HRM Practices of Employee Involvement - McDonalds Corporation - Essay Example

HRM practices of employee involvement, employee engagement and leadership styles: McDonalds Corporation Lihang Yang Number: 294784 Course: Managing People Professor: NADINE HENNESSY Executive summary Employee engagement, employee involvement and leadership styles are some of the most important human resource management (HRM) functions of the modern business world. These three things are interconnected each other in many ways. Effective leadership styles help an employee to improve involvement and engagement in his regular job functions. In other words, leadership plays a vital role in bringing out the best from the employees. Even though all organizations know the importance of employee engagement and involvement for business success, only few of them are able to succeed in this regard. Ineffective leadership, poor organizational culture, poor management styles, poor working conditions, lack of work life balancing, lack of career development opportunities etc. are some of the major reasons that prevent employees from delivering their bests. This report analyses the importance of employee engagement, employee involvement and leadership styles, taking McDonalds Corporation as an example. Table of Contents Executive summary 2 Introduction 4 Employee engagement and employee involvement and leadership 5 Role of leadership in enhancing employee engagement and involvement in McDonalds 6 Conclusions 12 References 14 Introduction Founded by Maurice and Richard McDonald in 1940 and operating in 119 countries, McDonalds is world’s largest the fast food business group now. Around 1.7 million people were employed by McDonalds in its 14000 restaurants operating at different parts of the world (Reward Gateway UK, 2014). The 1.7 million workforces of McDonalds are extremely diverse since the company is operating in different parts of the world. Management of diverse or multicultural workforce is not as easy as the management of a single cultural workforce. The leaders and the managers of the company should implement effective HR strategies to bring out the maximum productivity of the employees. According to Torrington et al (2011), HRM is all management activities that help an organization to use its workforce to make things happen in a productive way. Even though an organization may have many resources such as machine, money and materials, none of them are as important as manpower resources. It should be noted that manpower is the only active resource of an organization and it is necessary to mobilize all other resources. Ineffective workforce may waste all other organizational resources whereas effective or skilled workforce may use all other resources in an efficient manner. In short, manpower resource is the most important resource for all organizations. According to Boxall & Purcell (2012), effective utilization of manpower resource is one of the most important HR functions. The success and failure of an organization depends on how well the leaders are capable of managing its human resources. In a well-managed organization, employee engagement and employee involvement will be more. Employee engagement and employee involvement and leadership Employee engagement refers to an organizational approach designed to make sure that employees are motivated properly to help the organization to meets its goals and objectives (Engage for Success, 2015). Motivation refers to the inner power or energy that pushes human toward work (Sasson, 2013). Only motivated employees accelerate the development whereas demotivated employees retard the growth of an organization. Therefore, it is extremely important for an organization to make sure that all its employees are motivated perfectly all the time. There are two types of motivation: intrinsic and extrinsic. Intrinsic motivation is guided by inherent traits and it is based on inherent satisfactions of the behaviors (Areepattamannil et al., 2011) whereas extrinsic motivation refers to a broad array of behaviors that are controlled by instrumental reasons (Vallerand and Ratelle, 2002). Both intrinsic and extrinsic motivations are essential to increase employee engagement. For example, a computer expert is intrinsically motivated for doing computer works. Placing him in the wrong department such as sales or accounts may not help him to engage properly with his work. Same way extrinsic motivators such as good salary and working conditions would help an employee to improve his engagement. On the other hand, employee involvement means “the direct participation of employees to help an organization fulfil its mission by applying their own ideas, expertise, and efforts towards solving problems and making decisions” (Bullock and Powel, n. d.). There are many employees who are reluctant in providing their feedbacks to the managers or leaders because of fear or concerns about how the leader or the manager takes his views and suggestions. Many of the organizations do not allow employee participation in the decision making process. Employee feedbacks are considered least seriously by such organizations. As a result of that employees in such organizations may become too much professional in their approach and stay away from activities that are unrelated to them. In such cases, it can be said that employee involvement is poor. Employee involvement in organizations with autocratic management styles will be poor since the managers do not respect the views and suggestions of employees in such organizations. On the other hand in democratic organizations, managers give more respect to employee views and suggestions. Therefore, employees may not show any reluctance in providing their feedbacks to the managers and leaders. It can be said that employee involvement is better in such organizations. From the above discussions, it is evident that leadership plays an important role in improving employee engagement and employee involvement. According to Kruse (2013), leadership can be defined as the ability to influence others with the help of one’s actions and behaviour. In his opinion, leadership involves many things such as influencing others, motivating them, empowering them and encouraging innovation and creativity. Employees may have many hidden skills and capabilities. Effective leaders will be able to bring out such hidden potentials of the employees so that the organization will be benefitted from it. Innovation and creativity are two of the most essential skills necessary for the modern employees. Effective leaders help employees to formulate innovative and creative ideas and thereby improve employee engagement and involvement. Role of leadership in enhancing employee engagement and involvement in McDonalds According