Strategic Position of McDonalds - Research Paper Example

?McDonalds: Strategic Position McDonalds: Strategic Position Introduction MacDonald’s Corporation is the largest network of hamburger fast food restaurants headquartered in the United States. The company was founded by brothers Richard and Maurice McDonald in 1940 and currently the organisation has a presence in 119 countries. Franchisees, affiliates, or the corporation itself run its restaurants. The firm’s main sources of revenues are rent, royalties, and fees from franchisees and sales revenues from company-operated restaurants. The corporation’s product lines include hamburgers, chicken, cheeseburgers, French fries, soft drinks, and desserts. The company achieved a 27% revenue growth over the three years ending in 2007 (Seeking Alpha 2011). This paper will evaluate whether the recruitment and selection, training and development, staff turnover, and reward and benefit policies of McDonalds are strategic or not. The paper will analyse if those policies have assisted the organisation to achieve its goals and objectives. Recruitment and selection The market success of any business largely depends on its product quality and service efficiency. It is clear that high quality products can be designed, produced, and delivered only if high quality people are employed. AsRioux and Bernthal (1999) point out, for any business like McDonalds offering customised services, efficiency in employee recruitment, selection, and retention is particularly vital to meet customer satisfaction and thereby promote market share growth. While analysing McDonald’s recruitment and selection policy with reference to related practices such as training and development, staff turnover, and rewards and benefits, the policy seems strategic. To illustrate, the organisation uses effective and extensive recruitment and training approaches to attract, identify, develop, and retain potential staff that would best suit McDonald’s long term business interests (McDonald’s Corporation 2009).McDonalds opened its first restaurant in UK in 1974 and there were 1330 McDonald’s restaurants in the country by 2004. Like corporate giants like Wal-Mart and Coca Cola, McDonalds is also a world’s leading large scale employer (ibid). As per records, in 2004, the company employed 43,491 people in its restaurants and they embraced 40,699 hourly paid workers, 2,292 managerial personnel, and 500 office staff. McDonald’s US franchisees employed further 25,000 people in 2004 (The Times 100, n.d). Most of the McDonald’s employees are paid based on an hour-rate system and those employees are referred to as crew members. In order to ensure the efficiency of employee recruitment and selection process, McDonalds’ management has specifically outlined skills and behaviours that an applicant should possess. According to this, “for each position there is a job description outlining typical duties and responsibilities and a person specification defining personal skills and competences.” (The Times 100, n.d). The McDonald’s recruitment policy makes its individual restaurants responsible for appointing adequate number of hourly-paid workers. The company’s Management Recruitment department coordinates all activities associated with the recruitment process (McDonald’s Restaurants Limited 2004). In order to recruit skilled and efficient hourly-paid employees, the organization follows some typical requirement approaches including advertising in restaurants, local job centres, career fairs, and other local facilities (The Times 100, n.d). Throughout the company history, it seems that McDonald’s management mainly uses advertising in restaurants technique to hire quality staff. The company believes that this recruitment policy would assist to find out quality workers from local people and/or friends of existing workers. The management collects applications from huge number of candidates and prepares a short list of applicants to be interviewed based on specific criteria. Over 60% of the McDonald’s crew members are aged 20 or below and the company like to provide employment to young people. McDonald’s interviews are well designed to identify an applicant’s potential to be a productive employee. As Williams and Curtis (2012, p. 59) point out, to find candidates who will excel in quality service delivery, the organisation has scripted an interview guide that is beneficial to predict how a candidate’s previous history may influence his/her future performance. The company follows a fact based decision making process rather than merely focusing on applicants’ interview performance. Generally, interview questions are based on actual events or situations instead of allowing candidates to give a theoretical or general response. The interviewer rates the candidates’ interview appearance, and selects those who achieve highest ratings. McDonalds mainly practices two ways to develop its future managers. First, over half of the salaried management positions are filled up by promoting better performing hourly-paid employees. The remainder is taken up by direct appointment of graduates who are able to demonstrate necessary managerial skills and talents. As Woods reports, currently the company encourages its candidates to apply online through McDonald’s website. This employee selection process embraces an initial online psychometric test, which produces an initial score (ibid). Subsequently, the candidate appears for the first stage interview and is given the opportunity for ‘On Job Experience’ (OJE), which is a two day evaluation, in a restaurant (GradsEast, 2012). Once the applicant completes the OJE successfully, he/she will be passed to the final interview, after which the interviewer makes the final decision relating to the applicant’s employment (ibid). Training and development After the completion of the recruitment and selection process, the company inducts its newly recruited employees into the business through a specially designed Welcome Meeting; and it is the first stage of training at McDonalds (McDonald’s Corporation, 2008). The Meeting provides the fresher employees with an overview of the company including job requirements, policies and procedures, hygiene and safety training, and other employee benefits (ibid). After the Welcome Meeting, candidates will be provided with a trainer. The trainer assists his/her trainees to be conversant with operations of a restaurant’s 11 work stations, from the front office to the grill area. The company has set a three week probationary period for its newly recruited employees, and after this term, employees are retained or terminated on the ground of their performance. As the company has realised that high standards of quality, service, and cleanliness offered to consumers are key to its success, the management gives particular focus to training and development. McDonald’s management has framed a comprehensive training programme and career progression for its fresher employees to enable them to gradually achieve top management positions through merit based promotions. Generally, McDonald’s training is floor based or ‘on-the-job’ based as the company management believes that trainees can learn quickly and retain information if they are allowed to follow the ‘learning in practice’ approach. In addition to practice sessions, class room based training sessions have been developed for fresher employees. The restaurants do encourage the crew