Performance Appraisal of McDonalds in Different Countries - Case Study Example

THEMATIC INDEPENDENT STUDY Contents Contents Introduction 2 Discussion 4 Performance appraisal of McDonald’s in USA 4 Performance appraisal of McDonald’s in UAE 6 Performance appraisal of McDonald’s in India 9 Performance appraisal of McDonald’s in Canada 10 Performance appraisal of McDonald’s in Australia 13 Conclusion 16 References 18 Introduction Performance appraisal mechanism is an important aspect of human resource management. This concept is beneficial since it facilitates organizational effectiveness. There are eight important features associated with the approach of performance appraisal such as simplicity, relevancy, adaptability, descriptiveness, communication, comprehensiveness, time orientation and definitional clarity. The entire study is based on performance appraisal systems adopted by McDonald’s in different countries. McDonald’s Corporation is considered to be the largest corporation in the food industry. This organization has come forward with innovative food products as per demand of consumer market. McDonald’s Corporation was initially a barbecue restaurant started in 1940. The firm has its headquarters located in United States and it has 35,000 outlets located across the globe. Employee base of a company needs to be strong in order to enhance organizational effectiveness. Franchisee business model is implemented by the company to acquire desirable profit margins. McDonald’s operations are spread across different regions which are intensely competitive. In such competitive market place it is essential to acquire and retain talent within the system. Employees can be retained only through incorporating wide array of motivational techniques. Performance appraisal can be denoted as one of these motivational techniques. It is all about identifying individual employee performance to acknowledge. Performance level of employees can be increased only through appraisals. It serves as a motivational factor for team members. There are opposing opinions to this concept stating it to be an additional cost for the company. However it enables an organization to retain best talent and improve upon overall organizational effectiveness. Performance appraisal systems are not only advantageous for employees but are even essential for employers. It helps employers to analyze contribution of individual team member towards organization over the past few years. This kind of analysis supports a firm to frame training strategies for poor performers and decide on awards or appraisals for best performers. Any performance appraisal framework needs to be simple and well understood by employees. This framework can only be meaningful when it has relevance with job roles or responsibilities of employees. Appraisal results need to be fair for all team members and this requires framework to be descriptive by nature. Supervisors should be able to understand all parameters of performance appraisal system in order to conduct appropriate employee appraisal. In this study, five different countries have been chosen where McDonald’s have its business operations such as United States, UAE, India, Canada and Australia. All these regions encompass different performance appraisal systems for its employees which have a direct impact on organizational effectiveness. Discussion Performance appraisal of McDonald’s in USA McDonald’s performance appraisal system forms the basis of organizational effectiveness. 360 degree evaluation technique is applied by the organization for its operations based in USA. United States can be regarded as the home country of McDonald’s extended operations. The employee base of this region is exceptionally talented and highly motivated. It is essential for the company to acquire information about employee performance from all stakeholders. 360 degree evaluation enables the firm to gain productive information for executing performance appraisal mechanism. HR manager of this country considers 360 degree evaluation to be central component of appraisal framework. This clearly indicates that peers, subordinates and superiors play a significant role in performance appraisal of employees. On the other hand, organizational culture is closely knitted with performance appraisal techniques adopted by an organization. This culture encompasses various external environmental factors. For instance, in United States, people are treated as the most valuable asset of an organization. There are appraisal measures implemented by US based companies in order to motivate employees to perform well. Short-term employee orientation is usually followed within US organizational system of McDonald’s. Work culture in United States is highly competitive and this requiring hiring talented individuals on board. These employees are retained by implementing effective performance appraisal systems. Annual appraisals are exhibited by McDonald’s in USA. Monetary and non-monetary appraisal is entertained within organizational system. Performance review is stated as a formal procedure conducted annually in this location. There are set international standards of McDonald’s and employee’s performance are evaluated against these standards. Four levels are outlined in performance review framework such as need improvement, good, excellent and outstanding. Employees are graded on basis of these parameters so as to identify their respective areas of strength and weaknesses. American employees are offered cash based and non-cash incentives. These incentives usually differ from one department to another in the organization. Cash based incentives are centred towards annual allowance, attendance allowance and medical allowance. The company during annual performance review selects top performers and offers them a free holiday package. There are even situations in which company provided additional job responsibilities