to Mats Lederhausen, McDonald`s senior executive, the company’s two most important assets are its people and their skills (Lovins, 2012). In other words, McDonalds know the importance of skilled workforce in shaping the future of the company. Therefore the company is keen on addressing all the issues related to HR management in order to keep the workforce motivated all the time. Haid & Sims (2009) mentioned that McDonalds has integrated its employees into the organisation’s decision making systems, thus enabling them to provide their views and opinions to management as well as airing their grievances to the management. Sundaray (2011) argues that there is an association between employee engagement and the profitability of a firm that results from high productivity, sales and employee retention. Only satisfied employees will stick with an organization whereas dissatisfied employees will look for other options. In other words, job satisfaction is extremely important as far as employee retention is concerned. Job satisfaction can be obtained in many ways. If an employee gets proper salary and other benefits along with good working conditions, he will not think about other companies. On the other hand, if he gets poor salaries, career development opportunities and working conditions, he will think about joining another organization all the time. He will stick with an organization until he gets a better offer from other organizations. Such employees may not concentrate in their works and their involvement and engagement in the work will be poor. McDonalds knows this fact very well and they are doing everything possible to keep all its employees satisfied and motivated. Communication is an important function as far as human resource management is concerned. According to Hynes (2005), effective communication is the key to planning, leading, organizing, and controlling the manpower resources of an organization. On the other hand, Hanna and Wilson (1998) have defined communication as a process of generating, transmitting, receiving, and interpreting messages in interpersonal, group, public and mass communication contexts through written and verbal formats. The leaders and managers of McDonalds are taking employee views and suggestions seriously to promote employee engagement and involvement. Moreover, McDonalds has implemented many strategies to promote employee engagement. For example, the reward gateway program implemented by McDonalds in 2011 has caught the attention of the business world. Within three months from introduction, the reward gateway program helped McDonalds to achieve record success, having exceeded £2 million spend and over £100,000 in savings for employees. More than 60% of McDonald’s global employees registered for the scheme through the company’s award-winning internal staff website ‘ourlounge.’ Moreover, this program has won several awards such as ‘Outstanding Employee Engagement Strategy’ in the HR Excellence Awards 2011 and ‘Grand Prix’ employee benefits prize at the Employee Benefits Awards 2012 (Reward Gateway UK, 2014). Ourlounge helps McDonalds to know the employee views and suggestions properly. It should be noted that some employees may have reluctance in expressing their views and opinions directly to their leaders or managers. Such employees can make use of ourlounge website just like a blog. They can openly convey their opinions to the McDonalds management through this website. While using a website for communication, employees and employers get more flexibility and convenience in talking to each other. Moreover, such a communication would enhance the psychological contract between employees and employers. As per the views of Daniels et al. (2008, p.135), “psychological contract is the “unwritten expectations of the employer and employee”. Psychological contract can take place in two ways: transactional and relational. While transactional psychological contract gives more importance to short term security and financial rewards, relational psychological contract gives more importance to long term security, loyalty, commitment and financial reward (Guest et al, 1996; Guest, 2002; Guest, 2007). The needs of one employee may not be the same as that of another employee. Some employees may like short term benefits while others look for long term benefits while working in an organization. Some employees prefer job security, career prospects training and development (relational contract) more while others like pay, performance based pay and employment security (transactional contract) more (Torrington et al, 2011). There are many employees who like flexibility in their work in order to achieve work life balancing. On the other hand, there are many others who like to have overtime on a regular basis because of their financial problems. It is necessary for an organization to have an idea about all these things in order to devise suitable employee beneficiary programs and to provide the working environment desired by the employees. Ourlounge helps McDonalds to customize its employee beneficial programs in such a way that all the employees’ get the benefits they are looking for. Based on the nature of implementation, HRM is usually classified as Hard and Soft. While hard systems give more importance to business objectives, soft systems give more importance to workforce and communication. McDonalds have more faith in soft systems of HRM as the company believes that the business objectives will be automatically met once the employees are properly motivated towards their work. That is why the leadership of McDonalds gives ample importance to employee beneficial packages. As per the principles of soft systems of HRM, leaders need to gain commitment and loyalty from their employees resulting in improved performance (Storey, 2001). Charismatic leaders or effective leaders will always successful in inspiring their followers or employees, even in difficult situations. For example, Apple Inc. was on the verge of destruction in the 80s and 90s. However, the Apple employees had immense faith in the abilities of their leader Steve Jobs. They were ready to follow the instructions of Steve even when they were going through difficult situations. Steve has convinced them about the necessities of diversification of business and went ahead with the development of new products such as iPhone, iPads, iPods etc. The employees of Apple had shown no resistance against the proposed change by Steve, even though they forced to suffer a lot initially as part of these changes. The rest is history now. McDonalds has learned a lot from this incident and accepted soft systems as part of its HRM strategies. Kular et al. (2008) pointed out that McDonalds have no problems in allowing employee participation