management (HRM), from the traditional Personnel management, has made HR a vital part of the organization, whose personal objectives must be catered for the organization's objectives to be met. Thus, in contemporary times, the incorporation of the HR into the organizational strategic planning process has brought about a new dimension of modern organization management and the birth of Strategic Human Resource Management (SHRM). Organization do not operate in vacuum, hence there are interconnectivities of interrelationships. The relationship between management and workers of organization, with the focus of how organizations' productivity can be enhanced has brought about the emergence of plethora of organizational theories. Among these are , the Frederick Taylor Scientific or Machine theory, Elton Mayo's Human Relations theory, Behavioral theory, Administrative theories, System theories, motivational theories , like McGregor's; X and Y theories, Abraham Maslow Hierarchy of Need theory and Frederick Hezberg two Factors theories, inter alia. How feasible and tenable is the proposition that "human resource strategies should be underpinned by organization development theories". This write- up will focus on this, using McDonalds Corporation as a case study to show how organization's strategy helps in contributing to its success. CONCEPTUALIZATION OF TERMS Human Resource Management (HRM) is the management of organization's human resources in such a way that the workers personal needs are adequately met in order that they put in their best in the attainment of the organization's objectives and long term goals. According to Sims (2002), HRM is the term increasingly used to refer to the philosophy, policies, procedures, and practices related to the management of an organization's employee. In the process of HRM, there is an increasingly emphasis on the personal needs of the organization and its members. The challenge is to create an organizational environment in which each employee can grow and develop to his or her fullest extent. Strategic Human Resource Management (SHRM) is the linking up of HRM to the strategic goal and objectives of the organization. "Strategic HR means accepting the HR functions as a strategic partner in the formulation of the company's strategies through HR activities such as recruiting, selecting, training and rewarding personnel". (Chaturvedi, 2005). Theories are abstractions from the real world situations in order to give explanation to a given phenomenon or interrelating variables. Thus, organization development theories are those theories that tend to explain how efficiently the organization's resources can be adequately managed in order that the highest productivity and the attainment of set objectives are achieved by the organization. INCORPORATING ORGANIZATION DEVELOPMENT THEORIES IN HUMAN RESOURCES STARTEGIES Scholars have argued that SHRM has no thoroughly researched theories to give explanation on how HRM is linked to the organization's strategy. In the view of Wright and Haggerty (2005), SHRM research has greatly borrowed from other disciplines' meta-theories and utilized organization theories in linking up HRM to strategic management. "existing research in SHRM had predominantly utilized Resource based Theory, the Behavioral Approach, Open System theory, and Control theory with a few authors exploring Population Ecology and Critical theory". (Wright and McMahan, 1992, cited by Wright and Haggerty 2005) The important role the HR plays in the organization has led scholars to formulate theories on the best way to motivate and manage employees in order to bring out the best in them. Thus, the Machine theory of Frederick Taylor, which came in the wake of the industrial revolution, brought about the use of stop watch and clipboard to time workers. Whereby the process sees workers like robot which can be controlled and only motivated economically in order to attain the best from them. The dehumanization process of the scientific theory attracted to itself critics, and this led to the birth of the Human relation Movement, led by Elton Mayo, whose research work was done in the famous Hawthorne factory (1923-1933). The Human Relation theory posited that workers in an organization are not mainly motivated by monetary and economic incentives, but the informal interrelationship network among workers goes a long way in motivating them. Also, the condition of environmental set up for wok. "Human Relations Movement emphasized emotional aspects in human behaviorHuman relations advocates work from assumptions of underlying employee- employer harmony". (Reshef, 2003) The Human Relations theory also emphasized adequate communication in the organization, between management and the employees. Thus, the perception that human resource is an important factor in the attainment of organizational goals and objectives was upheld. Organization development theories suggest ways in which people in an organization should be managed in order that the organization adequately attains its set objectives and goals. Hence, the current move where workers are integrated and made partakers of the organization's strategy development, this requires that organization development theories are applied in the fashion in which the human resource is linked with the organizational strategies. This is done through the HR practices which are linked up with the adumbrations of the organization's theory in use. For example, the Human Relations theory emphasizes the recognition of informal interrelationship among workers and extensive communication between management and workers. Thus, these features should be applied in linking workers to the modus operandi of the organization. Multi- level theories can be used in linking organizational processes to individual processes through communication steaming from the HR practices. Bowen and Ostroff (2004), argued that HR practices serve as communications mechanism signaling employees to engage in certain behaviors. Thus, HRM systems that impede or facilitate this communication process should be looked into for an effective integration of the HR into the organizational strategy. According to Wright and Haggerty (2005), "one approach should be to develop comprehensive theories that integrate across levels of analysis, such a theory would attempt to link organizational concepts to individual concepts back to other organizational concepts." Theories and research on issues such as Schemas/ Cognitive processes, social information processing, individual differences, and motivation theories can provide valuable explanation to the individual processes that are being triggered by organizational level HRM practices (ibid). Thus, it is significant that the individual workers are nurtured and adequately orientated and integrated into the organizational culture, strategies and goals and objectives. This is done through organizational development theories; through adequate communication and motivations. Also, the organization recognizes the individual differences among its workers and thus, fashions ways in connecting these differences in the organization, while the strategic goal and focus of the organization is upheld. According to De Silva (1998), "Enterprises driven by market pressures need to include in their goals improved quality and productivity, greater flexibility, continuous innovative, and the ability to change to respond rapidly to market needs and