to some best performers. It serves as a motivational factor because team members feel being valued (Harrison, 2005). This in turn has a direct impact on organizational effectiveness because highly motivated employees are productive in nature. Individual productivity can be summed up to deliver increased organizational productivity. On the other hand, appraisals are also given in non cash based form like crew of the month/year, branch of the year, free food, access to gift certificates, etc. Balance scorecard helps to determine organizational effectiveness in a particular industry. There are four perspectives of this strategic tool like customer perspectives, internal perspectives, learning and growth and financial perspectives. In USA, McDonald’s invest lump sum amount in its employees through training and development, performance appraisal, etc. Customers are highly satisfied with food quality, delivery on time, ambience, staff behaviour, etc. All these factors are enhanced through high motivational level of employees. The internal perspective states that this firm has been able to retain its market position through timely production and supply of goods. From financial perspectives the company is consistent in its efficiency level but needs to adopt strategies so as to be aligned with competitors. McDonald’s in this region is witnessing declining sales growth over the past three years which can be addressed through incorporating required skills and knowledge within team members (Rao, 2004). Goal setting model can also be utilized to analyze performance level of employees. This model comprises of a parameter that helps in evaluating individual performance of team members. Challenge of the firm is to obtain higher profit margins in the market place. This is achieved through enhancing satisfaction level of team members. Reward management scheme is an important factor which is executed after performance review. Employees in this organization who are highly satisfied helps in efficiently dealing with challenges. Negative consequences in this aspect leads to further challenges for a firm. As per this model, McDonald’s goal setting is supported with appropriate performance evaluation techniques. Organizational effectiveness is reduced due to low level of employee satisfaction. Performance appraisal of McDonald’s in UAE McDonald’s Corporation is regarded as the largest employee across the globe. The human resource department of McDonald’s in United Arab Emirates is divided into various units. Each of these departments is aligned with business goals and objectives. McDonald’s UAE believes in grooming their staff base so as to ensure high levels of service quality. This aspect is taken into consideration while recruiting employees on board. The work culture in this particular region is not inclined towards offering performance based incentives to employees. On the contrary, job enrichment and job enlargement are two factors which are taken into consideration by every UAE organization. This element even holds true in case of McDonald’s Corporation. Employees in this branch are motivated through providing additional job responsibilities. This performance appraisal technique is highly distinguishable from that used in United States. Performance of individuals is not evaluated in UAE based McDonald’s rather focus is on team performance. The entire team performance is measured by the organization on quarterly basis. Rewards are given for efficient team performance and not on individual grounds. It has been observed that this region performs well due to team work. Organizational effectiveness is closely knitted with the approach of team work. Togetherness and positive attitude are two critical factors possessed by workforce of McDonald’s UAE. The company located in this region comprises of diversity in workforce. This organization is able to understand the importance of performance management for career growth of employees (Mueller, 2006). In UAE, company is focused towards providing additional value to customers since it determines success and growth of a firm. Performance appraisal system in this region is directly linked with career growth and development of employees. This aspect was not witnessed in performance appraisal mechanism of USA. In the later case, more emphasis was given on non-financial and financial rewards given to employees for their improved performance level. McDonald’s UAE believe that employee satisfaction level can be enhanced through career succession planning rather than offering rewards. This belief system greatly contradicts performance appraisal mechanism followed in United States. Performance development system of the company in UAE is well aligned with external environmental conditions. Quarterly performance objectives are set by the firm and evaluation also takes place on quarterly basis. Performance appraisal system in this country can be classified into two dimensions like training and promotion. Increase in job responsibilities tends to make employees more satisfied within an organization. Ownership aspect is often ignored by many firms while designing performance appraisal systems in an organization. It is well addressed in UAE through innovative practices. Promotion is given to those employees who perform well, all year round, in specific job area. The company promotes employees and place them in desirable position within organization system. High profits and company growth is achieved through training and development sessions organized for employees. Balanced scorecard can be applied on UAE based McDonald’s. From financial perspective the company has gained desirable profit margins in less time span. Cost leadership strategy adopted by the company in UAE market facilitated increased market share. Quality of food and service has been able to attract large base of customers in this region. Speed of food delivery is