in the decision making processes. The leadership of McDonalds is keen on implementing democratic principles of management in its HRM. The leadership of McDonalds knows that the success and failures of an organization rests in the hands of its employees. It should be noted that the leadership of McDonalds is not interacting directly with its customers. Only the employees handle the customers and hence they know the demands and problems of the customers better than the leadership. The leadership of McDonalds will get information about such things only from the employees. Therefore, it is vital for a company like McDonalds to collect information from the employees and to allow them to participate in the decision making. While allowing employees to take part in the decision making, employee engagement will be improved. It should be noted that an opportunity to take part in the decision making will be valued very much by the employees. When they get such an opportunity, their commitments and attachments towards the organization will be improved. A feeling of belongingness will be generated in the minds of employees when they are allowed to participate in the decision making. Such a feeling of belongingness will improve the employee engagement as well as employee involvement. Unlike the CEOs of many other companies, the CEOs of McDonalds are actively participating in employee engagement programs. For example, “McDonalds UK CEO Jill McDonald is actively involved in employee engagement, driving the initiatives within the business and publically talking about the work taking place in the chain” (HR Magazine, 2012). Jill and many other CEOs of McDonalds hate the idea of operating from behind the curtains. They are always leading from the front and have no hesitation in talking to the employees to and to realize their problems. The leaders of McDonalds treat their employees as humans rather than machines. “Last year it launched meet our people, which seeks to humanise staff in uniform - and to celebrate and feature a selection of McDonalds staff. The campaign, which set out to show employees as talented individuals from all walks of life, was the first campaign in the employers history to receive a 100% positive or neutral reception” (HR Magazine, 2012). Better corporate image and reputation would help a company to improve employee engagement and involvement. Many people have the illusion that sponsorship of sports events or other events of public interest would help a company to promote its products and services. In fact such activities have the potential to improve employee engagement and involvement. For example, McDonalds have sponsored the London 2012 Olympic Games. It helped the company to cultivate a sense of pride in the minds of its employees. Employees hate the idea of working for an organization that has bad reputation in the market even if the organization offers good salaries and benefits. For example, Satyam computer was one of the reputed companies until recent times. However, the accounting scandal that took place recently in the Satyam computers has spoiled its reputation. Imagine a case in which an employee gets offers from Dell and Satyam. Even if the offer from the Dell is inferior to that from Satyam, the employee may join Dell most probably. This is because of the better corporate image Dell enjoys compared to that of Satyam. In short, corporate image plays an important role in improving employee commitment, involvement and engagement in an organization. “McDonalds has set out on the road to turning around perception of its brand and every engagement decision it makes is directly linked to its corporate goals. It reports 84.5% of staff feel valued, 83.8% feel proud to work at the restaurant chain, and 83.5% feel motivated” (HR Magazine, 2012). Leadership activities play a vital role in shaping the corporate image in the right direction. It should be noted that the CEO Ramalinga Raju himself was responsible for the accounting fraud in Satyam Computers. In short, leaders have direct roles in improving employee engagement and involvement. There are some criticisms also against the effectiveness of employee engagement. Opponents of employee engagement claim that there is no known cure for organisational problems, especially in this era of globalisation, where the marketing environment has become so competitive due to strong rivalry and high product substitutability (Harter, Schmidt & Hayes, 2002). It is a fact that globalization has brought many changes in the traditional market place. Moreover, the introduction of computers and internet has transformed traditional market place to modern market space as ecommerce and internet related business activities are growing. As a result of these things, competition in the market has been increased rapidly. It is possible for all companies to enter any market they like because of globalization. It is possible for a Chinese company to market its products in America and vice versa though both the countries have different politics. Under the above circumstances, it is reasonable to assume that employee involvement and engagement are outdated topics in front of market competition. At the same time, it is illogical to neglect these topics completely since employees have the ability to make or break a business. It should not be forgotten that even ecommerce requires the supervision of humans. In other words, no business (Online or offline) in this world can be performed with the help of machines alone. Under the above circumstances, it is essential to consider employees and their needs as the most important things when an organization shapes its business strategies even for the future. Conclusions Employee engagement and involvement are extremely important subjects in the business world. These subjects will not lose their importance until the machines take full control of business. Since such a scenario is unimaginable and impractical, employees will remain the most important organizational resource as long as the business survives in this world. Leadership has the potential to shape employee involvement and engagement. Better leaders always value the contributions of the employees and make sure that the employee needs get first priority while formulating strategies for the future. In short, employee engagement and involvement depends heavily on the ways through which they were managed or led. References Areepattamannil S, Freeman, J.G & KlingeIntrinsic D.A. (2011). Motivation, extrinsic motivation, and academic achievement among Indian adolescents in Canada and India. Soc Psychol Educ (2011) 14:427–439.DOI 10.1007/s11218-011-9155-1 Bullock, R and Powel, S. (n.d.). What is Employee Involvement? 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