members to management positions that are paid hourly and those which are pegged onto responsibility for sections within the company or accountability for shifts. The restaurant provides training and development as well as constant development to members during specific days. Employees usually attend training courses upon successfully completing their management entrance exams. This is conducted by the training department before the employees resume their management positions. The Management and development program at McDonald’s selects new employees from the trainee manager to the position of Restaurant Manager. This comprises of on-the-job training and open learning development programs which are anchored by seminars and courses at the firm’s National and Regional training centres (Rachael, 2006; p. 3). The curriculum targets individuals above 21 years of age either as persons with previous experience in management or graduates. It provides a straight path into the company management, via a rigorous systematic training curriculum. The curriculum of management development is partitioned into four main systems; Shift management involves coaching trainee managers in the expertise and skills needed in becoming efficient in all dimensions of leading a shift. System management is a program that aims at the second assistant and freshly promoted assistant managers. It runs through all areas on the company hence improving on the business information and growing personal techniques. The third program is the restaurant leadership which provides orientation to managers on the fundamental skills required to become successful such as decision making, team building and communication. The last program is the business leadership which encompasses focus on the general managers on the necessity to grow a business tactic that comprises of external and internal aspects. Majority of departments in the regional offices provide restaurant managers chances to be supported to work in the regional positions. This offers an experienced manager a chance to establish and develop new skills, to view a different dimension of the firm and to encounter the various ways in which strategies in the department have a part in fulfilling the objectives of the company. Staff turnover The perennial challenge for majority of fast food restaurants has been the escalating high employee turnover rate. The rate went high to 130% in the course of last year (Marylyn & Patrick, 2009; p. 678). In spite of the increasing wages, flexible work schedules and health insurance cover, the staff turnover is on the rise. Many experts observe that individuals are aware of what is required but they are adamant not identifying that it is an investment. From the latest observations, there are over 600,000 individuals working at the United States’ 13,700 McDonald’s restaurants while the King’s branch has got 5,000 restaurants. The giant division in Hamburger made attempts to promote careers by two years which resulted into mixed results by putting a spotlight on the popular persons who were once employed at McDonald’s. Some of these individuals include, Macy Gray a singer, a professional speed skater Derek Para and Carl Lewis a 10 time Olympic track and field medallist (Derdak & Pederson, 2004; p. 109). The current strategy by the firm is to turn their focus on their employees. It can be noted that cutting on turning rate that aligns with industry standard by a few percentage units would minimize the huge amount of dollars that are spent by the restaurant yearly on training. The company has however refused to reveal the amount of dollars that is spent on training new hires (Andrew, 2007; p. 371). McDonalds also specifically focuses on the issue of staff turnover as this problem causes many difficulties to the organisation (BBC News, 2008). First, recruitment and training of new employees is an expensive task, and hence employee turnover contributes to the firm’s operating expenses. Secondly, since due to this issue the organisation may lose experienced and skilled employees, the company may face productivity declines too. McDonald management’s view ‘choose wisely, and treat well’ is one of the most effective ways to curb the issue of staff turnover (The Times 100, n.d). Reward and benefit As Hendon and Svenson (2005) point out, the company uses ‘Observation Checklists’ to continuously evaluate employee performance and manage ‘appraisal grading’. On the basis of this appraisal grading, employees are promoted to hourly-paid management positions. In addition, management entrance exams are conducted for the purpose of employee promotion. The company offers a relaxed worksite environment, fun time, and flexible work schedules to its employees (Allan et al 2002, p. 170). In addition, the firm provides its staff with scholarships and grants, discount cards, and other financial incentives. Through an effective reward and benefit system, McDonalds reduces its staff turnover rate to a great extent. Various rewards and benefits are offered to employees working at the company, some of which are given to management trainees and others to the regular employees. The management trainee benefits include wide-ranging management development program that might lead one into attaining a higher diploma in Business management and probable attendance at conventions held for assistant managers and restaurant managers. Besides, they might be eligible to a company car and a private health care cover for the manager and the entire family. In addition, the managers might be given a flexible roistering system for the arrangement in shifts. Other employees are given flexible working hours that can fit into their commitments such as schooling, sporting or family issues. This helps the young employees to balance their work life and school work. Employees under the age of 17 are given less time for working given that they are minors. Moreover, the company also sets the employees lives by enabling to learn new skills that can serve them in their areas of life such as management of time, team work and customer service. Professional expertise such as money handling, quality control and maintenance of equipment are also provided by the company to the employees (Mark, 2006; p. 221). Conclusion From the above discussion, it is evident that the McDonalds firm has a high esteem for the triumph of its chain of restaurants. This is what seems to be making the company tick in terms of popularity and success. Therefore more attention is directed towards the selection and recruitment of employees. It is apparent that main impediment to the success of the company rests in the employee turnover which the company is doing best to reduce. Thus by focusing on the welfare of the employees through rewards and benefits the firm might jumpstart to their profit accumulation trend. This is possible with efficient implementation of its programs and policies that may end up convincing the existing employees to stay. Bibliography Allan, C, Bamber, G. J and Timo, N., 2002. Employment relations in the Australian fast-food industry, In: T. Royle and B. Towers (Eds), Labor Relations in the Global Fast Food Industry. New York: Routledge. BBC News., 28 January 2008. 'Everything I needed to know I learned in McDonald's', [Online] Available at: [Accessed 20 August 2012]. Brand, R. (23 December 2006). "Chipotle founder had big dreams". 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