comparatively more and this indicates a base of satisfied employees. Learning and growth perspective outlines that sufficient training is provided to new comers as well as to those who have low performance level. Internal perspective reflects upon the goal of this company which was to adopt best production measures and operate on global platform (Tyson and York, 2002). The company on basis of its talented employee base has expanded its operations into various Middle Eastern regions. Performance appraisal system plays a vital role in context of motivating employees and training them to undertake additional job responsibilities. Goal setting model cannot be directly linked with performance appraisal system used in UAE based McDonald’s. This is simply because performance in this branch is linked with employee satisfaction without support of any reward systems. Performance is evaluated and job responsibilities are increased in order to enhance employee satisfaction level. The less satisfied employees are observed to leave an organization whereas more satisfied employees are effectively retained by an organization. Performance appraisal of McDonald’s in India In India McDonald’s has set high mark in the fast food industry. The company has achieved desirable goals through its innovative practices and wide range of products. External environmental influences are taken into consideration while designing organizational practices. Indian culture is totally different from that of American culture or culture followed in UAE. In India best talent can be retained in organizational system through offering high incentives and attractive salary package. This aspect is at times also supported through continuous training programs and job promotion. It can be stated that McDonald’s in India needs to retain large base of employees since it is an intensely competitive market place. Talent acquisition and retention is a vital aspect for organizations operating in India. McDonald’s implemented annual performance review of its employees. 360 degree feedback is incorporated within this organization which is similar to performance appraisal mechanism followed in United States. Quarterly review like McDonald’s UAE is not encouraged in this region due to wide base of employees and differing mindset. Annual performance review is conducted by HR managers and more emphasis is given on individual performance. Once performance is evaluated, employees are either offered promotions or rewards. The common goal of business while operating in this region is to enhance long term orientation. McDonald’s India also focuses on long term orientation of employees. This is accomplished through giving them job appraisals or offering monetary incentives. The performance appraisal system implemented by the company in India is inclined towards placing talented individuals in suitable job positions. It is highly contradictory to UAE’s performance appraisal system. In UAE the focus was more on job enlargement so as to embed sense of ownership amongst employees. On the contrary, McDonald’s India believes in monetary or non-monetary reward scheme apart from job enrichment or job enlargement. Responsibilities tend to motivate employees but majority percentage of workforce is motivated through monetary rewards or incentives. Team work is also encouraged in this branch which is similar to that of UAE based McDonald’s. There are certain appraisals allocated to effective team performance. HR department of McDonald’s India believes in collecting feedback from customers in order to analyze employee performance. The quality of service delivery is dependent on behaviour, skills and knowledge possessed by employees. Goal setting framework can be applied on performance appraisal techniques adopted by the company in India. The entire focus of the company is on annual performance and productive reward management (Richard and Johnson, 2004). Rewards are closely knitted with satisfaction level of employees which helps in facing organizational challenges. Negative consequences are also observed in the form of less satisfied employees not being a part of the company. Trade unions are a common issue in organizations located in India and this can be resolved through offering appropriate incentives, pay scale, rewards, etc., to employees. On basis of balance scorecard, customer perspective states that service quality in McDonald’s India is low in comparison to other countries. This in turn requires efficient employee base so as to deliver superior service quality to customers. Performance appraisal of McDonald’s in Canada Performance appraisal and its techniques vary from one country to another. The performance appraisal techniques in different countries are dependent on how the context of performance in relation to the employees in different countries is judged. Performance appraisal techniques in different countries vary according to how performance as a concept is viewed in different countries. Mc Donald’s in Canada believes that the employees are the foundation or cornerstone of their business (McDonald, 2015.). Starting from the newest employees to the senior most employees the company the company offers continuous training for its employees and other benefits such as flexibility and opportunities that the employees need in order to succeed at the workplace. The Mc Donald’s has a unwritten promise to the employees associated with it that it will look into the growth of each and every one working at their store, that they would value the contribution of each and every one of their employees in every day and in every way possible. McDonald aims to become the best employer in each and every Canadian community. McDonald’s respects and recognizes each of their people’s commitment and contribution, McDonald supports the growth of the employees and looks to empower the employees through providing them with opportunities to