HR Management in McDonalds - Case Study Example

Report HR Management in McDonalds June, 6, Contents Contents Page number Background and Introduction 3 2. HRM at McDonalds 3 3. Conclusion 8 4. References 10 HR Management in McDonalds Background & Introduction: McDonalds stands number one fast food chain and it is also one of the top ten mostly widely recognized brands around the world. Ray Korce was the first person who opened first McDonald’s restaurant in USA in 1955 and he made a sale of $ 366.12 on the first day of his operation (Docshare.com). Ever since McDonald’s has colorful; fairly tale like history of evolving growth and it owns the culture of the modern fast food chain today. When the McDonald’s first restaurant was opened in America, it was a unique type of business that offered a novelty concept at that time. The items on the McDonalds menu were beef or pork burgers, fries and drinks. Their restaurant presented a different kind of lay out at that time. The open kitchens for the customer view presented a uniqueness and novelty to the viewers and visiting customers. With track record of successful emergence on the global scene, McDonald today a huge network of restaurants spread across in more than 90 countries in the world and it has achieved an unparalleled success and a top position in the fast food Industry during the last more than half a century period. McDonald has always pursued a growth strategy and it present success is reflective of the keen sense of market and customer focus that it has so successfully maintained. As Ray Kroce who is the on of the building blocks and architect of modern McDonalds opened the first McDonalds restaurant in America in 1955, his served good quality meals in moderate prices and clean seating environment. He could not have imagined the super success that McDonalds would earn in the years to come. But he did see that phenomenal success that was delivered by a superior strategy pursued not only in managing its business but also in managing its people internally. HRM at McDonalds: People are a key ingredient of any organization and HRM is the key focus of a fast food industry which is characterized by high degree of customer service. McDonalds owns and runs a business strategy that is highly interactive and dependent on a highly competent HRM team. The back office food technologist and the front office customer services staff have no room for mistakes at all. What is more important is that McDonalds has to look after its long term strategy of HRM so that it keeps the best of the people in food technology and fast food industry. At the overall level what drives an HR strategy and its context. What is the main thrust of McDonald’s strategic HR policy? (Harris & John 2009) point out that the MD of McDonalds remarked that “maintaining a diverse and inclusive and inclusive workforce is certainly the right and proper thing to do, but we have long maintained that it is the smart thing to do.” This depicts that McDonalds maintains a very diverse and inclusive workforce on purpose as it supports it growth. Diversity is one dimension of the HR of the McDonalds. For the back office production and quality control, it hires skilled staff, mostly high tech food technologist and experts in their field and look after the back office production and quality control. For the front office, McDonald’s hires customer services staff that are mostly unskilled and have to go through rigorous on-job trainings. The labour market that McDonald’s addresses for the front office staff is really unstructured and unskilled labour is preferred with younger lads and girls who are at or below the graduate level. The composition is based on mostly on migrant workers who are in need for work. The age bands are really 16-30 makes and females who are daily / weekly wage earners doing hardcore labour with no strings attached. They are mostly available for part time and full time jobs with low to moderate skills levels. They are taken through rigorous in-house on-job training by McDonalds. The legal framework permits part time work for students on a limited weekly hour basis and the students are able to carry out their work along side their studies on campus. They get recruited on ad hoc basis and can join the mainframe McDonald’s workforce on satisfactory completion of training and induction period. The McDonalds offers ad-hoc jobs while observing the minimum wage levels that guarantee minimum subsistence level earnings and does not encourage temporary and ad-hoc staff to be members of any trade union or any other representative system. The employees face a highly competitive performance based environment that also offers avenues for growth. The regulatory laws affect the HR policy of McDonalds in every country. The labour laws and laws governing employee benefits, hiring, retirement benefits and benefits after retirement govern McDonalds HR policy. The McDonalds HR department obeys these laws and regulatory frameworks and works with their ambit. As Kumar (2011) points out that because of McDonalds operations in so many different countries, it has had to adapt it products, services, HR policy to local legal, political, economic and social factors in each of these countries. Few examples will explain these adaptations. For example in India, the beef is not encouraged by a vast Hindu majority therefore McDonalds uses mutton or chicken instead of beef burgers. In Japan McDonalds has developed Teriyaki burgers. In some the Middle Eastern countries, McDonalds have developed separate dining restaurants for the males and females. HR operations have to be adjusted usually before starting an operation in a new country. McDonalds adapts to local laws and regulations that govern the legal and economic framework of HR in a specific country. This is one of the Critical Success Factors (CSF) of McDonalds HR strategy in particular and of the business strategy in general that it strives to achieve a fit between local factors and its strategy. These examples illustrate the cultural and religious factors that McDonalds adapted it to. It did similar adaptations to the local political, economic factors that were important for McDonalds to succeed in several countries. The McDonalds has a complex organizational structure and it is operating in a dynamic market. It controls its operations and maintains quality in product, service areas equally well. McDonald’s HR policy is also affected by the labor and technology structure that surrounds the organization. McDonalds is a highly preferred employer and candidates seek out for McDonald’s jobs very actively. This is especially so when a McDonalds starts a new operation in a country. For example when McDonalds started off first restaurant