demands. Effective HRM is vital for the attainment of these goals, improved quality and productivity linked to motivation can be achieved through training, employee involvement and extrinsic and intrinsic rewards". "HRM strategies to secure individual commitment through communication, consultation and participatory schemes underline the individualization thrust, or at least effect, of HRM strategies" (ibid). Also Rosabeth (1984:241) threw more light on this, stating that, corporate entrepreneurs still get their projects done by crafting coalitions and building teams of devoted employees who feel a heightened sense of joint involvement and contribution to decisions. The integrative, participative vehicles surrounding innovators- open communication, interdependence responsibilities, frequent team efforts- keep them close to the power sources they need to operate, ensuring access to information, resources and the support needed for implementation. The effectively utilization of HR in an organization in jointly meeting the set objectives of the organization requires that they are properly managed and integrated into the overall organization strategy. "Matching HRM policies to business strategy calls for minimizing labor costs, rather than treating employees as a resource whose value may be enhanced.by increasing their commitment, functional flexibility, and quality" (Karen, 1991) The ability of the organization to effectively carry out the integration of its HR to its operational strategy requires that this is underpinned by organizational theories, such as communication theory, human relation theory and motivational theories. This will enable the organization knowing how to properly manage its HR in order that the best results are obtained fro it. Also, the workers of the organization will be in a better position to increase its productivity rate in meeting set objectives and targets of the organization. CONTRIBUTION OF HR STRATEGY TO THE SUCCESS OF MCDONALDS COMPANY McDonald's corporation is the world's leading food service organization. The corporation started in its small capacity in 1948, managed by two brothers, Dick and Mac McDonald. By 1967 the company had expanded its operations to countries outside the USA. Canada, Japan, Germany, Australia, France and England are known as McDonald's 'Big Six' because combined they provide about 80 percent of international operating income. Today McDonalds have more than 1,200 restaurants in Germany, 700 McDonald's locations in Australia, 980 restaurants in France and 1,200 restaurants in the United Kingdom. (mcdonalds.ca, 2005) In the past years McDonalds Corporation has witnessed huge success rate in its business operations. "McDonalds was only company in the Standard & Poor's 500 to have publicly reported 100 consecutive quarters of year-to- year combined increases in revenues, income, and earnings per share since 1965" (ibid). The success level of the corporation is attributed to the effective strategic management put in place by the organization. The innovativeness of the McDonalds corporation in creating new items to add to its menu as being a strategic way in which it has beaten down its competitors. The strategy of the McDonalds is analyzer in the sense that it create new pattern of operating and new menu, while at the same time it maintains those it has acquired over the years. With the vision of the organization to dominate the global fast food industry, the McDonalds have successfully incorporated its workforce in the overall strategic plans. Total Quality Management (TQM) is an operating strategy adopted by the corporation in giving the best services to its ever increasing customers. The workforce are trained along this line; where every of their services are given with the best quality that can be obtained anywhere. Another strategy of the McDonalds that has contributed to its success over the years is that the corporation carries out Psychographic segmentation, where services are designed to suit certain segment of the society. Thus, the working class and middle classes are serviced accordingly to suit their social status. Since they are people who frequent fast food restaurants due to the nature of the fast moving life, they require fast meal. The McDonalds have also practiced a backward vertical integration in the supply of raw- food stuff, from its own grown agricultural farms. This is done with the aim of reducing cost and also, obtaining the best quality of food stuffs. "The joint venture partnership between McDonalds and the General Corporation of Beijing Agriculture, Industry, and Commerce had been working for five years to establish the network of local farmers, manufacturers, and other suppliers to support the restaurants". (ibid: 6) McDonalds operate a workforce that is diversified in nature. Hence, the individual differences are managed in such a way that they work as team in producing the required high quality services. There is steady movement of lower staffed workers to higher position; as two thirds of middle and upper management started out as crewmembers in the McDonalds restaurants. The TQM as a strategy of McDonalds requires that the employees follow a certain standard operational procedures, so as to give customer the best quality service. Thus, teamwork is emphasized with the employees adequately trained in the execution of their duties. All these strategies of the organization have contributed in making the McDonalds Corporation very successful many years now in the fast food industry. CONCLUSION The integration of an organization HR to its strategic operation helps the workforce of such organization to be equipped and more focus in the attainment of those objectives and goals set by the organization. The effective link up is done through the proper management of the HR where individual differences of workforce are coordinated and synchronized, and the organizational cultures inculcated in the employees. Thus, the application of organization development theories makes this process very feasible and attainable. REFERENCES Bowen, D. & Ostroff, C. (2004), "Understanding HRM- Firm Performance Linkages: The Role of the Strength of the HRM System". Academy of Management Review. Vol. 29 No2. p.221 Chaturvedi, Siddharth (2005), "Strategic Human Resource Management" http://www.humanlinks.com/manres/articles/shrm.htm (13/08/05) De Silva, S.R. (1998), Human Resource Management, Industrial Relations and achieving management Objectives. International Labour Organization, Bangkok. http://www.ilo.org/public/english/dialogue/actemp/papers/1998/srshrm.htm (03/01/06) Karen, Legge (1991), "Human resource Management: A Critical Analysis" in John Storey(Ed), New Perspectives on Human Resources Management. London: Routledge p.32 Mcdonalds.ca, (2005), "History of McDonalds Company" http://www.mcdonalds.ca/pdfs/history_final.pdf. (27/08/05) Reshef, Yonatan (2003), "Elton Mayo & The Human relations Movement 1880-1949" school of Business, University of Alberta Edmonton, Alberta, Canada. Rosabeth, Moss Kanter (1984), The Change Masters. (Unwin Paperbacks, Unwyn Hyman ltd) p.241 Sims, Ronald R. (2002), Organizational Success through effective Human Resources management. Westport, CT: Quorum Books Wright, P.M. & Haggerty, J.J. (2005), "Missing Variables in Theories of Strategic Human Resource Management: Time, Cause, and Individuals". Working Papers 05-03 CAHRS. Cornell University. NY. (Word count 2,267) Read More