grow in the organization and to imbibe leadership qualities within them. McDonald uses people’s principles to guide their activities and reflect the value and culture that is central to the organization. The employees of the organization are treated by the managers as the employees like to be treated. Employees of the organization are treated with respect; they are given value and are empowered. The employees of the organization are recognized and rewarded so that they perform in a much better and motivated manner. The rewards that the employees receive are wide in variety and once in lifetime experience. Mc Donald has a policy to be open to the suggestion of the employees which helps them to improve further as a company and device better ways to perform and reward performances. The pay that the employees receive is either at par with other local restaurants or greater than that. The benefits that are included in the compensation packages are according to the liking of the employees. Regular performance and wage reviews of the employees take place in order to access if the employees require a performance hike. Besides providing employment to so many of their Canadian workforce, the Mc Donald’s has policies in place to motivate their employees and train them adequately so that they have the scope to grow further in their career. The company performs regular performance appraisals of both the individual and the team to identify the top performers and rewards them suitably in order to motivate them to increase their performance. Balance score card: The balance score card is used to analyze the performance of Mc Donald in Canada from all the possible angles in order to provide a true and complete overview of the organization and effectiveness of the performance appraisal system that is used by the company in the country. Financial: The financial results of the company in the Canada have been good as the company has been able to post strong sales growth in the region. In a time when the sales growth in different other countries have fallen the company’s performance in Canada has remained steady and this is testimony to the fact that the company’s performance appraisal techniques have indeed increased the company’s effectiveness (Burger business, 2015). Customer perspective: As the performance appraisal techniques have resulted in the motivation of the employees they have performed better to successfully retain customers and make them satisfied with the services that the employees have provided. Innovation and learning experience: The Company has provided a platform for the employees where they can continuously learn and grow while doing their job. Internal business process: The internal business process has to be improved further going into the future so that the McDonald Canada can continue on the growth path Goal setting In case of the McDonald Canada the goal as it is, is to achieve the long term goals of effective performance improvement and sales increase. The company tries to achieve this by better performance appraisal and motivation system. The employees are rewarded so that they can achieve their targets and on reaching the targets new goals can be set. After analyzing the performance appraisal system of these two countries that are applied by McDonald in these countries it seems that the McDonald is brilliant and has quite an effective performance appraisal system. Performance appraisal of McDonald’s in Australia In the MC Donald’s at Australia Mc Donald’s always strives to create a workplace where everyone is treated equally and respected. The team members are encouraged to engage in behaviours that aim to achieve mutual respect amongst the staff at workplace and every staff is treated with dignity. When development opportunity arises people are evaluated based on their performance the promotion is always merit based and there is no favouritism. Employment, promotion and performance appraisal are never done based on age race, colour, sex, appearance, religion, marital etc. Everyone is evaluated fairly and squarely based on their performance. A comprehensive diversity inclusion policy is at place in Mc Donald’s and a summary of the same is provided to the employees (McDonald, 2012.). It is also included in the same a module on how to treat everyone with equal opportunity. However despite all these measures if the employee feels that he or she has been discriminated then he or she has every right to approach the higher authority and tell them about their grievances. All the employees and managers at Mc Donald’s receive an annual performance and salary review which in turn is used to determine their pay increase. The crew members are invited to participate in this review and many of the employees do actually participate in the reviews. However, it should be noted that the salary of the employees are annually hiked irrespective of whether a review takes place or not. For many years Mc Donald’s has been using annual surveys in order to receive feedback from the crew, managers and employees. This process of receiving feedbacks has been perennially used as a performance appraisal tool by Mc Donald’s. In addition to the annual surveys there are other methods of performance appraisal that are used by the company. Some of the other methods of performance appraisal are: A quarterly scorecard is used by the company and it includes different matrices which measures parameters such as proportion of female employees, annual leave balance, turnover rates and the no. of absentees which are unscheduled. Anonymous exit surveys are undertaken of the employees who are leaving the organization Sometimes the people in the leadership hosts brown bag lunches for a random selected group of employees and the two parties engage in small group discussion in order share feedback and action with the people who attended the lunch. Mc Donald’s additionally appraises the