in Moscow, it received 27000 applications initially, (Kumar, 2011). But McDonalds is highly sensitive on its customer service and customer care, therefore it prefers to hire candidates who have a strong customer service background and skills. As franchising system, McDonalds offered such arrangements that everyone stood to gain from it and every one looked as a partner. The McDonalds is a true story of global success as Ritzer (2010) puts it that: “no two countries that both have a McDonalds have ever fought a war since they each got a McDonalds”. This reflects that McDonalds has a true global story to tell the whole world. It says louder in actions than in words. It a super success story in the food retailing sector. From the macro environment, the HR strategy of McDonalds has been quite affected by certain exogenous factors that determine the HR of an organization. The organizational factors that affect the HR consist of: 1. Sector of economic activity 2. Size of organization / workplaces 3. Structure and complexity of organization 4. Ownership (e.g. country of ownership, family firm, history and philosophy) Marchington & Wilkinson (2008), p.139 -142 The employees at McDonalds face a highly competitive performance based environment that also offers avenues for growth. The regulatory laws affect the HR policy of McDonalds in every country. The labor laws and laws governing employee benefits, hiring, retirement benefits and benefits after retirement govern McDonalds HR policy. The McDonalds HR department obeys these laws and regulatory framework. McDonald dominates the fast food retailing sector and it has shown one of the fastest growth records in the world history of food retailing. It is globally seen as a leader and founding father of the fast food business as it laid foundations for fast food retailing in America and it has achieved a path making success in the food retailing fast food business not only in USA but worldwide. A very larger proportion of its success and current revenues come from global markets now. Seemingly simple, it is a dynamic sector of the economy. The product innovation rate is high and the customer service levels have to be equally dynamic. The food sector is one of the most demanding and yet stable sectors because it comes under necessities and affects the HR requirements equally well. The back office HR requirements are highly specific and whereas front office requirements are little flexible. The in-house training need is high. Because of a larger size of the organization, McDonalds is a large organization and its size affects it recruitment, hiring, training and employee benefit and retirement policy equally well. The restaurant size, franchising agreement all affect the recruitment policy and HR policy. McDonald’s is moderately capital and labor intensive organization and this affects its HR policy accordingly. The labor intensity and capital intensity is of the moderate degree affecting its HR requirements accordingly. In a long terms strategic sense, the food technologists and the back office food technologists of high caliber are needed by the organization. Conclusion McDonalds has an impressive track record of success and it is a true success story that the global markets have seen in the last half a century period. The success of McDonalds is in large part owned and explained by a smart and pragmatic HR strategy that it has pursued during the successive phases of its growth. It has always respected and adapted to local legal, political, economic and cultural factors in product innovation, business outlook and HR strategy designs that it has pursued. People who work for an organization are its strategic resource. It is especially true for McDonalds since it regards its customer service to be of prime most significance. Major thrust of McDonalds’ strategic HR policy has resided in maintaining a diverse and inclusive workforce and it has long maintained it as a smart thing to do. The staff that McDonalds hires for the front office comprise of students and graduate level staff, who are usually migrants in need for work and students in the age 16-30 with low to moderate skills levels. They are taken through rigorous in-house on-job training by McDonalds. McDonalds offers ad-hoc jobs while observing the minimum wage levels that guarantee minimum subsistence level earnings and does not encourage temporary and ad-hoc staff to be members of any trade union or any other representative system. McDonalds offers them an environment conducive to work, learn, get trained, perform and grow with the organization. This is inherent in the fast paced modern work culture launched by McDonalds in every restaurant it opened in different countries of the world. Since McDonalds has operations in so many countries, it adapts it products, services, HR policy to local legal, political, economic and social factors in each of these countries. HR operations are adjusted usually before starting an operation in a new country. McDonalds adapts to local laws and regulations that govern the legal and economic framework of HR in a specific country. McDonalds has a complex organizational structure and it is operating in a dynamic market. It controls its operations and maintains quality in product, service areas equally well. McDonald’s HR policy is also affected by the labor and technology structure that surrounds the organization. McDonalds is a highly preferred employer and candidates seek out for McDonald’s jobs very actively. No wonder why McDonalds maintains a very diverse workforce which is serving its global employer like a global family. Diversity of cultural background is one key dimension of the HR of the McDonalds today as it needs adapting workforce to match its local customer needs and cultural milieu. References: 1. DocShare.com:http://www.docshare.com/doc/116075/Human-Resources Management McDonalds. Web. [Accessed: June.6.2011] 2. Harris, Patricia Sowell , John Wiley and Sons, (2009): None of us is as good as all of us: how McDonalds prospers by embracing inclusion and diversity 3. Kumar, Raj. (2011): Human Resource Management: Strategic Analysis Text and Cases: McDonalds International HR (p 462). Web. http://books.google.com.pk/books?id=4OgyJ740KxMC&pg=PA462&dq=mcdonalds+hr+practices&hl=en&ei=9VLsTevCCoyaOuCR-KIB&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCkQ6AEwAA#v=onepage&q&f=false.[Accessed: June.6.2001] 4. Kroc, Ray & Anderson, Robert: Grinding it out: the making of McDonalds (1992).Web. http://books.google.com.pk/books?id=ZavI5VI33CkC&dq=mcDonalds&hl=en&ei=mV7sTcX7BoeZOv-Zxa4B&sa=X&oi=book_result&ct=book thumbnail&resnum=1&ved=0CDAQ6wEwAA[accessed.June.6.2011] 5. Ritzer, George: The McDonaldization of Society 6 (2010) Read More