performance of its employees and accesses what training is required by the employees in order to develop their managerial capabilities so that they can be promoted to the next level of responsibilities. Balance Score card: The balance score card is used to find balance of different factors in order to understand the performance of a company. The balance scorecard recognizes the fact that no single measure can be used to identify the performance of a company. The balance scorecard can provide a performance evaluation based on several critical factors. Managers do both financial and operational performance evaluation in order to provide a 360 degree view of the performance evaluation measure of the company. While providing information from four different angles, balance score card minimizes information overload and limits the no. of information. Financial: As a result of the performance appraisal techniques the employees of the Australian branch of Mc Donald’s are motivated to perform better. The McDonald’s has shown good performance and sales results (Heffernan, 2015). Internal business process: Identifying internal process that are required to be analyzed and developed in order to improve further. The Mc Donald’s perspective in order to improve further is to go on doing the good work and motivating its employee’s further so that they can achieve the target. Customer perspective: The performance appraisal systems actually motivates to the employees to perform better which results in more no. of satisfied customers, set of performance indicators indicate that the customers are really satisfied and the customer retention is also high. Innovation and learning experience: The MC Donald’s has received awards and recognitions consequently for being a very good employer who facilitates learning for the employees. Goal setting: The goal of the Mc Donald’s at Australia is to ensure that the employee performance improved so as to ensure that the company is able to achieve its growth prospects. The company can ensure this through performance appraisal techniques that will help in motivating its employees. The employees are rewarded suitably for achieving the targets which lead to their satisfaction so that they perform well and are able to achieve their targets. On reaching of the targets by the employees new goals are set for them to achieve. Thus the Mc Donald’s at Australia seems to achieve what it sets out for in terms of organization effectiveness through providing for performance appraisal systems. Conclusion Performance appraisal is an important element of HR. It is every human’s natural tendency that they tend to feel motivated if someone approves of the performance that they put into their work. However one demand of every performance appraisal system is that they should be fair. There should be no biasness in the performance appraisal system and this is ensured by having a proper performance appraisal system that is written down if possible. Another important feature of the performance appraisal system is that it differs from one country to another. This is because each country views different factors responsible for performance. For example in Israel performance is measured as a group activity rather than from an individual perspective. Western cultures on the other hand view performance from an individualistic point of view. In this essay the topic of focus has been Mc Donald’s in different countries and how it uses different performance appraisal techniques in different countries and what is the effect it has on the organization effectiveness. In analyzing the performance appraisal techniques by McDonald in different countries it is found that it varies from country to country with some common elements that are characteristics of its org. culture. The performance of the company in Canada and Australia is quite good and is augmented by the brilliant performance appraisal system. McDonald’s performance appraisal system changes from one country to another. There are performance appraisal systems adopted by the company in context of reward management, incentives, pay scale, etc. Employee motivation forms the basis of organizational effectiveness. Organizational productivity is largely dependent on efficiency level of employees. Performance level of employees is closely knitted with accomplishment of company goals and objectives. Employee performance can be improved through different measures and techniques. In some countries the company is focused on monetary incentives and in other scenario focus is on job promotions. Promotion and training can be directly related to performance appraisal system. Training is usually provided to those employees who are weak performers in the organizational system. On the other hand, job promotions are associated with level of employee performance. In UAE, the company is inclined towards providing additional job responsibilities to employees. This form of added responsibilities tends to make employees highly satisfied with their job position. McDonald’s India focuses on incentive scheme as common performance appraisal technique as it helps to retain large base of talented employees. In USA, concept is a bit different since main aim of the company is on short term orientation and annual performance review of employees. References Burger business., 2015. Does Canada have McDonalds solution? [Online] Available at < http://www.huffingtonpost.com/burgerbusiness/does-canada-have-mcdonald_b_6833228.html?ir=India > [Accessed 10 March 2015] Harrison, R., 2005. Learning and development. London: CIPD. Heffernan, M., 2015. Its still a happy meal in Australia for McDonalds. [Online] Available at < http://www.smh.com.au/business/retail/its-still-a-happy-meal-in-australia-for-mcdonalds-20150309-13ysvf.html > [Accessed 10 March 2015] McDonald., 2012. Employment and training. 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